SBAM — HB 5009, HB 5100, HB 5101 and HB 5102: R&D Tax Credit

Summary

Letter from Kelli Saunders, Vice President of Policy & Engagement, to Chair Hoskins and Members of the Economic Development and Small Business Committee, regarding HB 5100 (Martus), HB 5101 (Rogers) and HB 5102 (Puri). The letter says Michigan is 1 of only 14 states that does not have an R&D credit built into the tax code and cites a membership of 32,000+. It states that SBAM would support an R&D tax credit implemented through the tax code that is automatic and available to all companies, borrowing federal definitions and adding a Michigan credit as a percentage of the federal R&D Credit, similar to the approach taken with the Earned Income Tax Credit.

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Full text

Chair Hoskins and Members of the Economic Development and Small Business Committee:

In regard to HB 5009 (Hood), HB 5100 (Martus), HB 5101 (Rogers) and HB 5102 (Puri), we want to thank
you for your interest in R&D. Michigan is 1 of only 14 states that does not have an R&D credit built into
their tax code. For Michigan to be competitive, getting the R&D tax code right is imperative for future
growth. While these bills show recognition that R&D is a piece of the puzzle to creating an environment
for entrepreneurial success, we would like to share with you some key principles that our membership of
32,000+ strong hold true specifically as it relates to small business accessing and utilizing this type of
credit.

Building the R&D tax credit into the tax code will bring many advantages. First, it is predictable and
reliable. Second, it will be administered simply and efficiently in that it is automatically implemented
through annual tax filings within Treasury, especially if it is handled as an “add on” to the federal R&D tax
credit. Finally, making the credit available to all industries and sizes (large and small) allows varying types
of innovation to take root and grow. This wide-ranging approach helps define the business climate here
in Michigan as being one that encourages innovation at every level.

SBAM would support an R&D tax credit implemented through the tax code making the credit automatic
and available to all companies currently in Michigan, as well as those newly considering investing in
Michigan. Ideally, the credit would borrow federal definitions and simply add on a Michigan credit as a
percentage of the federal R&D Credit. This approach can be compared to what was done earlier in the
year with the Earned Income Tax Credit (EITC), that saw great bipartisan support. We would encourage
the committee to emulate that same methodology as it moves forward in considering its next steps.

When companies are choosing their next location and long-term investments like R&D, they need
predictability and certainty that tax credits supporting that effort will remain in place.

Thank you for taking the time to consider these different facets. Our small business owners want to
continue to make Michigan their home for innovation. Please feel free to reach out to us at any time
with follow-up questions.

All the best,




Kelli Saunders

Vice President of Policy & Engagement

                               101 S. Washington Square, Suite 900, Lansing, MI 48933
                                                  www.sbam.org


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