A new ballot proposal called “Invest in MI Kids” is being circulated. While the name sounds positive, the proposal itself is a constitutional amendment that would create a massive graduated income tax. The proposal calls it a “surcharge,” but what it truly means is a permanent tax hike that would replace Michigan’s flat income tax.
Don’t be misled by the name. This is a tax hike on Main Street and small businesses, not just the wealthy.
You have the power to stop this harmful proposal before it gets on the ballot. When someone asks you to sign the “Invest in MI Kids” petition, politely decline and spread the word.
See below to learn more about the consequences of a graduated income tax and how the Detroit Regional Chamber has been leading the charge to protect Michigan’s small businesses.
Despite the “Tax the Rich” rhetoric, this tax hits the heroes of the economy: small businesses. IRS data shows that at least 77% of those targeted by this tax are small business owners. Most small businesses are “pass-through” entities (S-Corps, LLCs, etc.), meaning business income appears on the owner’s personal tax return. This tax would be a direct hit on their business income, punishing them for success.
If passed, Michigan’s top income tax rate would soar to 9.25%, making it the 7th highest in the nation and dramatically higher than neighboring states. This tells the state’s job creators: if you want to grow, leave. This proposal would also tax thousands of small businesses at a higher rate than large corporations.
The petition claims money will go to classrooms, but the actual constitutional language gives politicians control. There are ZERO guarantees the legislature will choose to put the money where the proposal suggests. They could simply use these new funds to replace existing state funding for education, moving that money elsewhere. Michigan would be left with a damaged economy and no real gain for schools.
“The proposed additional permanent 5% tax on those earning north of $500,000 annually will dissuade businesses wanting to move to the state and discourage small business growth. Existing business tax rates in Michigan are already a reason many companies opt to do business elsewhere, and this would give site selectors one more reason to put Michigan in the ‘Do Not Consider’ column.”
– Sandy K. Baruah, President and Chief Executive Officer, Detroit Regional Chamber
The Michigan Constitution is the state’s foundational document, intended to be a stable framework for government. It is not the place for complex and experimental tax policy. Once a proposal like this is added, it is incredibly difficult and expensive to fix or repeal, even if it proves disastrous for our state’s economy. Economic conditions change, but a constitutional amendment is virtually permanent.
Let’s keep the state’s constitution clean and allow elected officials to manage tax policy through the legislative process, where it can be debated and adapted over time.
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