Impact of Tax Changes

Transcription

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2 Impact of Tax Changes Favorably Impacted Party & event planners Management consulting Company research services Forensic accounting services Industries where private investment is important Manufacturing Semi conductor and circuit manufacturing Negatively Impacted Invoice discounting

3 Technology Disruptors Negatively Trucking Rent a car Cable Toys, household goods, food Retail Positively Scrap

4 Other Industries Restaurants Home Delivery Mobile Apps Student loan assistance more valuable than healthcare Retail In-store sales up 2 ½% More stores closed than opened Internet sales 12-14% of total retail effectively replacing catalog sales Walmart/Amazon expanding offerings Walmart Service Amazon - Food

5 Bankruptcy 363 Sales in retail bankruptcies dropped from 40% to 5 & 15% in 2016 and 2017 Sales are defensive, landlords and senior lenders becoming buyers

6 Regulatory Dodd Frank reform Smaller banks avoid stress tests Exemption from Volcker rule >$10 billion prohibits risky bets with federal deposits

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8 What is Your Profession? Attorney 24.3% Banker 32.7% Business Owner 12.2% CFO 6.1% CPA/Consultant 22.5% Private Equity 2.0% CPA/Consultant CFO Business Owner Private Equity Banker Attorney

9 Did your Company/Clients Meet or Exceed 2017 Revenue Projections?

10 Where Did Your 2017 Success Come From?

11 Where Did Your Revenue Shortfall Come From?

12 Rank the Following Factors Impact on Middle Market Companies.

13 Which of the Following Factors Will Impact 2018 Profitability?

14 What is Your Barometer for Evaluating the Overall Health of the Middle Market?

15 How Will Your Employment Headcounts Change During 2018?

16 Will Middle Market Companies See Profits Increase or Decrease in 2018?

17 Are Middle Market Companies Increasing or Decreasing Capital Expenditures in 2018?

18 Do You Anticipate Challenges from the Changes to Accounting Regulations for Revenue and Lease Recognition?

19 What is the Relative Strength or Weakness of Each Segment?

20 How Would You Describe M&A Activity in the Middle Market? Very Active 13.89% Inactive 8.33% Active 77.78%

21 How Will the New tax Code Changes Affect Middle Market Growth?

22 If Your Company is Forecasting Savings as a Result of the Tax Code Changes, How Will That Money be Spent?

23 How Will the Unpredictable Stock Market Effect Middle Market Growth? Positive, 11.11% No impact, 55.56% Negative, 33.33% How Will the Pending U.S. Trade Policies Affect the Middle Market? Positive, 24.32% Negative, 62.16% No impact, 13.51%

24 Will the Democrats Take Control of Congress in the Next Mid-term Election Cycle?

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26 Exhibit 108 : Northwood s State Competitiveness Index Rank ( ) Alabama 32 Montana 22 Alaska 40 Nebraska 6 Arizona 29 Nevada 17 Arkansas 19 New Hampshire 26 California 11 New Jersey 48 Colorado 2 New Mexico 38 Connecticut 49 New York 45 Delaware 37 North Carolina 18 Florida 33 North Dakota 10 Georgia 12 Ohio 30 Hawaii 47 Oklahoma 4 Idaho 8 Oregon 9 Illinois 35 Pennsylvania 42 Indiana 23 Rhode Island 50 Iowa 14 South Carolina 24 Kansas 28 South Dakota 16 Kentucky 43 Tennessee 13 Louisiana 27 Texas 3 Maine 44 Utah 1 Maryland 41 Vermont 39 Massachusetts 46 Virginia 5 Michigan 21 Washington 7 Minnesota 34 West Virginia 20 Mississippi 31 Wisconsin 36 Missouri 25 Wyoming 15

27 Exhibit 109 : Northwood s State Competitiveness Index Rank ( ) Michigan Great Lakes Region United States RTW States Non-RTW States

28 Exhibit 128: Northwood s State Competitiveness Index Rank ( ) Alabama 38 Montana 16 Alaska 37 Nebraska 14 Arizona 26 Nevada 27 Arkansas 35 New Hampshire 28 California 15 New Jersey 46 Colorado 6 New Mexico 45 Connecticut 49 New York 43 Delaware 42 North Carolina 4 Florida 2 North Dakota 7 Georgia 25 Ohio 24 Hawaii 36 Oklahoma 33 Idaho 13 Oregon 10 Illinois 31 Pennsylvania 34 Indiana 8 Rhode Island 50 Iowa 22 South Carolina 18 Kansas 30 South Dakota 23 Kentucky 32 Tennessee 5 Louisiana 47 Texas 3 Maine 41 Utah 1 Maryland 39 Vermont 44 Massachusetts 17 Virginia 12 Michigan 9 Washington 11 Minnesota 18 West Virginia 48 Mississippi 40 Wisconsin 29 Missouri 21 Wyoming 19

29 1200% 1000% 800% Exhibit 124: Percent Increase in Michigan Based Fortune 500 Company Stock Price (Non-Automotive) (03/09 8/17) 1032% 910% 747% 600% 400% 200% 357% 367% 359% 254% 84% 403% 268% 239% 0% *Arrow indicates whether stock price is up or down, versus last year. Source: Yahoo! Finance October 2017

30 Exhibit 120: Michigan s Economic Performance Ranking ( Data) NU State Competitiveness Index: Michigan Factor 1 General Macroeconomic Environment Factor 2 State Debt and Taxation Factor 3 Workforce Composition and Cost Factor 4 Labor and Capital Formation Factor 5 Regulatory Environment

31 Exhibit 26: Gross State Product Growth ( ) GLR Average = 2.11 U.S. Average = WI MI IL IN OH

32 70% 60% 50% Exhibit 37: Personal Income Per Capita Growth ( ) 64.5% 65.7% 63.5% 54.8% 45.9% 40% 30% 20% 10% 0% Michigan Great Lakes Region United States RTW States Non-RTW States Source: Computed with data from Bureau of Economic Analysis ( )

33 Exhibit 38: Great Lakes Average Personal Income Per Capita Growth ( ) GLR Average = 3.6% U.S. Average = 3.4% 3.2 WI 28 th in Growth MI 6 th in Growth IL IN OH 10 th in Growth 14 th in Growth 15 th in Growth Source: Bureau of Economic Analysis

34 Source: Computed with data from Bureau of Economic Analysis ( ) 120% Exhibit 19: Gross State Product Growth ( ) % % % 100% 80% 79.57% 60% 60.0% 40% 20% 0% Michigan Great Lakes Region United States RTW States Non-RTW States

35 Exhibit 28: U.S. GSP Growth in Great Lakes Region ( ) State Average GSP Illinois Indiana Michigan Ohio Wisconsin Great Lakes U.S

36 U.S Exhibit 29: U.S. GSP Growth by Region ( ) Region Average New England Mid East Great Lakes Plains South East South West Rocky Mountains Far West

37 8,000,000 6,000,000 Exhibit 17: Population Net Migration ( ) 6,535,523 4,000,000 2,000, ,000,000 Michigan -714,603 Great Lakes Region United States RTW States Non-RTW States -9,469-4,000,000-2,473,898-6,000,000-8,000,000-6,544,992 Source: Computed with data from Bureau of Labor Statistics ( )

38 25% Exhibit 33: Non-farm Payroll Employment Growth ( ) 20% 19.7% 16.7% 15% 13.7% 10% 5% 4.4% 0% -5% -0.2% Michigan Great Lakes Region United States RTW States Non-RTW States Source: Computed with data from Bureau of Economic Analysis ( )

39 Exhibit 62: Total Government Employees per 10,000 People (2016) Michigan Great Lakes Region United States RTW States Non-RTW States Source: Computed with data from Bureau of Economic Analysis (2016)

40 350 Exhibit 88: Kauffman Index of Entrepreneurial Activity (2017) Michigan Great Lakes Region United States RTW States Non-RTW States Source: Computed with data from The Kauffman Foundation (2017)

41 Source: Computed with data from U.S. Energy Information Administration (Average Jan.-Apr. 2017) $8 Exhibit 80: Industrial Natural Gas Prices (Avg. Jan.-Apr. 2017) $7.41 $7 $6 $5.99 $5.84 $6.27 $5 $5.13 $4 $3 $2 $1 $- Michigan Great Lakes Region United States RTW States Non-RTW States

42 $3,000 Exhibit 68: Average Price of Annual Car Insurance Policy (2017) $2,500 $2,394 $2,000 $1,500 $1,329 $1,310 $1,334 $1,286 $1,000 $500 $- Michigan Great Lakes Region United States RTW States Non-RTW States Source: Computed with data from CarInsuranceQuotes.com (2017)

43 Exhibit 107: State Business Tax Climate Index 2017 State Overall Index Rank Corporate Tax Rank Individual Income Tax Rank Sales Tax Rank Unemp. Insurance Tax Rank Property Tax Rank Wyoming South Dakota Alaska Florida Nevada Montana New Hampshire Indiana Utah Oregon Great Lakes Region Michigan Illinois Wisconsin Ohio Source: Tax Foundation (2017)

44 Exhibit 122: An Economic Snapshot of Key Great Lakes Region Cities ( ) Metro Compounded Annual GDP Growth Rate ( ) Metro Compounded Annual GDP Growth Rate ( ) Metro Compounded Annual GDP Growth Rate ( ) Metro GDP (2016) Rank Metro GDP (2011) Rank Metro GDP (2016) Number of Employers City Population (City Proper) (2016) City Median Household Income/State ( ) Chicago $651 B ,000 2,705,000 $48,522/$57,574 Cleveland $129 B , ,000 $26,150/$49,429 Columbus $131 B , ,064 $45,659/$49,429 Detroit $253 B , ,795 $24,017/$49,576 Grand Rapids $59 B , ,445 $40,355/$49,576 Indianapolis $136 B , ,164 $41,987/$49,255 Lansing $22 B , ,020 $35,563/$49,576 Milwaukee $101 B , ,047 $43,873/$53,357 U.S. Metro Areas $16.8 T Source: Bureau of Economic Analysis in Real Dollars (2017)

45 Exhibit 123: Comparison of Key Michigan Data from Studies Average Personal Income Per Capita Growth Gross State Product Growth U.S. Population Net Migration U.S. Employment Growth Total Government Employees Per 10,000 People The Kauffman Index of Entrepreneurial Activity Industrial Natural Gas Prices Median Price of Annual Car Insurance Policy Northwood University Competitiveness Index 2012 Study 2013 Study 2014 Study 2015 Study 2016 Study 2017 Study % 27.5% 30.0% 35.1% 41.3% 45.9% % 31.5% 42.1% 48.3% 53.2% 60% , , , , , , % % -5.8% -4.3% -2.5% -0.2% $8.23 $7.42 $7.92 $6.58 $5.73 $ $4,490 $2,520 $2,551 $2,476 $2,738 $2,

46 Exhibit 1: Michigan is the Comeback State Michigan Region Rank National Rank 1 U.S. Real GDP Growth th 50th 2 U.S. Real GDP Growth st 6th 3 4 U.S. Per Capita Personal Income Growth th 50th U.S. Per Capita Personal Income Growth st 3rd 5 State Corporate Tax Rate st 8th 6 Overall Business Tax Friendliness nd 12th

47 Exhibit 2: Michigan Real GDP Growth in 2017 Period Percent Growth Rank 1 Michigan Real GDP Growth Q 4 Q % 33 rd 2 Michigan Real GDP Growth Q 1 Q % 4 th 3 Michigan Real GDP Growth Q 4 Q % 13 th

48 Exhibit 3: Top Metropolitan Areas for Real GDP Growth ( ) National Rank Metro Area Growth Rate State Rank 24 th Grand Rapids, MI Area 3.7% 1 st 25 th Midland, MI 3.5% 2 nd 45 th Detroit, MI Area 2.7% 3 rd Total 382 National Average 2%

49 Sources: Tax Foundation Fiscal Fact Report 570 (2018), IRS Tax Data (2015) Table 1. Summary of Federal Income Tax Data, 2015 Top 1% Top 5% Top 10% Top 25% Top 50% Bottom 50% All Taxpayers Number of Returns 1,412,046 7,060,231 14,120,463 35,301,156 70,602,313 70,602, ,204,625 Adjusted Gross Income ($ millions) Share of Total Adjusted Gross Income Income Taxes Paid ($ millions) Share of Total Income Taxes Paid $2,094,906 $3,658,556 $4,803,327 $6,997,737 $8,998,075 $1,144,545 $10,142, % 36.07% 47.36% 68.99% 88.72% 11.28% % $567,697 $866,447 $1,026,601 $1,259,698 $1,413,200 $41,125 $1,454, % 59.58% 70.59% 86.62% 97.17% 2.83% % Income Split Point $480,930 $195,778 $138,031 $79,655 $39,275 Average Tax Rate 27.10% 23.68% 21.37% 18.00% 15.71% 3.59% 14.34%

50 Chart 1. Half of Taxpayers Pay 97.2 Percent of All Income Taxes Share of Income and Share of Federal Income Taxes Paid, by Income Group (2015) Share of Adjusted Gross Income Share of Income Taxes Paid 45% 40% 39.04% 35% 30% 25% 20% 15% 10% 11.28% 19.72% 10.55% 21.64% 16.03% 11.29% 11.01% 15.42% 20.54% 20.65% 5% 2.83% 0% Bottom 50% 50% to 25% 25% to 10% 10% to 5% 5% to 1% Top 1% Sources: Tax Foundation Fiscal Fact Report 570 (2018), IRS Tax Data (2015)