If It Doesn’t Say So, It Aint So: Michigan Supreme Court Holds For-Profit Schools Entitled To Property Tax Exemption
A unanimous Michigan Supreme Court decision this week will have big implications for for-profit schools and colleges – and even for-profit laboratories, research and development facilities, and test centers.
On Monday, May 1, 2017, the Supreme Court held that personal property of for-profit schools and colleges is exempt from property tax. The decision in SBC Health Midwest, Inc v City of Kentwood involved SBC Health, a Delaware for-profit corporation that operates the Sanford-Brown College in Grand Rapids. SBC Health requested a tax exemption from the City of Kentwood for personal property used by Sanford-Brown College, which the city refused. SBC appealed that decision to the Tax Tribunal which held in favor of the city on the basis that exemption applied only to nonprofit educational institutions. The Tribunal’s decision was later reversed by the Court of Appeals.
Taxation is a statutory field. No tax can be levied and collected without statutory authorization, and exemptions for taxation are matters of legislative grace. Modern tax statutes serve many purposes beyond simply raising revenue. The tax laws trend toward the complicated and elaborate because those statutes are shaped by many (and sometimes conflicting) value judgments, economic, social, and political. The legislature chooses a variety of structural mechanisms including exemptions, deductions, and credits to advance those policy goals. Sometimes those features are drafted with less than meticulous precision.