Michigan lawmakers looking to phase out the state’s income tax over time without a plan to replace it won’t find much support from their constituents, according to a new survey. The poll, commissioned by the Michigan League for Public Policy, found that nearly three-quarters of those surveyed oppose the plan – introduced in both the Michigan House and Senate – that would leave up to a $9 billion hole in the state’s general fund.
The League’s president and CEO, Gilda Jacobs, says if the goal of good tax policy is to move the state toward a more prosperous future, this plan misses the mark.
“Less money for infrastructure, less money for K-12 schools, higher college tuition, and then, less support for people with disabilities and seniors, and families, and children that live in poverty,” she said. The state’s 4.25% income tax makes up about one-third of the entire state budget, giving Michigan the 36th highest overall tax burden in the nation. Nine states currently have no income tax.
The Republican legislators who introduced the plan claim it will help bring people, businesses, and jobs back to the state. But Jacobs believes the opposite would happen. It passed a House committee on Wednesday, with Governor Snyder criticizing the vote and the plan. The bill in the House drops the tax from 4.25% to 3.9%, and then eliminates a tenth-of-a-percent of the tax every year for 39 years until it’s gone.
“People in Michigan deserve to have good services and decent roads, and affordable colleges, and safe streets, and you can’t have those important services without taxes,” Jacobs added.
A similar tax reform plan implemented in Kansas in 2012 led to massive political and financial turmoil for that state. While the proposal passed the House Tax Policy Committee Wednesday, Jacobs says it’s noteworthy there was no mention of an income-tax repeal in Governor Snyder’s budget proposal, which he unveiled last week.