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SB-0633, As Passed House, November 10, 2005

HOUSE SUBSTITUTE FOR

SENATE BILL NO. 633

A bill to amend 1975 PA 228, entitled

"Single business tax act,"

by amending section 31 (MCL 208.31), as amended by 1999 PA 115.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 31. (1) Except as provided in subsections (5) and (6),

there is levied and imposed a specific tax upon the adjusted tax

base of every person with business activity in this state that is

allocated or apportioned to this state at the following rates for

the specified periods:

(a) Before October 1, 1994, 2.35%.

(b) After September 30, 1994 and before January 1, 1999,

2.30%.

the rate under this subsection shall be reduced as provided in

subsection (5).

(d) Beginning January 1, 2009, the rate under this subsection

shall be 1.85%.

(2) As used in this section, "adjusted tax base" means the tax

base allocated or apportioned to this state pursuant to chapter 3

with the adjustments prescribed by sections 23 and 23b and the

exemptions prescribed by section 35. ~~If the adjusted tax base~~

~~exceeds 50% of the sum of gross receipts plus the adjustments~~

~~provided in section 23b(a) to (g), apportioned or allocated to~~

~~Michigan with the apportionment fraction calculated pursuant to~~

~~chapter 3, the adjusted tax base may, at the option of the~~

~~taxpayer, be reduced by that excess.~~ If a taxpayer reduces the

adjusted tax base under this subsection, the taxpayer is not

entitled to the adjustment provided in subsection (4) for the same

taxable year. This subsection does not apply to an adjusted tax

base under section 22a. For the specified years and except as

otherwise provided in subsection (6), if the adjusted tax base

exceeds the following percentages of the sum of gross receipts plus

the adjustments provided in section 23b(a) to (g), apportioned or

allocated to Michigan with the apportionment fraction calculated

pursuant to chapter 3, the adjusted tax base may, at the option of

the taxpayer, be reduced by that excess:

(a) Before January 1, 2009, 50.0%.

(b) Beginning on and after January 1, 2009, 51.4%.

(3) The tax levied under this section and imposed is upon the

privilege of doing business and not upon income.

(4) In lieu of the reduction provided in subsection (2), a

person may elect to reduce the adjusted tax base ~~by the percentage~~

~~that the compensation divided by the tax base exceeds 63%. The~~

~~deduction shall not exceed 37% of the adjusted tax base.~~ pursuant

to this subsection. For purposes of computing the deduction allowed

by this subsection, as effective for the respective tax year,

compensation does not include amounts of compensation exempt from

tax under section 35(1)(e). This subsection does not apply to an

adjusted tax base under section 22a. Except as otherwise provided

in subsection (6), a person may elect to reduce the adjusted tax

base by the percentage that the compensation divided by the tax

base exceeds the following percentages for the specified years and

the deduction shall not exceed the following percentages of the

adjusted tax base:

(a) Before January 1, 2009, the percentage that compensation

divided by the tax base exceeds 63% and the deduction shall not

exceed 37% of adjusted tax base.

(b) Beginning on and after January 1, 2009, the percentage

that compensation divided by the tax base exceeds 64.7% and the

deduction shall not exceed 35.3% of adjusted tax base.

(5) If the comprehensive annual financial report of this state

for a state fiscal year, published pursuant to section 494 of the

management and budget act, 1984 PA 431, MCL 18.1494, reports an

ending balance of more than $250,000,000.00 in the countercyclical

budget and economic stabilization fund created under section 351 of

the management and budget act, 1984 PA 431, MCL 18.1351, for that

state fiscal year, the tax rate under this section shall be reduced

by 0.1 percentage point on the January 1 following the end of the

state fiscal year for which the report was issued.

(6) All of the following apply for tax years beginning on and

after January 1, 2009:

(a) A taxpayer may elect to reduce its tax base using the

percentage allowed under subsection (2)(a) if the taxpayer

calculates tax liability using the rate determined pursuant to

subsection (1)(c).

(b) A taxpayer may elect to reduce its tax base and claim a

deduction using the percentages allowed under subsection (4)(a) if

the taxpayer calculates tax liability using the rate determined

pursuant to subsection (1)(c).

(7) ~~(6)~~ The department shall annualize the rate under this

section as necessary, and the applicable annualized rate shall be

imposed.

Enacting section 1. This amendatory act does not take effect

unless all of the following bills of the 93rd Legislature are

enacted into law:

(a) House Bill No. 4342.

(b) House Bill No. 4972.

(d) House Bill No. 4980.

(e) House Bill No. 5095.

(f) House Bill No. 5096.

(g) House Bill No. 5097.

(h) House Bill No. 5098.

(i) House Bill No. 5106.