State Reps. Abdullah Hammoud (D-Dearborn) and Jon Hoadley (D-Kalamazoo) sent a letter to the Michigan Economic Development Corporation (MEDC) proposing the creation of workgroups to review identified budget items — amounting to millions of dollars in tax breaks benefiting large corporations — in response to the governor’s call for a stimulus package to better serve Michigan’s small businesses in need. Hammoud and Hoadley have identified sources of revenue that would provide more than $100 million in much-needed support. In response, Hammoud released the following statement:
“It’s impossible to overstate just how important small businesses, and the dedicated entrepreneurs and employees who keep them going, are for building successful, thriving local and state economies. Facing seemingly insurmountable challenges posed by COVID-19, they’ve continued to step up to the plate day-in and day-out to keep our communities on track. While the silence of federal leaders on this issue has been deafening, we still have a chance within our state to do more for the small business owners. I encourage the dedicated professionals at the MEDC to consider this request, and welcome any opportunity for further collaboration on any project that makes much needed progress on building back Michigan’s economy.”
Rep. Hoadley added, “Gov. Whitmer continues to act to protect the health, safety and economic well-being of the people of Michigan. We have the power to stimulate Michigan’s economy right now without waiting for DC to act. We can invest in Michigan small businesses and close tax loopholes that pick winners and losers at the same time. We are excited for the MEDC and other stakeholders to work on these issues now and into the future.”
Our state’s small businesses are struggling and due to inaction by the federal government, surging COVID-19 cases and deaths, and shut-downs, small businesses are in an impossible position. They are struggling to keep the lights on and desperately need all the help that they can get. We have identified sources of revenue that can be re-appropriated to provide over $100M in support to small businesses.
After a deep dive into Michigan’s Executive Budget Appendix on Tax Credits, Deductions, and Exemptions, we identified hundreds of millions of dollars in tax breaks that benefit large corporations, that can be better served supporting our small businesses. We propose examining the closure of these loopholes by establishing workgroups dedicated 10 reviewing these budget items, with the intention of reallocating captured funds to small businesses in need.
The following are just a few examples of corporate loopholes that should be re-evaluated:
•$40.8M tax break for Interstate Trucks and Trailers (Sales and Use Tax)
•$29.3M tax break for Communication and Telephone Exemption (Sales and Use Tax)
•$23.3M tax break for Cargo Aircraft (Sales and Use Tax)
•$18.6M tax break for Motor Fuel Evaporation and Loss Allowance (Sales and Use Tax)
•$14.2M tax break for Aircraft Parts (Sales and Use Tax)
•$13.9M tax break for Tobacco Products Tax
•$4.4M tax break for Marginal Wells (Commerce Tax)
•$2.8M tax break for Investment Coins (Sales and Use Tax)
Small mom-and-pop shops are the backbone of Michigan’s economy. We fear we are at a tipping point and that inaction will lead to the closure of more small businesses, which will devastate neighborhoods, cities, and our entire state economy. We simply cannot depend upon the federal government to step up and do the right thing. Rather we must take action to look at every state tax dollar to determine what can be used to help rescue small businesses on the
verge of collapse.
Thank you for taking the time to consider this proposal and know that we are committed to working with you on this solution, as well as others.