A prescription for the MBT

by James P. Hallan
MRA President and Chief Executive Officer

Preliminary results of the new Michigan Business Tax are in and they’re not pretty. Reports of members paying three, four or more times the business taxes they paid last year are all too common.

Let’s think about this for a minute. The Michigan Business Tax is essentially a gross receipts tax that includes sales tax in the definition of gross receipts. By anyone’s definition, that’s a tax on a tax and incredibly unfair to retail, the industry that is primarily responsible for collecting sales tax for the state.

Moreover, the new MBT includes a temporary rate surcharge that increases everyone’s tax burden at a time when many Michigan businesses are on life support.

It’s time to call in the doctors for a prescription of common sense and maybe even radical surgery to correct a flawed system. We cannot have certain sectors receiving substantial tax breaks at the expense of others.

For over 25 years, Michigan’s Single Business Tax was tinkered with in order to correct early inequities. But today, businesses can’t wait 25 years for a life-saving treatment. It must be done quickly, and it must provide relief from the pain of excessive tax bills for the state’s retail industry.

Two simple actions would go a long way to leveling the playing field among the various business sectors. First, eliminate the surcharge. Second, follow the lead of the Michigan Senate and eliminate sales tax from the gross receipts calculation.

While we appreciate the legislative complexity of trying to craft a bipartisan tax, what has developed is troublesome and threatens the very survival of many important Michigan businesses. Time is of the essence. The legislature needs to act now.

On another note, I am sad to report that Helen McCurry, wife of MRA board member Joe McCurry, has passed away. Over the years, Helen had attended many MRA functions and was a dear friend of many of us. The entire MRA community mourns her loss and sends our condolences to Joe.

In addition, one of Michigan’s visionary retail leaders passed away last month. A vibrant and compassionate leader, Wally Bronner built the world-renowned Bronner’s CHRISTmas Wonderland in Frankenmuth and made it one of Michigan’s top tourist attractions.

He received a Michigan Retailer of the Year award in 2005, honoring his many generous contributions to his community, such as a major contribution to the Frankenmuth School District that helped pay for necessary renovations and additions, including a state-of-the-art performing arts center.

With his passing, all of Michigan retail paused for a moment to tip its hat to Wally and say, “Well done. You did it the right way and made all of us proud.”