The effort to phase out Michigan’s tax on industrial equipment is expected to clear a major hurdle this week as a state Senate committee wraps up hearings on the plan.
A vote in the full Senate could come as soon as this week. Manufacturers say Michigan’s tax on industrial equipment is a drag on the state’s economic recovery. Manufacturing remains the dominant sector of the Michigan economy.
The Senate plan would eliminate the tax on industrial equipment by 2022. But local governments rely on that revenue to pay for everything from police and fire to parks and libraries. Communities with a lot of factories would be hit hardest by the loss of tax revenue. Local officials complain the phase-out plan does not guarantee they’ll recover all the lost revenue, which would force cuts to services or force local tax hikes to make up the difference.