The Detroit News is reporting that the State Republican lawmakers are on the verge of cutting state taxes in half for 32,000 small businesses by month’s end. However, Gov. Jennifer Granholm may oppose the tax cut unless supporters for the proposal can find a way to pay for it without cutting more from the State’s budget.
Under the GOP proposal, small businesses that pay an alternative tax to the state’s main business tax would see their rate drop immediately from 2 % to 1%. The cut would save 32,000 businesses an average of $938 annually while costing the state budget about $30 million a year.
While the first year of lost tax revenue would be covered by a recent state funding surplus, Republicans have not put forth a plan which will address the loss of future revenues.
Keith Carey, a Lansing lobbyist for the National Federation of Independent Business, welcomed the proposal. “I wouldn’t describe it as a momentous piece of tax relief,” he said. “But it’s very important. It’s broad-based tax relief for small business. It doesn’t pick winners and losers.”
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