News Story

Small Biz Advocates: Teacher Union Wrong about “Tax Break for Rich CEOs”

The Michigan Education Association has put up billboards criticizing Gov. Rick Snyder’s tax reform saying it created a “$1.8 billion tax break for rich CEOs.”

While it is true that all businesses will likely benefit from Snyder’s dumping of the much maligned Michigan Business Tax and the switchover to a Corporate Income Tax, those who lobby for Michigan’s small businesses at the state capitol say it is small businesses that are the biggest winners with the change. Furthermore, they argue that the bigger businesses are the ones targeted with the new 6-percent Corporate Income Tax.

The Michigan Business Tax, which will be replaced in January, would have raised $1.99 billion in 2012-13. The new Corporate Income Tax is expected to raise $780 million in 2012-13, according to James Hohman, assistant director of fiscal policy at the Mackinac Center for Public Policy.

But C-Corporations, or those larger businesses that typically have stock and a board of directors, are the only businesses paying the Corporate Income Tax. C-Corps with gross receipts totaling $350,000 or less are exempt from the new tax.

“Small businesses are probably the biggest winners here,” Hohman said.

Two lobbyists who represent small businesses in Michigan agree.

“That’s a lie from the Left – ‘big, corporate CEOs are making out like bandits’,” said Charles Owens, state director of the National Federation of Independent Businesses, referencing the MEA billboards. “They actually aren’t. It is the small mom-and-pop and mid-sized businesses that are being incentivized. … If you look at the job creation numbers, that’s where all the jobs are coming from.”

The Small Business Association of Michigan considers the Corporate Income Tax to be the “one of the most significant tax reform efforts in this state in decades” because it creates relief for small businesses, said Dave Jessup, the director of government relations for SBAM.

“It doesn’t give preferential treatment to the large companies,” Jessup said.

Jessup said large businesses could be hurt by Snyder’s tax reform because a lot of the tax credits they received have been eliminated.

“In fact, if it hurts anyone, it’s the large C-Corps,” he said.


See also:

Michigan Business Owner: Tax Reform Means 'Our Company Will Create Jobs'

Commentary: Courage, Cuts, K-12 and the Snyder Business Tax

Gov. Snyder v. Rachel Maddow

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.