Analysis of Business Taxes in Michigan

Abstract

This paper is an evaluation of the Michigan Business Tax, which was implemented in 2008. This tax has been viewed as controversial and is considered to be a failure by many economists, politicians, and business owners. The goal of this document is to analyze what a good revenue system would be by laying out the three main components of a quality tax: reliability, equity, and efficiency. These characteristics are then held up to the MBT to see how it holds up in regards to the ideal revenue system. Through this document, it becomes apparent that the MBT has not been successful in its attempts to reform business tax in Michigan to become more reliable, equitable, and efficient. By placing financial restraints on businesses and constricting their business activities, the MBT does not meet the goals that were set when it was first implemented. This study also identifies several proposals to reform the tax, as it is obvious through statistics and reactions that the MBT needs to be changed.