The debate at the state Capitol to get rid of Michigan’s tax on most industrial equipment began Wednesday with a Senate hearing. Manufacturers say this is overdue tax relief targeting the biggest sector of the state’s economy. Local government leaders say the plan threatens their ability to deliver services.
Local governments and school districts say the Republican-drafted plan will pile a new round of financial pressures on communities that rely on factories for tax revenue.
Utica Mayor Jacqueline Noonan warns of the impact.
“It’ll push some communities into insolvency, bankruptcy," she says. "For others, they will cut police, fire, essential services.”
Or, Noonan says, some local governments might have to raise other taxes.
There is a tradeoff, says Mike Johnston of the Michigan Manufacturers Association. He says manufacturing created half the new jobs in the state last year.
“So we are at the beginning of a recovery," he maintains. "Now is the time to ensure a sustained recovery by getting rid of this barrier to competition.”
Johnston says Michigan and Indiana are the only states in the Midwest that still tax industrial property.