LANSING, MI – A proposed tax hike in Michigan, potentially targeting high-earning households, is drawing sharp criticism from fiscal policy and business advocacy groups, who warn of significant negative impacts on the state's economy and job market. James Hohman, Director of Fiscal Policy for the Mackinac Center for Public Policy, has publicly stated that the proposed increase is "bad for business --- and worse for jobs."
The debate centers on a proposal that could see top earners in Michigan subject to a combined federal and state income tax rate of up to 46.25%, potentially placing Michigan among states with the highest income tax burdens. This measure is reportedly aimed at individuals earning over $175,000 annually, or families with incomes exceeding $350,000, and is projected to increase state revenue by at least $1.5 billion.
The Mackinac Center argues that Michigan's state government does not require additional revenue, asserting that the state faces a spending problem rather than a tax revenue deficit. According to Hohman, the state budget is on an "unsustainable path," and current spending levels are already significant. The Center contends that the proposed tax increase would stifle investment, discourage entrepreneurship, and impede economic growth.
The concerns voiced by the Mackinac Center are echoed by broader business organizations. The Michigan Chamber of Commerce has also expressed strong opposition, stating that such a "massive tax hike" would "penalize success, discourage hard work and entrepreneurship and hurt Michigan’s economy by stifling investment and growth." This comes as Michigan's economic recovery has reportedly stagnated, with economic growth rates lagging behind the national average.
As discussions continue around the 2025 state budget and potential ballot initiatives, the fiscal policy landscape in Michigan remains a key point of contention. The Mackinac Center, through figures like James Hohman, continues to advocate for fiscal restraint and policies that it believes will foster a more competitive business environment and encourage job creation without increasing the tax burden on residents and businesses.