Michigan Business Lawyer Blog

The new Michigan Business Tax was enacted with the supposed aim to benefit Michigan businesses by replacing the much hated Michigan Single Business Tax with a tax that was fair, reasonable, and economically viable. But as it turns out, it may be that the cure is worse than the disease.

Crain's Detroit Business magazine has a recently posted story that demonstrates some of the unintended consequences that the new tax act seems to be having. This article highlights the state tax travails of a Plymouth, Michigan high tech company named Stardock Corporation. Crain's notes that Stardock is exactly the kind of company that Michigan should be working to cultivate. It's a high technology and entertainment enterprise that creates computer games and software. It has 55 employees and projects gross revenue this year of approximately $18 million.

Stardock's tax troubles are very simple: Under the old Michigan single business tax, it's state business tax liability was approximately $1,200. Under the new Michigan Business Tax and its accompanying surcharge, it's state business tax liability this year will be almost $170,000! Not surprisingly, the company is contemplating a move to a more tax friendly state. Stardock claims that it wants to pay its fair share of taxes but that its tax burden under the new Michigan Business Tax and surcharge are so "lopsided" that it would be "suicide" to stay in Michigan unless there is some sort of favorable resolution.

This article is good food for thought. In addition to Stardock, many other Michigan businesses are facing steep tax increases under the new Michigan Business Tax. Of course, companies should have to pay their fair share of taxes. But, it seems that the current Michigan business tax structure has gone beyond that goal and is actually causing businesses that Michigan sorely needs to consider leaving the Great Lakes State. That's not good for anyone in Michigan.