A bipartisan group of policymakers, including Gov. Gretchen Whitmer and Speaker Matt Hall, continue to float the idea of raising taxes on Michigan businesses to fill the budget hole created by Michigan’s roads crisis, instead of focusing on user fees that directly pay for the roads most traveled. Rep. Alabas Farhat (D-Dearborn) introduced a package of bills this week, HB 4142-4144, that will increase the corporate income tax to 8.5% from 6%. Additionally, the package targets digital advertising, making the state of Michigan a more powerful tax collector than the IRS, allowing financial agents to comb through the company’s financial reports of their national and international business endeavors to determine how much tax they should pay the state.
A better solution is to look at other states with better roads than Michigan and lower corporate tax rates. Do we want the state to continue increasing costs on large and small businesses that are already bracing for tariffs rather than spreading costs to all users of the system, including businesses?
The Detroit Regional Chamber is seeking a solution to the problem of road funding that current proposals have not yet offered: a sustainable funding model that erases the road crisis in Michigan. The only way Michigan can achieve this would be through savings in the state budget, combined with targeted user fees including traditional gas taxes and registration fees, and new innovative ideas that can subsidize roads.
Additionally, any road funding source needs to be effectively distributed with equity in mind, not equality. Public Act 51, the road funding model in Michigan, was written before the advent of the interstate highways system. It favors rural roads by treating every mile of road the same, regardless of traffic or the number of lanes. The Chamber proposes Act 51 be reworked to account for lane miles as well as population density. The bumper-to-bumper traffic of 12 Mile or eight lanes of Jefferson Ave should be treated as the critical economic engines that they are. Residents in rural areas deserve to have good roads too, but not at the expense of Michigan’s population and economic centers.
Michigan needs to be building out its economic development toolbox instead of throwing tools away. The corporate income tax rate increase is another blow to Michigan’s already fragile economy.