Michigan Chamber of Commerce

Closing some 'loopholes' in the state's tax code can generate an extra $1 billion, according to the Michigan Chamber of Commerce.

The Michigan Chamber of Commerce today released a list of tax code reforms as an alternative to the business tax increases.

The list identifies over $1 billion worth of tax exemptions enjoyed by non-profits, schools, and local governments that could be repealed in order to balance the state budget.

"This would be more than enough to cover Michigan's budget 'shortfall' and is what you might call a 'start at home' list of recommendations," said Tricia Kinley, Director of Tax Policy and Economic Development for the Michigan Chamber.

The League recommendations would result in tax increases on food vendors and distributors, telecommunications companies, small business owners, truck operators, and more.

The List of Alternative Tax Code Changes

• Nonprofit Organizations – Exempts sales to nonprofit schools, hospitals, homes for the care of children or aged persons, and other benevolent institutions operated by an entity of government, a regularly-organized church, a religious or fraternal organization, a veteran's organization, a nonprofit corporation, or a parent-cooperative preschool.
  Savings: $174,752,000.
  
• Tax-Exempt Public Education Property – Exempts real property owned, leased, loaned or otherwise made available to school districts if the property is used primarily for public school purposes.
  Savings: $455,000,000.
  
• Tax-Exempt Countyand Municipal Property – Exempts real property owned by counties, townships, cities, villages, and school districts.
  Savings: $244,000,000.
  
• Tax-Exempt Other Real Tax Exempt Property – Exempts other real property including hospitals, charitable institutions, selected nonprofit organizations, cemeteries, and utilities.
  Savings: $155,000,000.
  
• Municipal Franchise Vehicles – Refunds gasoline tax to persons operating passenger vehicles under a municipal franchise, license, permit, agreement or grant, such as taxi cabs.
  Savings: $430,000.
  
• Public Vehicles – Exempts fuel purchased for motor vehicles owned or leased by state, federal, or local governments from motor fuel taxes.
  Savings: $13,900,000.
  
  Source: Executive Budget Appendix on Tax Credits, Deductions, and Exemptions Fiscal Year 2008

"Government employee pension reform and a single school election date are two direct ways that local governments and schools could save money without tax increases," said Kinley. "Unfortunately, schools and local governments have shown minimal interest in meaningful cost-saving measures."

"Especially at a time when more and more schools, local governments, and non-profits are engaging in direct competition with private, taxpaying employers, maybe it's time that lawmakers to consider repealing their tax exempt status and save Michigan billions of dollars," Kinley concluded.

The Michigan Chamber of Commerce is a statewide business advocacy organization representing over 7,100 employers, trade associations, and local chambers of commerce.