Playlist: Michigan

Tom Ivacko: Most local leaders say personal property tax is complex, but important to their budgets

November 19, 2012 0:02:02
Kaltura Video

Thomas Ivacko is the administrator and program manager of the Ford School's Center for Local, State and Urban Policy. He oversees the Michigan Public Policy Survey program.

Transcript:

The most recent Michigan Public Policy Survey here at the Ford School asks about the personal property tax in Michigan. This is a tax on businesses in the state. It is not on their property in terms of land and buildings, instead it is on personal property like equipment, furniture, computers, artwork and so on. We ask local leaders how important it is for their budget and what we find is 51 percent of leaders say the personal property tax is an important source of revenue. That goes up significantly for the state’s largest communities, 83 percent of them say it is important for their funding. 
There are lots of arguments against the personal property tax, arguments that it is too complex, that it penalizes economic development and so on. What we find is that Michigan’s local government leaders are pretty well split over these arguments. About 42 percent of them think indeed its difficult to administer because it is so complex, so there are concerns about it. But at the end of the day more of these local leaders think that the revenue, the tax rate is worth the difficulties that it presents.
Overall about three-quarters, 74 percent, of Michigan’s local leaders would be OK with eliminating the personal property tax but only if the revenues are replaced in full. If the State replaces less than the full amount, even if they replace most of it, support drops sharply down to about 44 percent. 
And among the state’s largest jurisdictions, the ones that say the revenue is important, it drops even further, only about 23 percent would support eliminating the tax with partial replacement.
There is concern that the state won’t follow through on replacement funding. About 67 percent of leaders don’t trust the State to do that in the long run and so about 68 percent overall of these leaders think that any replacement revenue should be handled locally.  They should raise it locally and retain it there rather than running through the state.