We strive to keep you informed of developments that may have an effect on your business. This month, we detail a proposal seeking to repeal the Personal Property Tax. As the ballot including this plan is to be put to a vote on August 5th, we wanted to make sure we provided our clients with timely information to make an informed decision for themselves and their businesses.
Proposal 14-1 Explained
The August 5, 2014 ballot will include a single proposal 14-1, which would repeal the Personal Property Tax. This is a tax businesses pay on items such as machinery, furniture, computers, and other equipment. The tax is paid directly to local units of government. Each unit sets its rate and uses the revenue to pay for police, fire, local schools, and other public services. The amount paid annual is approximately $590 million. Since many neighboring states don't levy a similar tax, the Personal Property Tax has put Michigan at a disadvantage for retaining and attracting additional jobs.
The State Use Tax is a companion to the sales tax. It's levied on the use, storage, and consumption of certain tangible personal property, plus the services of telephone, telegraph, and other leased wire communication; used auto sales between individuals; and use of motel and hotel rooms. The use tax rate is 6%, and one third is earmarked for school aid.
If the ballot is approved, the portion of the use tax dedicated to local governments, schools, and libraries would be transferred into the Local Community Stabilization Authority to completely replace local governmental unit revenues lost by phasing out the Personal Property Tax. Also, certain eligible industrial and/or commercial personal property will have an essential services assessment levied on it to lessen the financial impact of these changes on the state budget.
We find the ballot language confusing, as there is no mention of the repeal of Personal Property Tax in the wording. We hope you will find this explanation helpful as you consider your decision on Proposal 14-1.
Minimum Wage Changes
As of September 1, 2014, the following minimum wage changes will go into effect for Michigan:
The minimum wage for Michigan workers is raised to $8.15 per hour, effective September 1, 2014. Tipped employees may be paid 38% of this wage, or $3.10 per hour. If the tips received plus the tipped employee minimum hourly wage do not equal or exceed $8.15, the employer must pay any shortfall to the employee. A training wage of $4.25 per hour may be paid to employees 16 to 19 years of age for the first 90 days of their employment. Minors aged 16 and 17 may be paid $7.25 per hour, which is the current Federal minimum wage.
As always, please feel free to give us a call with any questions or concerns you may have regarding Proposal 14-1 or the minimum wage changes detailed above.
