The Single Business Tax Burden on Michigan Industries

The Michigan Single Business Tax (SBT) was, at the time of this report's release, the only value-added state business tax system in the U.S. The author explores its history, actual practice, and inherent advantages and disadvantages. Tables of data are provided, showing the SBT burden as a percentage of the Adjusted Tax Base on industries in Michigan. This report is a good overview of the SBT and its impact on the state's businesses. 30 pages.

Contents

• Executive Summary
• I. Introduction
  • A. Objective Questions
  • B. Recommendations to the Michigan Legislature
  • C. Outline of this Study
• II. The Single Business Tax
  • A. History of the Tax
  • B. The SBT: A Consumption-Based Value-Added Tax
  • C. Advantages and Disadvantages of the Single Business Tax
    • 1. Comprehensiveness of the Single Business Tax System
    • 2. Cyclicality of the VAT
  • D. The SBT and Capital Investment
  • E. The SBT and the Capital/Labor Decision of the Firm
  • F. Accounting for Capital Expenditures Under the SBT
• III. Methodology and Analysis: Relative SBT Burdens for Different Industries
  • A. The 1985 Treasury Report: A Critique
    • 1. Data
    • 2. Aggregation
    • 3. Conclusion: Data
  • B. Methodology for Analyzing Industry SBT Burdens
    • 1. The Selection of a Proper Tax Base
    • 2. The Effect of Using an Incorrect Tax Base
    • 3. Tax Burden Ratios
    • 4. Measures of "Fairness"
• IV. Results
  • A. Tables of SBT Data
  • B. The SBT Tax Burden Ratios
  • C. The "Fairness" of the SBT
  • D. The Tax Burden of the Financial Industry
  • E. SBT Burdens Compared With Profit
  • F. The Overall Business Tax Burden in Michigan
  • G. Notes on Test Statistics
• Endnotes
• About the Author