Gov’t Affairs News: Federal tax reform steals the show

All eyes on Washington

Over the past few weeks we’ve seen more action at the federal level on tax reform than on issues retailers are following in Michigan. Shocking, I know. The U.S. Senate Budget Committee kicked out a marked-up version of tax reform on Tuesday and the full Senate could vote on the bill later today. The U.S. House voted 227-205 to approve its plan prior to Thanksgiving. Before anyone gets too excited, remember: Congress is at best, only about half way through the process. And the really hard part starts once the two chambers must put each plan side by side and agree on a final compromise bill.

Painting in broad strokes, both tax reform plans could provide tax relief to retailers and small business owners. That’s because retailers don’t benefit from many of the existing tax breaks and loopholes available to other industries. The reforms would lower the overall max corporate tax rate from 35 percent to 20 percent and modify the tax rate on business profits for pass through business (partnerships, S-corps and LLCs). Pass through businesses are currently taxed using an individual’s personal income tax rate. Under the Senate plan, pass through businesses would pay a 17.4 percent tax on business profits or 25 percent under the House plan.

Meanwhile, back in Michigan the legislature is just getting the ball rolling to reform retirement healthcare benefits for local government employees. Identical16-bill packages were introduced in both the House and Senate yesterday. The bills set up certain funding requirements and a five-step process for state oversight and involvement if local units are severely underfunded.

Legislators plan to start hearings next week with hopes of getting the reforms passed by Christmas. Having stable local governments with adequately funded liabilities is important to ensure critical local services continue to be provided and infrastructure is regularly maintained. Police officers and fire fighters are vehemently opposed to the fifth step of the process, which results in oversight by a financial management team. The state argues that if local units do not address these unfunded liabilities themselves, the debt will fall on the state.

SNAP beneficiaries to see changes in some counties

Federal food assistance beneficiaries in 14 counties will no longer qualify for an exemption from the work requirements beginning January 1, 2018. An estimated 16,000 individuals will be impacted by the change in Allegan, Barry, Berrien, Clinton, Eaton, Grand Traverse, Ingham, Ionia, Kalamazoo and Livingston counties. Able-bodied individuals between the ages of 18-49 can meet the work requirements by working an average of 20 hours per week, participating 20 hours per week in employment training programs or by volunteering at a nonprofit organization. The change is a result of Michigan’s dramatically improved unemployment rate and should affect all 83 counties by October 2018. The work requirements were reinstated in Kent, Oakland, Ottawa and Washtenaw counties in January 2017. For more information, visit

Other important items to note:

  • Half mile rule: The Joint Committee on Administrative Rules will hold a hearing on the Michigan Liquor Control Commission’s suggested rescission of “half-mile rule” on Dec. 6. MRA supports the rescission of the anti-competitive rule. The committee can delay the rescission of the rule but in order to stop it, the legislature would need to pass legislation codifying the rule into law. Next step: Hearing on Dec. 6. | MRA Position: Support rescission of the rule.
  • Urban grocery incentives: Yesterday, the Senate Economic Development and International Investment Committee approved legislation to create grants for grocery store improvements necessary to locate in, or remain in, neighborhood and commercial corridors. HB 4207 seeks to address food deserts. Both new and existing stores are eligible for grants but new stores must be at least one mile away from any existing stores. Next step: Senate floor. |  MRA Position: Support.

  • Sick leave benefit expansion: Legislation introduced yesterday as SB 665 would require employers that offer sick leave to allow employees to use it to address issues related to sexual assault, domestic violence or stalking. The bill further details that the benefits can be used by the employee for a family member or household member who is targeted. It would also allow an employee to bring a civil action against an employer for any damages if the benefit was not extended. Next step: Senate floor. |  MRA Position: Under review.
  • Unemployment disqualification exemption: SB 666, introduced on Tuesday, would ensure an individual is not disqualified from receiving benefits if he or she can prove the reason for leaving work is due to domestic violence. Next step: Senate Commerce Committee. | MRA Position: Under review.
  • Unemployment reforms:  The Senate Oversight Committee unanimously approved legislation (HB 51655172) that makes a number of reforms to the Michigan’s Unemployment Insurance Agency and the unemployment insurance program. Next step: Senate floor. | MRA Position: Support.

  • Medicaid false claim penalty: Legislation introduced Tuesday as SB 669 would change the penalty violators pay for submitting a false claim to Medicaid. Currently, the Michigan penalty is a civil fine of $5,000-10,000 plus three times the damages suffered by the state. If approved, the legislation would instead reference the federal penalty which is the same but is adjusted each year for inflation. Next step: Senate Judiciary Committee. | MRA Position: Under review.

  • PPT exemption clarification: The House Tax Policy Committee heard testimony on legislation that would modify the current process for filing the commercial Personal Property Tax (PPT) exemption for commercial personal property with a true cash value of less than $80,000. Under current law, taxpayers must file an exemption form with the local unit of government each year. HB 5261 would only require an exemption to be filed the first year and would not require any additional filings unless the property is no longer be eligible for the exemption. Next step: House Tax Policy Committee vote. | MRA Position: Support.
  • Secondhand dealer hold process: Legislation introduced on Tuesday as HB 5256 would establish a more stringent hold process for items received by secondhand shops. Among more detailed record keeping and tagging requirements, the bill creates a formal process for law enforcement to request an additional 90-day hold. The bill is similar to HB 4887, which addresses the same issue for pawn shops and was approved by the House Commerce Committee this week. Next step: House Commerce Committee. | MRA Position: Oppose.

  • Emotional support animals: SB 663, introduced Tuesday, would establish a process for certifying the need for an emotional support animal by health care providers based in Michigan. The bill defines an emotional support animal as an animal that assists a person who has a disability-related need for that support. Certification is not required to have an emotional support animal and the Americans for Disabilities Act provides strict guidelines that may not allow the state to prescribe the certification process.  Next step: Senate Local Government Committee. | MRA Position: Under review.
  • Service animal obedience instructor certification: Legislation introduced as HB 5281 on Tuesday creates a formal process to license and certify individuals as basic obedience instructors. Basic obedience instructors could help train service animals, therapy animals, or emotional support animals. Next step: House Agriculture Committee. | MRA Position: Under review.
  • TIFA roll-up: SB 393, legislation that would roll all of the state allowed tax increment finance authorities (TIFA) into a single act, was approved by the Senate Economic Development and International Investment Committee yesterday. The bill is an attempt to address the lack of compliance in the reporting process and the same rules for reporting apply to all TIFAs. The Michigan Downtown Association is supportive of the legislation and considers this a thoughtful approach that does not place any additional burdens on DDAs. Next step: Senate floor. |  MRA Position: Neutral.