Saginaw County Chamber of Commerce Urges Legislators to Reject Mandate on Employers to Collect Local City Income Taxes
In November 2016, the Saginaw County Chamber of Commerce joined ten other statewide business organizations at a Michigan Chamber Press Conference to speak out against legislation mandating that suburban employers become the tax collectors for Michigan cities that impose an income tax on their residents even if the employer has no operation in the city.
Senate Bill 1127 and House Bill 4829 would mandate that suburban or "out-state" employers be the tax collector for cities with an income tax. Not only do city income tax rates and exemptions vary across the state, but many employees spend time in a variety of different locations, complicating this burden greatly. In addition, passage of this type of mandate would open employers up to all sorts of harsh penalties and city tax audits.
"This is not just another withholding," stated Jeff Wiggins, state director for Associated Builders and Contractors of Michigan. "This is a new mandate on job creators that adds another complicated layer to the payroll process where, if you have dozens of employees, there is the potential now for adding a half-dozen to a dozen new taxing entities to the list of entities to which these small businesses are now going to be liable."
Currently, 22 cities impose a local income tax on their residents and in-city employers. Those employers must already withhold and remit the resident's city income taxes. Legislation in the House and the Senate would change that requirement to include collection mandates for employers even if their business is not located within a city that has a local income tax. Senate Bill 1127 would apply statewide to any suburban and outstate employer hiring a resident from any of the 22 cities, and House Bill 4829 would apply to any outstate or suburban employers hiring a resident of Detroit.
"This legislation would impose an administrative nightmare on any employer who employs workers who live in cities with a city income tax," said Delaney McKinley, Director of Human Resource Policy and Membership Development for the Michigan Manufacturers Association. "The employer would be left holding the bag for the entire tax bill plus penalties and interest if their employees or former employees chose not to pay their taxes or made errors on their own taxes. The onus would be on the employer to hunt down the individual to get them to properly pay their city income tax."
"To make matters worse, this mandate could easily backfire," said Bob VanDeventer, President & CEO of the Saginaw County Chamber of Commerce. "If the state makes it so difficult for employers to hire city residents, they may look elsewhere for employees. There are many city residents who are eagerly looking for work and this legislation throws barriers in front of their opportunities."
According to Veronica Horn, Sr. Director of Government Relations for the Saginaw County Chamber of Commerce, "If our mission is to continue Michigan's success in growing jobs, the last thing we need to do is put a mandate on the private sector, on small business, when in fact maybe the government should be looking at why their Department of Treasury or whoever is in charge of collecting that money isn't able to do it."
The 11 statewide business organizations who participated in the press conference and oppose the legislation include: Associated Builders and Contractors; Associated Food and Petroleum Dealers; Auto Dealers of Michigan, LLC; Grand Rapids Area Chamber of Commerce; Michigan Chamber of Commerce; Michigan Grocers Association; National Federation of Independent Business-Michigan; Michigan Manufacturers Association; Michigan Retailers Association; Michigan Restaurant Association; and the Saginaw County Chamber of Commerce.
The coalition of statewide business organizations are urging their members to take action on HB4829 and SB1127. We are urging our members to call your legislators and ask them to oppose these bills. Tell them that job providers do not need another mandate.
Senator Ken Horn (32nd Senate District): 517-373-1760
Representative Tim Kelly (94th District) 517-373-0837
Rep. Vanessa Guerra (95th District - City of Saginaw, Carrollton, Buena Vista, Bridgeport) 517-373-0152
