August 23, 2006, Introduced by Reps. Byrum and Bieda and referred to the Committee on Tax Policy.
A bill to provide for the preservation of certain credits for
certain economic development activities.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. This act shall be known and may be cited as the
"economic development credit preservation act".
Sec. 2. As used in this act:
(a) "Adjusted services performed in a designated renaissance
zone" means either of the following:
(i) Except as provided in subparagraph (ii), the sum of the
taxpayer's payroll for services performed in a designated
renaissance zone plus an amount equal to the amount deducted in
arriving at federal taxable income for the tax year for
depreciation, amortization, or immediate or accelerated write-off
for tangible property exempt under section 7ff of the general
property tax act, 1893 PA 206, MCL 211.7ff, in the tax year or, for
new property, in the immediately following tax year.
(ii) For a partnership, limited liability company, S
corporation, or individual, the amount determined under
subparagraph (i) plus the product of the following as related to the
taxpayer if greater than zero:
(A) Federal taxable income, except that for a taxpayer other
than a corporation, that part of federal taxable income derived
from business activity, including, for a partnership, payments and
items of income and expense that are attributable to business
activity of the partnership and separately reported to the
partners.
(B) The ratio of the taxpayer's total sales in this state
during the tax year to the taxpayer's total sales everywhere during
the tax year.
(C) The renaissance zone business activity factor.
(b) "Casino" means a casino regulated by this state pursuant
to the Michigan gaming control and revenue act, Initiated Law of
1996, MCL 432.201 to 432.226.
(c) "Michigan economic growth authority" means the Michigan
economic growth authority created in the Michigan economic growth
authority act, 1995 PA 24, MCL 207.801 to 207.810.
(d) "New property" means property that has not been subject to
or exempt from the collection of taxes under the general property
tax act, 1893 PA 206, MCL 211.1 to 211.157, and has not been
subject to or exempt from ad valorem property taxes levied in any
other state, except that property exempt as inventory property does
not disqualify property as new property.
(e) "Payroll" means total salaries and wages before deducting
any personal or dependency exemptions.
(f) "Renaissance zone" means that term as defined in section 3
of the Michigan renaissance zone act, 1996 PA 376, MCL 125.2683.
(g) "Renaissance zone business activity factor" means a
fraction, the numerator of which is the ratio of the average value
of the taxpayer's property located in a designated renaissance zone
to the average value of the taxpayer's property in this state plus
the ratio of the taxpayer's payroll for services performed in a
designated renaissance zone to all of the taxpayer's payroll in
this state and the denominator of which is 2.
Sec. 3. (1) If the single business tax act, 1975 PA 225, MCL
208.1 to 208.145, is repealed for tax years beginning after
December 31, 2007, then for tax years beginning after December 31
2007, a taxpayer for whom credits under sections 37c(1) and
38g(20)(a)(i) and (b)(i) of former 1975 PA 228 have been initially
approved by a resolution of the Michigan economic growth authority
adopted before January 1, 2007 may claim a credit under a tax
designated by law as the successor tax to the single business tax.
The Michigan economic growth authority shall annually determine the
amount of the credits allowed under this section in the manner
provided under sections 37c and 38g(20)(a)(i) and (b)(i) of former
1975 PA 228 and shall issue a certificate to the taxpayer as
provided in sections 37c and 38g(21) of former 1975 PA 228. The
number of years for which the credit may be claimed under a tax
designated by law as a successor tax to the single business tax
shall equal the maximum number of years designated in the
resolution reduced by the number of years for which a credit has
been claimed under sections 37c and 38g(20)(a)(i) and (b)(i) of
former 1975 PA 228.
(2) A taxpayer that claims a credit under subsection (1) that
has an agreement with the Michigan economic growth authority based
on qualified new jobs as defined in section 3(n)(ii) of the Michigan
economic growth authority act, 1995 PA 24, MCL 207.803, that
removes from this state 51% or more of those qualified new jobs
within 3 years after the first year in which the taxpayer claims a
credit described in subsection (1) shall pay to the department no
later than 12 months after those qualified new jobs are removed
from the state an amount equal to the total of all credits
described in subsection (1) that were claimed by the taxpayer.
(3) If the sum of the credits allowed under sections 37c and
38g(20)(a)(i) and (b)(i) of former 1975 PA 228 exceeds the tax
liability of the taxpayer for the tax year under a tax designated
by law as a successor tax to the single business tax, the excess
shall be refunded to the taxpayer.
Sec. 4. (1) If the single business tax act, 1975 PA 228, MCL
208.1 to 208.145, is repealed for tax years beginning after
December 31, 2007, except as provided in subsection (2) and for tax
years that begin after December 31, 2007, a taxpayer that is a
business located and conducting business activity within a
renaissance zone may claim a credit against a tax designated by law
as the successor tax to the single business tax for the tax year to
the extent and for the duration provided in the Michigan
renaissance zone act, 1996 PA 376, MCL 125.2681 to 125.2696, equal
to the lesser of the following:
(a) The tax liability attributable to business activity
conducted within a renaissance zone in the tax year.
(b) Ten percent of adjusted services performed in a designated
renaissance zone.
(c) For a taxpayer located and conducting business activity in
a renaissance zone before December 31, 2007, the product of the
following:
(i) The credit claimed under section 39b of former 1975 PA 228
for the tax year ending in 2007.
(ii) The ratio of the taxpayer's payroll in this state in the
tax year divided by the taxpayer's payroll in this state in its tax
year ending in 2007 under former 1975 PA 228.
(iii) The ratio of the taxpayer's renaissance zone business
activity factor for the tax year to the taxpayer's renaissance zone
business activity factor for its tax year ending in 2007 under
section 39b of former 1975 PA 228.
(2) Any portion of the taxpayer's tax liability under a tax
designated by law as the successor tax to the single business tax
that is attributable to illegal activity conducted in the
renaissance zone shall not be used to calculate a credit under this
section.
(3) The credit allowed under this section continues through
the tax year in which the renaissance zone designation expires.
(4) The credit allowed under this section shall not exceed the
tax liability under a tax designated by law as the successor tax to
the single business tax of the taxpayer for the tax year.
(5) A taxpayer that claims a credit under this section shall
not employ, pay a speaker fee to, or provide any remuneration,
compensation, or consideration to any person employed by the state,
the state administrative board created in 1921 PA 2, MCL 17.1 to
17.3, or the renaissance zone review board created in 1996 PA 376,
MCL 125.2681 to 125.2696, whose employment relates or related in
any way to the authorization or enforcement of the credit allowed
under this section for any year in which the taxpayer claims a
credit under this section against the taxpayer's tax liability
under a tax designated by law as the successor tax to the single
business tax for the 3 years after the last year that a credit
under this section is claimed.
(6) To be eligible for the credit allowed under this section,
an otherwise qualified taxpayer shall file an annual return under
this act.
(7) Any portion of the taxpayer's tax liability under a tax
designated by law as the successor tax to the single business tax
that is attributable to business activity related to the operation
of a casino, and business activity that is associated or affiliated
with the operation of a casino including, but not limited to, the
operation of a parking lot, hotel, motel, or retail store, shall
not be used to calculate a credit under this section.