Background Briefing

MICHIGAN TAX REVENUE Jim Stansell, Senior Economist June 2015

Fiscal information in this briefing is based on May 2015 Consensus Revenue Estimates.

MAJOR STATE TAXES

Major State Taxes 

Individual Income Tax



Sales and Use taxes



Business taxes – – – –



Corporate Income Tax (CIT) Michigan Business Tax (MBT) Single Business Tax (SBT) Insurance company taxes

State property taxes – State Education Tax (SET) – Real Estate Transfer Tax (RET)

House Fiscal Agency: June 2015

3

Major State Taxes 

Total combined FY 2015-16 School Aid Fund (SAF) and General Fund/General Purpose (GF/GP) tax revenue is estimated to be $20,972.5 million



The largest sources of revenue are (in millions): Individual Income Tax $8,938.9



Sales Tax

$6,933.7

Use Tax

$1,396.4

State Education Tax

$1,861.9

Real Estate Transfer Tax

$268.4

Business taxes Corporate Income Tax (CIT) Michigan Business Tax (MBT) Single Business Tax (SBT) Insurance company taxes

$573.3

These account for almost 90% of all SAF and GF/GP tax revenue

House Fiscal Agency: June 2015

4

Individual Income Tax 

Base starts with federal adjusted gross income



TY 2014 Rate = 4.25%



$4,000 personal exemption



Retirement income taxable for most filers born after 1946



Refundable property tax credit for homeowners and renters



Estimated Distribution in FY 2015-16 – Approximately 28.7% to SAF – Approximately 71.3% to GF/GP

House Fiscal Agency: June 2015

5

Sales and Use Taxes 

Sales Tax – 6% levied on retail sale of tangible personal property for use or consumption – Major Exemptions: food, prescription drugs – Estimated Distribution in FY 2015-16  72.8% to SAF  15.9% to GF/GP  10.1% to local units (Constitutional revenue sharing)  1.2% to the Comprehensive Transportation Fund



Use Tax – 6% levied on some services, telephone/utility services, motor vehicle leases and private sales, hotels/motels – Complements sales tax – Estimated Distribution in FY 2015-16  35.6% to SAF  64.4% to GF/GP

House Fiscal Agency: June 2015

6

Business Taxes 

Corporate Income Tax (CIT) – Replaced MBT effective January 1, 2012; MBT will be repealed after all existing certificated credits have been claimed – Business income taxed at 6% – CIT only applies to C corporations – Certificated credits awarded under the MBT will be retained for the duration of the agreements provided a taxpayer continues to file under the MBT – No CIT credits, except for the small business credit



Disposition of CIT: – 100% to GF/GP

House Fiscal Agency: June 2015

7

Business Taxes 

Michigan Business Tax (MBT) – Although the CIT has replaced the MBT as the primary tax on business activity, taxpayers that have outstanding certificated credits may still file under the MBT until the credits have expired – Existing credits are anticipated to extend through at least 2030, and could reduce GF/GP revenue by as much as $900 million annually. – Disposition of MBT: 100% to GF/GP



Insurance Company Taxes – Levied on gross premiums of out-of-state insurance companies – Effective tax rate 1.25% – Disposition of Insurance taxes: 100% to GF/GP

House Fiscal Agency: June 2015

8

State Property Taxes 

State Education Tax (SET): 6-mill levy on taxable value of real and some personal property



Real Estate Transfer Tax (RET): 0.75% of fair market value of real property



Disposition of SET and RET: 100% to SAF

House Fiscal Agency: June 2015

9

Tax Revenue by Source As a Percent of Michigan Personal Income 3.0%

2.0%

1.0%

0.0%

FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 (Est) (Est) (Est) Individual Income Tax Sales and Use Taxes Business Taxes State Property Taxes House Fiscal Agency: June 2015

10

RECENTLY ENACTED TAX CHANGES

Personal Property Tax Changes 

Public Acts 397-404 and 406-408, of 2012.



Exempts all commercial and industrial personal property owned by a single taxpayer in a local unit provided the combined market value is $80,000 or less, effective January 1, 2014.



Eliminates personal property taxes on “eligible manufacturing personal property” (a new definition within the legislation) acquired before 2006 or after 2012, effective January 1, 2016.



Eligible manufacturing personal property (EMPP) acquired between 2006 and 2012 will be exempted one year at a time so that by 2023, all eligible manufacturing personal property will be exempt.

House Fiscal Agency: June 2015

12

Personal Property Tax Changes 

In August 2014, a statewide election approved a use tax levy by the Metropolitan Areas Metropolitan Authority (MAMA) created by the legislation.



Beginning in FY 2015-16, the MAMA will levy a portion of the 6% statewide use tax to reimburse local units of government for the revenue loss based on formulas contained within the legislation.



Beginning January 1, 2016, the state will levy a special assessment against taxpayers benefitting from the PPT elimination to help offset some of the revenue loss.



The net reduction in GF/GP revenue is estimated to be about $125.0 million in FY 2015-16 and $350.0 million in FY 2016-17. When fully implemented, the annual GF/GP revenue reduction will be about $500.0 million.

House Fiscal Agency: June 2015

13

MAJOR STATE FUNDS

Major State Funds 

Earmarking: dedication or restriction of an amount or percentage of revenue from a source to a specific fund or purpose



School Aid Fund (SAF) – Used primarily for K-12 education – Major sources include sales and use taxes, individual income tax, 6-mill state education tax, tobacco taxes, the real estate transfer tax, and state lottery revenue



General Fund/General Purpose (GF/GP) – Appropriated for any/all budget area(s) – Major sources include individual income tax, sales and use taxes, and net business taxes

House Fiscal Agency: June 2015

15

School Aid Fund Tax and Lottery Revenue Estimated FY 2015-16 Total = $12,242.9 million

State Education Tax $1,861.9 15.2%

Income Tax Earmarking $2,561.9 20.9%

Lottery Transfer $791.0 6.5% Use Tax $497.5 4.1% Cigarette Tax $341.6 2.8% Sales Tax $5,690.8 46.5%

Real Estate Transfer Tax $268.4 2.2% Casino Wagering Tax $112.7 0.9% Liquor Excise Tax $47.6 0.4%

House Fiscal Agency: June 2015

Other SAF Taxes $69.5 0.6%

16

GF/GP Tax Revenue Estimated FY 2015-16 Total = $9,520.6 million* Sales Tax $1,242.9 13.1%

Use Tax $898.9 9.4%

Individual Income Tax $6,377.0 67.0%

* Does not include GF/GP non-tax revenue of $361.3 million. House Fiscal Agency: June 2015

Business Taxes $573.3 6.0% Tobacco Taxes $180.5 1.9% Other GF/GP Taxes $147.5 1.5% Liquor, Beer, & Wine Taxes $100.5 1.1%

17

Combined GF/GP and School Aid Fund Tax and Lottery Revenue Estimated FY 2015-16 Total = $21,763.5 million* Sales Tax $6,933.7 31.9%

State Education Tax $1,861.9 8.6% Use Tax $1,396.4 6.4% Lottery $791.0 3.6%

Individual Income Tax $8,938.9 41.1%

* Does not include GF/GP non-tax revenue of $361.3 million. House Fiscal Agency: June 2015

Other GF/GP & SAF Taxes $746.2 3.4% Business Taxes $573.3 2.6% Tobacco Taxes $522.1 2.4%

18

Trends in GF/GP and SAF Revenue 

Change in SAF and GF/GP revenue from previous fiscal year: – – – –



FY 2007-08 saw increases due primarily to tax changes Great recession reduced FY 2008-09 and FY 2009-10 revenue Economic recovery increased FY 2010-11 revenue Projected increases in FY 2014-15 and FY 2015-16 due to economic gains largely offset by business tax cuts

As a % of Michigan personal income (relative to Michigan’s economy): – SAF revenue estimated to decline from 3.3% in FY 2000-01 to 2.8% in FY 2016-17 – GF/GP revenue is estimated to decline from 3.3% in FY 2000-01 to 2.2% in FY 2016-17



SAF and GF/GP Revenue – Between FY 2000-01 and FY 2015-16, average annual SAF growth is expected to be 1.4% – Between FY 2000-01 and FY 2015-16, average annual GF/GP growth is expected to be 0.0%.

House Fiscal Agency: June 2015

19

FY01 FY02 FY03 FY04 FY05

House Fiscal Agency: June 2015

FY06 FY07 FY08

SAF FY09 FY10

$432.7

FY13 FY14

$1,134.5

$1,072.8

$355.9 $239.6

FY15 (Est)

$359.7 $157.0

$362.6 $706.3

FY12

($543.9)

$250.9

-$369.4

-$106.6 ($608.7)

$359.9

$71.2 $32.4

$172.1

$294.6 $289.1

$72.8

$580.8

$139.9

$104.7

$390.9 $316.0

FY11

$433.4

($2,049.7)

-$590.9

($26.6)

-$99.4

($452.6)

($553.3)

($778.2)

Millions

Revenue Change From Previous Fiscal Year

FY16 (Est) FY17 (Est)

GF/GP

20

SAF and GF/GP Revenue As a Percent of Michigan Personal Income

3.3%

3.3%

3.3%

3.4%

3.3%

3.3%

3.3%

3.2%

3.3%

3.2%

3.3%

3.1%

3.1% 2.9%

3.0% 2.8%

2.8% 2.5%

2.8%

2.9%

2.9%

2.8%

2.8%

2.3%

2.3%

2.2%

2.9% 2.7%

2.7% 2.4%

2.4% 2.2%

2.4%

2.5% 2.2%

FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 SAF House Fiscal Agency: June 2015

2.8%

FY15 FY16 FY17 (Est) (Est) (Est)

GF/GP 21

SAF and GF/GP Revenue

$10,681 $9,994 $10,134

$10,715 $10,615

$11,153 $10,910 $11,082

$11,513 $10,922 $10,816

$11,248

$10,879

$11,270

$11,521

$10,337

$9,889 $9,902 $9,349

$8,897 $8,969

$9,258 $9,232 $9,264

$8,813

$9,247

$11,883

$12,599 $12,243

$9,725 $9,882

$9,563

$10,122

$9,019

$8,287 $7,679

FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 SAF

House Fiscal Agency: June 2015

FY15 FY16 FY17 (Est) (Est) (Est)

GF/GP

22

Revenue: House Fiscal Agency Role 

Prepare House Fiscal Agency forecast as part of consensus estimates – National and state economic forecast – GF/GP and SAF forecast



Review and estimate fiscal impact of bills discussed in Tax Policy, Commerce, and other standing committees



Prepare documents for House members – Revenue Source and Distribution: June – Revenue Review: Quarterly

House Fiscal Agency: June 2015

23

For more information about Michigan Tax Revenue, contact: Jim Stansell, Senior Economist [email protected] (517) 373-8080

Michigan Tax Revenue - Michigan House of Representatives

Michigan Business Tax (MBT). – Single .... $125.0 million in FY 2015-16 and $350.0 million in FY 2016-17. When fully ... Trends in GF/GP and SAF Revenue.

129KB Sizes 1 Downloads 242 Views

Recommend Documents

Michigan Department of Education Strategic Plan - State of Michigan
Systemic Infrastructure: Monitoring and Accountability . ..... Develop a menu of evidence-based strategies, tools and educator competencies to support Deeper ...

reforming juvenile justicein michigan - Michigan Committee on ...
Nov 4, 2015 - deterrent for crime, the approach seeks alternative sentenc- ing for low level, ... aside new beds in treatment programs, intermediate sanc-.

PSTP Save the Date 16 - Michigan Medicine - University of Michigan
Mar 18, 2016 - Sponsored by the Pharmacological Sciences Training Program. Program Schedule: 8:30am Registration and Breakfast – BSRB Atrium and.

Michigan Department of Education Strategic Plan - State of Michigan
National Implementation Research Network . .... Strategic Partnerships: Parent, Family, & Community Services . .... Page 3 ...

Michigan Girls State Application Michigan Girls State ...
Girls State Chairmen: Please mail this section with the (non-refundable) $10.00 application fee, for reservation # _____, or include your reservation form and sponsorship fee of ($310.00 before 12/31/13 or $325 after 12/31/13), and mail to ALA Depart

Michigan vs Michigan State Live Streaming NCAA ...
1 hour ago - Wolverines vs Michigan State Spartans live on internet, Michigan State ... I think, you are surfing internet for get your favorite teams match ...

Michigan Services
surveys collected in 2014–2015 and 2015–2016 from U.S. K–12 school principals. These data are from a multi-year Google-Gallup study of U.S. K–12 students, parents, teachers, principals, and superintendents. This report: goo.gl/AxHyMz. All rep

Social Studies Standards - Minnesota House of Representatives
May 15, 2004 - civilization to western Europe, India and Africa. 2. Students will describe the expansion of the. Chinese Empire and its effect on political and cultural life. 3. Students will describe the formation of states in sub-Saharan Africa and

Social Studies Standards - Minnesota House of Representatives
May 15, 2004 - emergence of the first American party system. 1. Equality, “life ..... Finance Corporation; Dust Bowl, Okies; urban and rural ...... information. 1. Ancient civilizations, capitals of major countries, largest cities in the. United St

for immediate release - State of Michigan
“Teacher and principal quality are the two most important school-based factors that ... Hannah Irvin, who has spent time teaching in both North Carolina and ... (APS), the Clarke County Schools District, the Georgia Department of .... Chicago's Sou

Ben S. Meiselman - University of Michigan
Nov 2, 2016 - “Compliance Costs and Electronic Filing: What Can We Learn from One ... University of Michigan Law School, Research Assistant for Michael ...

Lake Michigan -
Jul 8, 2010 - Cherry Picking: Edmondson Orchards. Old Mission Peninsula. Tel. 231 223-7130 (Joanne, Aaron). 12414 Center Road (M-37), Traverse. City.

the whirligig - Michigan Boys State
Jun 16, 2015 - SCHOOL ... contact me, two people approached me and let me know of this predicament, and one ..... written many articles about auto deal-.

the whirligig - Michigan Boys State
Jun 16, 2015 - Gabala, Marshal. SCHOOL ... their school and themselves in a positive way that would .... written many articles about auto deal- ers, owners ...

michigan dem complaint.pdf
MICHIGAN DEMOCRATIC PARTY, ... pioneer similar tactics in the 1980s before those efforts were blocked by the .... Displaying michigan dem complaint.pdf.

the university of michigan
Apr 10, 1996 - benchmarks, including many from the field of test pattern generation, indicate that application of the proposed conflict analy- sis techniques to ...

Michigan Saves PSA.pdf
this campaign was held on December 9, 2013 at The Fillmore Detroit. ... digital promotion and at live events organized by Michigan Saves and its partners.

STATE CONSTITUTION (EXCERPT ... - Michigan Legislature
All officers, legislative, executive and judicial, before entering upon the duties ... The classified state civil service shall consist of all positions in the state service ...

juvenile justice glossary - State of Michigan
Feb 1, 2013 - A person charged with an offense that, if committed by an adult, would be a ..... community based education programs, treatment or employment.

Working Paper - Deep Blue - University of Michigan
Feb 5, 2010 - The poor have low costs because their usage of value-added, and more expensive services such as financial payments, government services, downloading music, email, Internet browsing is "extremely low" (LIRNEasia, 2009). In Bangladesh, 94

optimal tax portfolios an estimation of government tax revenue ...
frontiers allows for across state analysis of the relative mean-variance tradeoffs. ...... The arch formed by the actual portfolios held by California in the past 48 .... The corporate profit base, tax sheltering activity, and the changing nature of