HOUSE BILL No. 4962 October 6, 1999, Introduced by Reps. Koetje, Kowall, Gosselin, Law, DeVuyst, Garza, Rick Johnson, Caul, Bishop, Richner, Mead, Hager, Allen, DeWeese, Ehardt, Birkholz and Raczkowski and referred to the Committee on Tax Policy. A bill to amend 1975 PA 228, entitled "Single business tax act," by amending sections 7 and 31 (MCL 208.7 and 208.31), section 7 as amended by 1982 PA 376 and section 31 as amended by 1999 PA 115. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 7. (1) "Sale" or "sales" means the gross receipts 2 arising from a transaction or transactions in which gross 3 receipts constitute consideration FOR 1 OR MORE OF THE 4 FOLLOWING: 5 (a)for theTHE transfer of title to, or possession of, 6 property that is stock in trade or other property of a kind 7whichTHAT would properly be included in the inventory of the 8 taxpayer if on hand at the close of the tax period or property 03059'99 * RJA 2 1 held by the taxpayer primarily for sale to customers in the 2 ordinary course of its trade or business., or3 (b)for theTHE performance of services, whichTHAT 4 constitute business activities other than those included in 5 SUBDIVISION (a)., or from any combination of (a) or (b).6 (2) "State" means any state of the United States, the 7 District of Columbia, the Commonwealth of Puerto Rico, any terri- 8 tory or possession of the United States, and any foreign country, 9 or political subdivision of any of the foregoing. 10 (3) "Gross receipts" means, EXCEPT AS OTHERWISE PROVIDED IN 11 SECTION 31, the sum of sales, as defined in subsection (1), and 12 rental or lease receipts. Gross receiptsdoesDO not include 13 the amounts received in an agency or other representative capac- 14 ity, solely on behalf of another or others but not including 15 amounts received by persons having the power or authority to 16 expend or otherwise appropriatesuchTHOSE amounts in payment 17 for or in consideration of sales or services made or rendered by 18 themselves or by others acting under their direction and control 19 or bysuchfiduciaries as guardians, executors, administrators, 20 receivers, conservators, or trustees other than trustees of taxes 21 received or collected from others under direction of the laws of 22 the federal government or of any state or local governments. 23 Sec. 31. (1) Except as provided in subsections (5) and (6), 24 there is levied and imposed a specific tax upon the adjusted tax 25 base of every person with business activity in this state that is 26 allocated or apportioned to this state at the following rates for 27 the specified periods: 03059'99 * 3 1 (a) Before October 1, 1994, 2.35%. 2 (b) After September 30, 1994 and before January 1, 1999, 3 2.30%. 4 (c) Beginning January 1, 1999 and each January 1 after 1999, 5 the rate under this subsection shall be reduced as provided in 6 subsection (5). 7 (2) As used in this section, "adjusted tax base" means the 8 tax base allocated or apportioned to this state pursuant to chap- 9 ter 3 with the adjustments prescribed by sections 23 and 23b and 10 the exemptions prescribed by section 35. If the adjusted tax 11 base exceeds 50% of the sum of gross receipts plus the adjust- 12 ments provided in section 23b(a) to (g), apportioned or allocated 13 to Michigan with the apportionment fraction calculated pursuant 14 to chapter 3, the adjusted tax base may, at the option of the 15 taxpayer, be reduced by that excess. If a taxpayer reduces the 16 adjusted tax base under this subsection, the taxpayer is not 17 entitled to the adjustment provided in subsection (4) for the 18 same taxable year. This subsection does not apply to an adjusted 19 tax base under section 22a. 20 (3) The tax levied under this section and imposed is upon 21 the privilege of doing business and not upon income. 22 (4) In lieu of the reduction provided in subsection (2), a 23 person may elect to reduce the adjusted tax base by the percen- 24 tage that the compensation divided by the tax base exceeds 63%. 25 The deduction shall not exceed 37% of the adjusted tax base. For 26 purposes of computing the deduction allowed by this subsection, 27 as effective for the respective tax year, compensation does not 03059'99 * 4 1 include amounts of compensation exempt from tax under section 2 35(1)(e). This subsection does not apply to an adjusted tax base 3 under section 22a. 4 (5) If the comprehensive annual financial report of this 5 state for a state fiscal year, published pursuant to section 494 6 of the management and budget act, 1984 PA 431, MCL 18.1494, 7 reports an ending balance of more than $250,000,000.00 in the 8 countercyclical budget and economic stabilization fund created 9 under section 351 of the management and budget act, 1984 PA 431, 10 MCL 18.1351, for that state fiscal year, the tax rate under this 11 section shall be reduced by 0.1 percentage point on the January 1 12 following the end of the state fiscal year for which the report 13 was issued. 14 (6) FOR TAX YEARS THAT BEGIN ON OR AFTER JANUARY 1, 2000, A 15 TAXPAYER MAY ELECT TO CALCULATE GROSS RECEIPTS FOR PURPOSES OF 16 SUBSECTION (2) BY ADDING THE TAXPAYER'S GROSS RECEIPTS FOR THE 17 TAX YEAR AND FOR THE 2 IMMEDIATELY PRECEDING TAX YEARS AND DIVID- 18 ING THAT SUM BY 3. 19 (7)(6)The department shall annualize the rate under this 20 section as necessary, and the applicable annualized rate shall be 21 imposed. 03059'99 * Final page. 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