Inside the Newsroom @ A2 Journal

Welcome to Inside the Newsroom @ A2 Journal, a blog written by the newspaper's staff at A2 Journal, a new, weekly, community newspaper covering Ann Arbor. This blog is a place for members of the newspaper's staff to write their thoughts, observations, opinions and other informative pieces they put together while covering the rich history, interesting people, institutions and traditions that make Ann Arbor such a unique community.

Thursday, April 26, 2012

PPT repeal legislation sounds like good idea, but isn't

The legislation aimed at Michigan's Personal Property Tax is one of the most straightforward documents I've read out of Lansing, which its drafters should be lauded for and proud of.

But there's nothing to be proud of when it comes to boiling this legislation down to its core components.

Obviously the idea is thus:

1) I'm a business owner with $x of personal property at my place of business that I'm paying $y of taxes on to local units of government, while I could be spending $y on business expansion in the form of hiring and purchasing more equipment.

2) So I take $y and spend it on some new people and buy some new equipment to better serve my customers or serve more of them.

3) My business expansion actually grows local and state tax revenues in other ways by improving the economy. I win and everyone wins.

The problem is that this isn't always going to happen. It may not even happen a great deal of the time -- it's a huge assumption that gives local governments absolutely no comfort or stability. From what I gather, the above is an assumption based on legislators talking to business owners about their pie-in-the-sky ideas about how to "grow their business," which doesn't necessarily mean hiring people and buying equipment.

The element missing from the equation is the means to increase demand for the products that these companies produce, and it just isn't there in the statewide and local markets right now, and national and global markets are still only looking good relative to the financial collapse of 2008. The only thing I can gather is that we're expected to bet it all on black in the hopes of a recovery feeding into this assumption and paying out a jackpot to Michigan and all of its residents.

While there's a lot to be pleased about if you watch Bloomberg or Mad Money, the real economy is still showing only anemic signs of recovery and none of the reforms that needed to happen to ensure we don't have another market breakdown were put into place.

It's unreaasonable to ask school districts and municiple governments at the local and county levels to expose themselves to markets outside of their boundaries like this, and that's exactly what this legislation will do. Why should your school district be so directly punished by the ups and downs of markets half a world away -- that is if your local governments are even lucky enough to have big commercial and industrial taxpayers in the first place.

Otherwise, giving small busineess owners a break on PPT isn't going to do any good but slightly boost yearly revenues and profits, which isn't going to translate into new jobs or new equipment purchases. This thing is only designed for the heavy hitters, and I just don't see them biting, at least in the way that the guys and gals in Lansing have been led to believe.


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