An Open Letter to Michigan Governor Jennifer Granholm: Auto Industry's Problems Make Small-Business Tax Cuts More Important than Ever

Dear Governor Granholm:

On behalf of the more than 14,600 members of the National Taxpayers Union in Michigan, I urge you to sign Senate Bill 957, the Single Business Tax Act, into law. By halving the rate that 35,000 of Michigan's small businesses must use to determine their Single Business Tax liabilities, this legislation would help free up capital that can be used to hire new employees and bolster Michigan's economic future.

As Michigan copes with the dislocation of jobs related to the automobile industry, workers will now look more than ever before to the state's 765,000 small businesses to provide new economic opportunities. According to the U.S. Small Business Administration, half of all private employment comes from establishments with under 500 employees. In Michigan, small businesses employ over half of the state's non-farm private sector. Between 2001 and 2002, firms with fewer than 500 employees made net job gains while large firms (500 or more employees) had a net loss of jobs. Clearly, small businesses generate significant economic growth in the state and deserve tax relief, especially in light of the $600 million tax cut that large manufacturers recently earned.

The Single Business Tax saps over $2 billion of vital resources from small firms every year - money that could be used to hire new employees or purchase new equipment. Passage of Senate Bill 957 will save small businesses, including many owned by women and minorities, over $50 million. Fretting over revenue neutrality in the face $320 million budget surplus is unseemly and ignores the potential revenue growth from business and worker gains that tax cuts are known to spur. The Michigan House and Senate saw the wisdom in sending this bill on for your signature, and our members hope you will demonstrate similar foresight by making these tax cuts a reality.

Kristina Rasmussen
Government Affairs Manager

cc: Michigan Legislature