This is our starting text

SB-0633, As Passed Senate, October 25, 2005

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),

(7), and (8), 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) On January 1, 2006 and before January 1, 2007, the rate

under this subsection shall be 1.84%.

(e) Beginning January 1, 2007 and before January 1, 2011, the

rate under this subsection shall first be reduced as provided in

subsection (5) and then further reduced as provided in subsection

(6).

(f) Beginning January 1, 2011 and each January after January

1, 2011, the rate beginning on that January 1 under this subsection

shall be the rate in effect for the immediately preceding tax year

reduced as provided in subsection (5).

(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 (7), if the adjusted tax base

exceeds the following percentages of the sum of gross receipts plus

Senate Bill No. 633 as amended October 25, 2005

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

allocated to this state 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) For tax years that begin before January 1, 2006, 50.0%.

<<(B) FOR TAX YEARS THAT BEGIN ON AND AFTER JANUARY 1, 2006 AND BEFORE JANUARY 1, 2007, 51.4%.>>

January 1 after which the criteria under section 74 have been met,

but before January 1, 2011, and each subsequent tax year until

subdivision (c) applies, <<52.8%>>.

(D) For the first tax year that begins on and after the first

January 1 after an increase in the percentage under subdivision (b)

has occurred and for which the criteria under section 74 have been

met, but before January 1, 2011, and each subsequent tax year until

subdivision (d) applies, <<55.6%>>.

(E) For the first tax year that begins on and after the first

January 1 after an increase in the percentage under subdivision (c)

has occurred and for which the criteria under section 74 have been

met, but before January 1, 2011, and each subsequent tax year until

subdivision (e) applies, <<58.4%>>.

(F) For the first tax year that begins on and after the first

January 1 after an increase in the percentage under subdivision (d)

has occurred and for which the criteria under section 74 have been

met, or January 1, 2011, whichever occurs first, and each

subsequent tax year, <<61.2%>>.

(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 (7), 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) For tax years that begin before January 1, 2006, the

percentage that compensation divided by the tax base exceeds is 63%

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

(b) For tax years that begin on and after January 1, 2006 and

before January 1, 2007, the percentage that compensation divided by

the tax base exceeds is 64.5% and the deduction shall not exceed

35.5% of adjusted tax base.

after which the criteria under section 74 have been met, but before

January 1, 2011, and each subsequent tax year until subdivision (d)

applies, the percentage of compensation divided by the tax base

exceeds is 67.5% and the deduction shall not exceed 32.5% of

adjusted base.

(d) For the first tax year that begins on and after the first

January 1 after an adjustment under subdivision (c) has occurred

and for which the criteria under section 74 have been met, but

before January 1, 2011, and each subsequent tax year until

subdivision (e) applies, the percentage of compensation divided by

the tax base exceeds is 70.5% and the deduction shall not exceed

29.5% of adjusted base.

(e) For the first tax year that begins on and after the first

January 1 after an adjustment under subdivision (d) has occurred

and for which the criteria under section 74 have been met, but

before January 1, 2011, and each subsequent tax year until

subdivision (f) applies, the percentage of compensation divided by

the tax base exceeds is 73.5% and the deduction shall not exceed

26.5% of adjusted base.

(f) For the first tax year that begins on and after the first

January 1 after an adjustment under subdivision (e) has occurred

and for which the criteria under section 74 have been met, or

January 1, 2011, whichever occurs first, and each subsequent tax

year, the percentage of compensation divided by the tax base

exceeds is 76.5% and the deduction shall not exceed 23.5% of

adjusted 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) The rate under subsection (1) shall be reduced as follows:

(a) Beginning on the first January 1 after which the criteria

under section 74 have been met, but before January 1, 2011, and

until a reduction under subdivision (b) has occurred, the rate

shall be the rate that was in effect on the December 31 immediately

preceding that January 1 reduced as provided in subsection (5) and

then reduced by 0.05 percentage point.

(b) Beginning on the first January 1 after which the criteria

under section 74 have been met, but before January 1, 2011, after a

reduction under subdivision (a) has occurred and until a reduction

under subdivision (c) has occurred, the rate shall be the rate that

was in effect on the December 31 immediately preceding that January

1 reduced as provided in subsection (5) and then reduced by 0.1

percentage point.

under section 74 have been met, but before January 1, 2011, after a

reduction under subdivision (b) has occurred and until a reduction

under subdivision (d) has occurred, the rate shall be the rate that

was in effect on the December 31 immediately preceding that January

1 reduced as provided in subsection (5) and then reduced by 0.1

percentage point.

(d) Beginning on the first January 1 after which the criteria

under section 74 have been met, but before January 1, 2011, after a

reduction under subdivision (c) has occurred and until subdivision

(e) applies, the rate shall be the rate that was in effect on the

December 31 immediately preceding the January 1 reduced as provided

in subsection (5) and then reduced by 0.1 percentage point.

(e) Beginning January 1, 2011, the rate under subsection (1)

shall be the rate in effect on December 31, 2010.

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

after January 1, 2007:

(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).

(8) ~~(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. 4972.

(b) House Bill No. 4980.

(d) House Bill No. 5096.

(e) House Bill No. 5097.

(f) House Bill No. 5098.

(g) House Bill No. 5106.