Michigan effort to pass $1.5B progressive income tax hike put on hold

Activists planned to get 425,000 signatures from Michigan voters to scrap the state’s constitutional flat income tax protection.

An effort to remove a key taxpayer protection in Michigan has been suspended due to the COVID-19 pandemic.

A new activist group, Fair Tax Michigan, recently began circulating petitions to remove the state’s constitutional flat income tax protection and replace it with a progressive income tax. They needed to collect 425,000 signatures from voters by July 6 to get their question on the ballot, followed by a simple majority vote in November to make it law. But that push has been suspended as the spread of coronavirus shuts down canvassing efforts.

Nearly 10,000 Michiganders signed a Mighty Michigan petition against the proposal.

“While our campaign is suspending our efforts to collect signatures, we are not suspending our campaign for a fair tax system,” the coalition said in a press release Tuesday. “We plan to continue building our coalition, planning for 2022 and communicating about the need for more funding for education, roads and clean water, and the need for a fair income tax structure in Michigan.”

At first glance, the proposal might seem appealing to some Michigan voters. But a closer look reveals serious problems. This progressive income tax proposal would harm middle-class families and Michigan’s economy, not to mention give the governor’s office enormous new taxing power. There are four major problems with this plan:

1. The plan would give Gov. Gretchen Whitmer – and subsequent governors – the power to set tax rates unilaterally, without voter or lawmaker approval.

2. Scrapping the flat income tax protection would open the floodgates for middle-class tax hikes.

3. It would harm Michigan workers and the state economy at large. Results in other states show progressive income tax hikes cause wealth and investment to leave for greener pastures.

4. Michigan’s income tax is already fairly progressive. High-income residents pay roughly five times the share of their income in state income taxes compared with lower-income residents.

Progressive tax proponents are asking state lawmakers to allow an online signature petition option. In a letter to House Speaker Lee Chatfield and Senate Majority Leader Mike Shirkey they wrote, “In the face of this public health pandemic, our government and communities are adjusting the way we do things for the safety of all of us; making petition signing digitally accessible can and should be one of those adjustments.”

Michigan voters have rejected switching from a flat to a graduated income tax three times in state history, by at least 2-to-1 margins in every case.