One of the state’s largest business organizations is urging Michigan state lawmakers to bury the state’s “death tax.”
Today the National Federation of Independent Business — or simply NFIB — one of the state’s leading small business organizations, communicated that strong message to the Michigan Legislature. This morning, the Michigan House Tax Committee held a hearing on House Bill 4922, sponsored by Rep. Steve Johnson of Kent County, that would repeal a law that’s been on the books for more than a decade and finally get rid of Michigan’s estate tax.
Charlie Owens serves at State Director for the NFIB. He says, “In the spirit of the upcoming Halloween holiday, NFIB is supporting legislation that would drive a final ‘stake in the heart’ of our estate tax that was created way back in 1899,” and adds, “While it impacts very few people, the inheritance tax in Michigan still does exist.”
In 2001, the federal Economic Growth and Tax Relief Reconciliation Act phased out Michigan’s estate tax over four years, ending its ability to collect any tax in excess of the federal estate tax credited to the state. The only people in Michigan who pay estate tax right now are those who receive property from someone who passed away prior to or on September 30, 1993. Most estates from that time period have been settled and any taxes due have been paid.
However, since Public Act 188 is still on the books, any legislature could amend it and institute a new estate tax in Michigan. That’s why Owens says lawmakers need to get rid of that “bad law” now.
Owens contends, “Eliminating the old law just makes sense because once it’s gone, lawmakers would have to pass new legislation to burden people in Michigan with a higher estate tax. Creating a new law is much more difficult than amending a current one.”
Owens pointed out that state lawmakers tried to amend Public Act 188 during the 2007-2008 legislative session.
Owens argues, “Estate taxes hit small businesses and farmers particularly hard,” suggesting, “That’s because the tax applies to the market value of their assets, not merely to cash. Many small businesses and family farms have millions of dollars in productive capital such as real estate, machinery, vehicles, and inventory they need to operate. Their heirs rarely have enough liquid assets to pay the tax and the consequences are dire: often the small business is sold, employees are laid off, and the operation has to be shut down to liquidate enough assets to pay the tax.”
For more than 75 years, NFIB has been advocating on behalf of America’s small and independent business owners, both in Washington, D.C., and in all 50 state capitals. NFIB is nonprofit, nonpartisan, and member-driven. Since their founding in 1943, NFIB has been exclusively dedicated to small and independent businesses, and remains so today. For more information, you can visit online at nfib.com.
