GRAND RAPIDS, Mich. (WOOD) — Tab DeJonge has a pretty good handle on what Michigan’s personal property tax does to his bottom line.
Not only does the co-owner of Constructive Sheet Metal in Grand Rapids have to pay sales tax when purchasing the machinery that keeps his company up and running, but he also has to write the state an annual check just for owning the equipment.
Imagine if the same tax was levied on the average citizen, he said.
“You take everything you have in your home that you purchased, you paid sales tax on, you add the 6%. Now let’s come back and I’ll start charging you for your hair brush, your blower, your whatever,” DeJonge said. “At the end of the year, you end up paying $2,000. That comes out of your personal budget for your house. Now you can’t go out to eat. You can’t to the movies. You can’t go to the beach.”
For years, business owners have complained about the personal property tax. It taxes equipment like the half-dozen machines that cut and shape sheet metal at DeJonge’s South Division Avenue factory.
“It cuts into bonuses, wages, our ability to upgrade equipment,” DeJonge said.
But the agencies that benefit from it — schools, cities and other local units of government that use the tax to pay for vital services like public safety — for years fought to keep it.
Proposal 1, which will be put before Michigan voters in August, would put an end to the personal property tax.
It is the result of business and government, under the leadership of Michigan Lt. Gov. Brian Calley, working together to come up with a solution.
The ballot initiative will ask voters to allow the state to shift usage fees — the fee you already pay when you lease a car or use other services not subject to the state sales tax — to take the place of the personal property tax.
The tax puts about $1.2 million annually into the hands of the City of Grand Rapids. The revised revenue stream would account for the same amount of money.
“Nobody’s paying more. Everyone’s paying the same. There’s no change in the landscape of taxation. It’ just how the funds are allocated,” Grand Rapids Deputy City Manager Eric DeLong explained. “This program is a way to achieve business tax relief so it will spur business and also guarantee this money will be replaced. So it’s a win-win for both business and government.”
But will voters be aware of what they’re deciding when they go to the polls on Aug. 5?
Explaining the measure and its importance was one reason for a Tuesday news conference at DeJonge’s factory organized by Michigan Citizens for Strong and Safe Communities.
“I think its a compelling story,” DeLong said. “When people understand the story, I think they’ll support it. ”
The group is also launching an online contest to find the oldest taxed piece of machinery in Michigan.
Proposal 1 is the only statewide proposal on the Aug. 5 primary ballot.