Michiganís Corporate Income Tax System
Michigan levies a Single Business Tax (SBT), which is a modified value-added tax (VAT). The base of the SBT is, in its simplest form, is the difference between a firmís sales and the cost of materials. The SBT consists of two brackets; all taxable receipts under $45,000 are not taxed, while all receipts over that threshold are taxed at a 1.9% rate. Among states levying corporate taxes, no state had a corporate rate lower than Michiganís, however if the SBT were converted into a corporate income tax the rate would need to be in excess of 14% to yield similar revenues. The Michigan Department of Treasury Office of Revenue and Tax Analysis conducted a study of the SBT in 2003. They determined that in order to raise an equal amount of revenue as the SBT, a Corporate Income Tax of 14.83 percent would be necessary. The analysis covered a time span of 22 years, from 1977 to 1999. 14.83 percent was the average rate that would have been required to raise equal revenue during the 22 year period. However, during that time the analogous rate was as high as 58.17 percent in 1992. In 2004, corporate tax collections reached $182 per capita, ranking it 8th highest nationally.
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