By Mark Robyn
The Tax Foundation

Michigan lawmakers approved significant corporate tax reform last year that went into effect at the beginning of 2012. Previously Michigan had a dual corporate tax system called the Michigan Business Tax (MBT). Under the MBT corporate profits were taxed at a rate of 4.95 percent, and all transactions were taxed at a rate of 0.8 percent (a gross receipts tax, or GRT). In addition, there was a 21.99 percent surcharge on the total tax liability from the MBT. We had been critics of the MBT, specifically the gross receipts tax, since it was implemented in 2008. GRTs are an outdated, economically damaging tax that leads to tax pyramiding (read more here).

In a January 15^th Detroit Free Press article titled “Michigan’s bad business climate reputation is hard to discard,” Tom Walsh reflects on an article in the January 2012 edition of Site Selection magazine.  Site Selection reported on a survey of 12 site consultants at the Mid-America Economic Development Council (MAEDC) conference held in December 2011.  Based on that survey, Indiana, North Dakota, Nebraska, and Iowa were ranked as having the best business climates in the Midwest; Michigan ranked last.  Walsh quotes one of the consultants as saying, “Michigan’s national reputation is very poor and has been for a long time…Michigan could do a complete reversal of course, and it would still take 10 years to reverse its reputation.”