Quick, Dramatic Changes in Michigan From the Perspective of a Small Business Owner

It is no surprise I support Gov. Rick Snyder in his effort to change how the State of Michigan deals with their business community, based on my posts and comments on Patch.  There are plenty of talking points on both sides that do not reflect the truth, but are grandstanding to push a point of view.  I thought it might be of value to hear the factual story from the trench on how Michigan used to treat small businesses and how they are changing in their approach.

Like many others I started out working for small and large corporations that were both privately and publicly held.  For the first 20 years of my career I worked full time, went to college at night, paid for it all myself, earned my degrees and advanced in my career.  In that time I set up operations in the U.S., Mexico, Germany, France and China as we expanded our businesses.  From that experience I saw how other states and countries deal with business and their employees. Then things took a dramatic change, we sold off the operations we set up around the world and I put myself out of a job.

In 1998 I entered small business ownership by necessity and survival.  I hung up my shingle marketing my skills to consult to companies with mixed results.  I invested my own (already taxed) money into the new business and did every job from the CEO to emptying the garbage cans; this is the glamorous life of the small business owner.  I paid my taxes at the personal rate, paid both sides of FICA and had to fight for any write off with the IRS and the State of Michigan.  I was audited twice and after many fou-hour meetings over an eight-month period of time I proved to them I owed no additional taxes, in fact they owed me.  This was a waste of time dealing with them which took me away from my business and cost me plenty of money.

Then in 2008 I took out my personal check book and purchased (with already taxed money) a small business that was in decline and in debt.  I had an idea on how to grow the business so I took a personal risk and went to work on the plan.  We were successful; we paid our taxes to the Feds and the state of Michigan.  In Michigan we had to pay corporate tax, then Single Business Tax (SBT) and then as the owner I had to pay personal taxes and the paper value of the company.  I called it the triple tax and all of them were very complex and I had to pay accounting services to just figure out what I owed.  Keep in mind we are a small business with less than $1 million in revenue.

For three years (2008, 2009 & 2010) the State of Michigan could not tell us what our SBT was going to be until February of the following year that already passed.  We made quarterly SBT payments based on what we thought they were going to do.  Well the Governor changed the rate, added surtaxes and adjusted the number up every year after the fact, so no planning could prepare you for that expense.  To add insult to injury, since I could not read their mind every one of those years and pay the right quarterly amounts I was charged a penalty and interest on the shortage.

In 2012 things have dramatically changed, with the SBT gone I no longer have to pay the triple tax, only a double tax.  This frees up time and money to further invest in my operations and expand.  This is a move in the right direction to help business be attracted to Michigan for expansion and investment.  We now know the rules and can plan with confidence, not like a few years ago.  Michigan is still low on the scale that measures states to states, but moving in the right direction.

If we read the paper and posts on the subject it says we are taxing the seniors’ pensions to pay for the elimination of the SBT. My parents and mother-in-law both have been middle class folks all their life and have private company pensions that have been taxed in Michigan. They both were very afraid of the grandstanding comments about them paying for the elimination of the SBT.  So I did a fact-based analysis and found out under the new plan they had no impact at all to taxes on their pensions.  So we explored that with others in their same situation and found out the facts still hold, there is no impact to them.

The impact is to the public sector pensions that have not been taxed and now will be like the private sector tax payers.  This is a fact; you draw your own conclusions.  The government at all levels has decided to have us fight against each other as a distraction, using many different techniques and diversions.  We need to hold them accountable to delivering a value and be good stewards with our money, not waste it.

Do you want to continue the personal attacks between ourselves, or, hold our elected officials accountable?  I think you know where I stand on this question.