LANSING – Michigan is facing dramatic challenges in our economy. Small business owners have a huge role to play in addressing these challenges and leading our state back to prosperity. When it comes to tax policy, we can’t remain in our comfort zone any longer. Michigan is primed for fundamental tax reform.

The Small Business Association of Michigan is a leader in calling for repeal of the Single Business Tax (SBT). Due largely to our efforts back in 1999 (along with Gov. Engler and State Senator Nancy Cassis) the law was changed to repeal the SBT effective Dec. 31, 2009. More recently, Speaker of the House Craig DeRoche and Oakland County Executive L. Brooks Patterson proposed accelerating the SBT repeal to 2007. SBAM welcomes them to the fight and supports their effort.

While SBAM is confident the SBT will be repealed, it is not the only tax dragging down the Michigan economy. Michigan?s personal property and income taxes are also job killers. Because Michigan?s entire tax system is badly flawed, SBAM is leading the effort for fundamental reform to replace our state tax system with the Michigan Fair Tax Plan.

The Fair Tax proposes to eliminate the SBT, state income tax, personal property tax and sales tax on business-to-business transactions. By eliminating these taxes, state and local government revenues will be reduced by over $19 billion. The Michigan Fair Tax will substantially replace all $19 billion with a new tax system so that government services, including public schools and local government, continue to operate.

In exchange for repealing all state taxes, the current 6% sales tax would rise to approximately 8.5% and be applied to both goods and services. An important feature of the Michigan Fair Tax proposal is that businesses would no longer pay sales taxes and taxes would be applied only once at the point of final consumption. The hidden taxes that result from our current tax system would be gone. Other provisions of the Fair Tax include a ?prebate? to address the regressivity of a sales tax system and remove any negative impact on the poor.

Some politicians have suggested replacing the revenue from the SBT by expanding the state sales tax onto all services. SBAM?s entire professional and grassroots lobbying strength will be focused at defeating any effort to apply sales tax to services until all state business taxes are eliminated, including the payment of sales tax on business-to-business transactions.

Michigan is helping to lead an effort to promote the Michigan Fair Tax along with Rep. Fulton Sheen and other state leaders. Rep. Sheen is Chair of the State House Tax Committee where debate on fundamental tax reform will occur. SBAM members are advised to learn more about the Michigan Fair Tax and ask questions about the impact it has on their business. What we find is that the more details small business people know about the Michigan Fair Tax, the more they support it.

There are many aspects of the Michigan Fair Tax and this short article undoubtedly raises additional questions. Learn more about the Michigan Fair Tax and how to join the campaign at SBAM.org

Barry Cargill is SBAM Vice President Government Relations