WASHINGTON DC – Michigan’s tax climate has seen a substantial improvement in 2012, leaping to 7th from 49th in corporate rankings and to 12th from 18th overall, according to the just released Tax Foundation?s 2013 State Business Tax Climate Index.
The Index represents the tax climate of each state as of July 1, 2012, the first day of the standard 2013 state fiscal year. According to the report, the 2011 elimination of the complicated Michigan Business Tax contributed significantly to the sizable leap.
Gov. Rick Snyder and the legislature replaced the cumbersome tax with a flat 6 percent Corporate Income Tax, which took effect Jan. 1. Largely free of special tax preferences, the tax is the most competitive in the Midwest and among the best in the nation.
Eliminating the Michigan Business Tax gutted many of the tax credits and exemptions carved into the code, Snyder told the Detroit News.
?What it really did was help small and medium-size businesses,? Snyder said.
By comparison, the Tax Foundation ranked only one Great Lakes state ahead of Michigan ? Indiana, at #11. Trailing Michigan are Pennsylvania (19th), Illinois (29th), Ohio (39th), Wisconsin (43rd), Minnesota (45th) and New York (50th).
Additionally, several other states vying to be automotive manufacturing hubs finished behind Michigan: Tennessee (15th), Mississippi (17th), Alabama (21st) and Georgia (34th).
The Tax Foundation first announced Michigan?s tax climate improvements in February. The newly released 2013 Index confirms the preliminary findings: Michigan?s tax reforms are a major improvement for the state?s business tax system.
?It?s rare you see such a leap in one year,? Tax Foundation Vice President Joseph Henchman told the News.
The Tax Foundation is a nonpartisan tax research group based in Washington, D.C.
