Michigan Business Tax's death was great for Meijer, right? Not quite
MACKINAC ISLAND—The Michigan Business Tax is dead and the general consensus — even among critics of Gov. Rick Snyder, who successfully pursued the tax's replacement — is that it'll boost Michigan businesses.
But the effect of replacing the MBT with a flat 6 percent corporate income tax that exempts 95,000 small businesses is not evenly applied among all companies.
Take Michigan-based grocery store chain Meijer Inc., for example.
Meijer President Mark Murray said today at the Detroit Regional Chamber's annual Mackinac Policy Conference that his company would probably incur a slight increase in its business taxes due to the changes.
But he's not complaining. He said that Meijer, which operates about 100 stores in Michigan, supports Snyder's tax reforms because it simplifies the system and eliminates double taxation on small business owners.
Murray's comments illuminate a widely-overlooked truism of Michigan's business tax reform: Financially, it benefits small businesses much more than big companies.
All companies will benefit from the fact that Michigan's business tax system is now substantially easier to navigate. But small business owners are more likely to benefit financially. Most small business owners will now pay taxes only through their personal tax returns, where they are taxed at the flat personal income tax rate of 4.35 percent.
Even though the new system favors small businesses, Murray said he's not complaining. He's particularly happy that the state finally eliminated its item pricing law, which previously required retailers to place a price sticker on virtually all products for sale.
"It was not causing chaos in Indiana, or Ohio, or any of the other states that don’t have item pricing," Murray said. "It just makes us all that much more efficient for consumers."
Murray said he wants Lansing lawmakers to improve the state's K-12 and higher education systems and foster more intergovernmental cooperation. He said he's happy that the Legislature — which is controlled by Republicans — is dealing with big issues.
"They spent two years debating whether we could have smoking in cigar bars. What kind of nonsense is that?" he said. "Now they're working on real stuff."
Contact AnnArbor.com's Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter or subscribe to AnnArbor.com's newsletters.
Comments
snapshot
Fri, Jun 3, 2011 : 4:12 a.m.
To all you "educators" and democrats who have been spouting off that education is suffering to give tax breaks to "big corporations" shame on you for lying to us poor ignorant folk. Self serving soundbites.
Michael Christie
Thu, Jun 2, 2011 : 9:49 p.m.
The MBT that was developed by the Granholm administration only helped large corporations because it allowed them to write off inventories. So the Big 3 and anyone else with stagnant outdated products that no one wanted benefited from this tax. The people it hurt was small businesses and the service industry becasue they could no longer write off payroll taxes and they were taxed as a corporation and again as an individual. It has been proven time and time again that job growth is greatest with small businesses. I've been living this tax nightmare for 2 years now. The first tax was on revenue, so you could loose money and still pay the MBT. Yeah, I want to be a business owner and have that to deal with. The second was to tax all businesses (minus inventory) at the corporation level and personally. This hurt small businesses becuase you pay tax as a business, then they tax your K1 filing (LLC's and S-Corps), but as a business owner you're getting double taxed because as an ower you're paying both of them. The last tax was a % of revenue/profit and was the "kicker" on top of it all. Granholm really blew us all away to the point that now that jobs are growing there's no one here to do the work.
Mush
Thu, Jun 2, 2011 : 5:10 p.m.
The biggest myth is all this is that only small businesses are getting the huge tax break. Actual small businesses paid nothing or very little MBT. Many didn't even have to file. The new flat tax benefits businesses that are not publicly owned, which may or may not be small businesses. What we now have are many more very wealthy business owners who now pay no business tax. The new legislation may or may not coax privately owned companies to invest in Michigan. There are other factors, like quality of life. Minnesota, for example, has one of the highest businesses taxes and one of the lowest unemployment rates: a paradox, which according to Michigan Republicans, just can't be so.
Jeff Renner
Thu, Jun 2, 2011 : 7:14 p.m.
Meijer is privately owned. (Wikipedia says, "The chain was ranked No. 18 on Forbes's 2008 list of 'America's Largest Private Companies' and 19 in Fortune's 2008 'The 35 largest U.S. private companies'.") Why will their tax bill go up?
zeeba
Thu, Jun 2, 2011 : 3:06 p.m.
Re: xmo - This is like saying that no consumers pay taxes, because their reduced expenditures are passed (not past) along to businesses in the form of reduced earnings. Same thing. In fact, there's a very strong case to be made that taxing consumers has a more negative effect on the economy than taxing businesses, because 1) consumer spending drives the economy and 2) additional earnings by a business or owner are not necessarily spent or reinvested in the same state or country. In fact, businesses expand only when there is more business to justify their expansion - not because they have extra dollars lying around to invest. When business opportunities (read: greater consumer spending) justify an expansion, they typically borrow the money for that expansion rather than pay for it out of past earnings.
xmo
Thu, Jun 2, 2011 : 1:16 p.m.
No Company pays taxes BIG or small! It is ALL PAST on to you: the consumer. I am glad that the uncertainty of taxes is being eliminated so businesses can plan and adapt. This is good for everybody. Now if Washington could do he same, we could end this Depression!
johnnya2
Wed, Jun 1, 2011 : 11:03 p.m.
"'"It was not causing chaos in Indiana, or Ohio, or any of the other states that don't have item pricing," Murray said. "It just makes us all that much more efficient for consumers." So when you get to the checkout you will need to closely watch to see what the ACTUAL price you pay for something is. I find it funny that Meijer has opened 101 stores in MIchigan PRIOR to changes in the tax structure and item pricing and have 40 in the entire state of Ohio (which Murray seems to think is the better system). It even makes him more of an idiot when you realize Ohio has a larger population than Michigan. I have never heard a PERSON in Michigan say "lets get rid of item pricing, it is not good for me". The only people this benefits is those that have a vested interest in being deceptive and dishonest with their prices. OR want to make it difficult for those who want to know what the price is BEFORE we take it to the register. I wonder how many people would go to a website to buy airline tickets, but could not know what the price is until they went to the checkout. As for his snide comment about cigar bars, I will point out that the legislation would have passed much sooner if the moron republicans had not fought every effort. I guess making Meijer's life easier is far more important than helping people LIVE. In the Snyder world nothing needs to be debated, since he wants to ram everything through regardless of consequences. City does not do what HE considers best practices, he takes away their funding and then when they dont measure up to HIS metric, he appoints a EFM.. Yeah he is right, dictatorshi[s are so much more convenient in getting things done. They can make the trains run on time. Finally, Meijer's record as aright wing nut job company has been around for years based on their treatment of gay employees. Wal Mart, which is hardly gay friendly, has a better record than Meijer. They also give to Calvin College, enough said
Alvan
Thu, Jun 2, 2011 : 11:28 a.m.
"This should allow Meijer to consolidate some duties and eliminate some positions." Really does a lot for creating jobs, doesn't it. :v)
njgreg
Thu, Jun 2, 2011 : 3:11 a.m.
You forgot to mention that it also benefits Meijer because they'll no longer need employees to price mark items. This should allow Meijer to consolidate some duties and eliminate some positions. Just think of the money you'll have when shopping and saving at Meijer!
L. C. Burgundy
Thu, Jun 2, 2011 : 3:06 a.m.
Wow, Wal-mart being rehabilitated on annarbor.com - didn't think I'd live to see that day. Wal-mart is also a union-busting company, while nearly every Meijer store in Michigan is unionized. These things are not all black and white. Meijer has had shelf tags and in-store scanners for some years now, if you really want to check the price of every product in your cart. EFMs are not needed in cities that actually manage their fiscal affairs. It's that or municipal default. Neither is good.
stunhsif
Wed, Jun 1, 2011 : 9:34 p.m.
Meijer rocks, we are very fortunate to have this fine company HQ'd in our state.
Townie
Wed, Jun 1, 2011 : 9:31 p.m.
'"It was not causing chaos in Indiana, or Ohio, or any of the other states that don't have item pricing," Murray said. "It just makes us all that much more efficient for consumers." It's hard to argue when you don't know the price of things until you arrive at the checkout. Murray is really just sawing customers no longer know when they are being cheated and thinks that's 'efficient'. For Meijer, of course.
John Q
Sat, Jun 4, 2011 : 3:15 a.m.
".Since most folks buy food products on a consistant basis they know the costs. Here's another thought, how do we know the product is stamped properly if you don't look at the shelf tag?" The price on the shelf doesn't help you when you're at the register. Unless you can memorize all the items in your cart, how do you know what is rung up matches the shelf price?
snapshot
Fri, Jun 3, 2011 : 4:09 a.m.
JohnQ, you must buy different product every time you go "food" shopping, or you "don't" food shop. Since most folks buy food products on a consistant basis they know the costs. Here's another thought, how do we know the product is stamped properly if you don't look at the shelf tag?
John Q
Thu, Jun 2, 2011 : 3 a.m.
Share with us your amazing ability to recall every price on the shelf when it rings up at the register. How do you do that?
Indicat
Thu, Jun 2, 2011 : 1:38 a.m.
There are shelf tags for each item, so you should know the price before you get to the checkout.
Mike Soto
Wed, Jun 1, 2011 : 9:31 p.m.
Of Course Big Businesses will pay way more taxes. Snyder eliminated the loopholes and subsidies. All the rhetoric from the Doomsday people have really took attention away from facts.....
Macabre Sunset
Wed, Jun 1, 2011 : 8:57 p.m.
I'm glad Meijer's management understands the benefits. It was obvious from the outset that the problem with the MBT was that it heavily favored big corporations (and the unions many of them employ). It stifled opportunity while preserving a fading status quo. Michigan can now leap up the charts of states friendly to new business. It was bottom five, and, since small business provides about half of the jobs in America, this was a big part of the reason we have close to a nation-leading unemployment rate.
Angry Moderate
Fri, Jun 3, 2011 : 1:15 a.m.
@njgreg: obviously, having a "business friendly climate" isn't the only factor that determines a state's unemployment rate. You failed to take into account other differences between Michigan and Texas (hint: immigration rates, poverty levels, and education.)
njgreg
Thu, Jun 2, 2011 : 3:05 a.m.
...Yeah, and hopefully with our new business friendly climate we can be as cozy to corporate America as say, Texas? You do know that as of April 2011, Texas ranked 22nd among all states in terms of the percentage of citizens unemployed. This statistic along with many others suggest that being "business friendly" does not always result in jobs, but rather more profits for companies--we mustn't confuse the two.
John Q
Thu, Jun 2, 2011 : 3:01 a.m.
" It was bottom five, and, since small business provides about half of the jobs in America, this was a big part of the reason we have close to a nation-leading unemployment rate." What statistics do you have to back up this claim? Michigan was getting hammered by job losses from large companies due to the problems at the Big 3.