Michigan Association of REALTORS®

Last week, the Michigan House and Senate passed competing Single Business Tax replacement bills. The House’s “Michigan Business Tax” (MBT), House Bill 4367 combines several aspects of the proposals laid out earlier in the year by the Detroit Regional Chamber of Commerce, Michigan Chamber of Commerce and the Granholm administration. This represents the first step of what will likely be intense negotiations between the House and Senate.

We will continue our work with leadership in both chambers throughout this process.

Initially excluded from the all-important compensation credit provided to Michigan businesses, the MAR was successful in getting the House Democrats to amend the legislation and include this credit for real estate brokerages.

In contrast, the Senate’s “Business and Economic Stimulus Tax” (BEST) is more accommodating to small businesses and companies enjoying higher profits and net worth, particularly real estate holdings. As such, the Michigan Association of REALTORS® has been on record as supporting this plan since February of this year.

However, the House MBT plan still includes some troubling aspects due to its high rate of taxation on business income (6.95%) and the new tax on “net worth” (assets minus liabilities) that includes the value of real estate.

Accordingly, we need your help as we prepare to testify on this legislation in the Senate Finance Committee. Please contact your broker and appraiser members and ask them to perform the following calculations if they have over $350,000 in gross receipts.

((Avg. two years federal taxable income * 6.95%) – (amount pd. to agents * 0.8%))
+
((0.488% * net worth (assets minus liabilities))

Then compare this tax liability with what they paid on the SBT over the last couple of years and email Tony Daunt (tdaunt@mirealtors.com) with their results and any questions that they might have. This input will be very important to our Taxation Task Force, Public Policy Committee and MAR Board of Directors as we move forward.

** Please note that the above calculations are based on $700,000 in gross receipts for a business. The tax rate is phased in from $350,000 to $700,000 to avoid the “cliff effect” that businesses are hit with by the current SBT.

The Federal Reserve plans to hold a public hearing to examine how the central bank can use its regulatory authority to curb abusive lending practices in the mortgage market.

The Fed said it plans to invite consumer advocacy organizations, banks, and "other interested parties," for the day-long hearing.

"We want to encourage, not limit, mortgage lending by responsible lenders, so it is crucial that any actions the board might take are well calibrated and do not have unintended consequences," says Fed Gov. Randall Droszner, who will chair the hearing.

The hearing will be held June 14 at the Federal Reserve Board at 20th and C streets, N.W., in Washington, D.C. The board has allotted time in the afternoon to allow other interested parties to speak who have not otherwise received an invitation. Register on the board’s Web site.

Rush into Convention & Expo 2007

Mark your calendars for Rush Week 2007 at MAR-U. MAR’s 2007 Convention & Expo is set to be held September 26-28th at The Soaring Eagle Casino & Resort in Mt. Pleasant. This year’s exciting theme and environment paired with the opportunity to hear from elite industry speakers, earn CE credit, and network with peers is an opportunity not to be missed.

Featured Speakers include Craig Harrington, Carol Bullion, Bob Corcoran, Saul Klein, Doug McClure, Marcus Wally, Sandy Geroux, and entertainment by “The Passing Zone,” a professional juggling group who have performed on The Tonight Show, The Today Show, Comic Strip Live, CBS This Morning and many more.

Remember to visit the MAR Web site and reserve space for your board members and also don’t forget to nominate your associations’ REALTOR® of the Year and REALTOR® Active in Politics. Both nomination and registration forms as well as the latest convention information can be found on the MAR Web site, www.mirealtors.com.

REALTOR® Magazine - Another Valuable Member Tool

Keep an eye on your mailbox for the latest issue of The Michigan REALTOR® magazine. The May 2007 issue features “What’s In and What’s Out” for homebuyers of 2007, “Exploring Homes on the Internet,” PDA timesavers, new strategies for VALU zoning, uncapping issues with real property tax assessments, and a look at the new Village at Grand Traverse Commons development. Together with the regularly featured Capitol Report, member and legislative profiles, and legal lines column, the May 2007 issue of The Michigan REALTOR® brings a wealth of industry knowledge and value right to your fingertips.

An electronic copy of the magazine may be obtained by visiting www.mirealtors.com.

Executive Leadership Session Addresses Michigan's Economy

In a presentation to association executives last week, David Sowerby, CFA of Loomis, Sayles & Company, L.P., began by saying “I have never had more questions than in the last 18 months about when Michigan’s economy will turn around? When will this end?”

Michigan’s problems have compounded over the past 10 years. In addition to the automobile company woes, there is a long list of companies who have “gone out the back door” (closed up business or moved to another state). While the non-auto side is growing in terms of profit, it is not making up the difference. Our biggest competitors for new business are Indiana, North Carolina, Illinois and Pennsylvania. Michigan, however, “is not in a recession.”

story continued...