Poll: Strong support for graduated income tax

A new statewide poll shows that three-quarters of Michiganders support a graduated tax system in which the wealthy would pay more.

The poll from national progressive policy group State Innovation Exchange (SIX) determined that 76% of Michigan residents support the creation of a “graduated income tax where millionaires pay more and working people get a tax cut.”

That system, which is common in other nearby states like Ohio and potentially soon in Illinois, would replace Michigan’s 4.25% flat income rate — considered on the lower end of the spectrum, according to the Tax Foundation. The Washington, D.C.-based research group notes that Michigan is one of only nine states in the nation with a single-rate tax structure.

Gov. Gretchen Whitmer has expressed support for a graduated income tax system in theory, particularly as the Republican-led Legislature has been reluctant to approve her plan for repairing the state’s roads.

SIX’s polling reveals “that Michigan voters are hungry for concrete improvements in the everyday life of the average person and their family,” according to a statement releasing the findings.

The polling also found that health care is Michiganders’ predominant economic concern, and that 58% of people in the state support repealing corporate tax cuts signed by Republican former Gov. Rick Snyder.

“Michiganders prioritize tangible impacts that help working people,” the group said. “Moreover, Michigan voters see a clear role for government in delivering these improvements and more broadly providing opportunities that help working families.”

Pluses and minuses

Naturally, “the devil is in the details” with regard to how much revenue the state might raise through a graduated income tax, according to Eric Lupher, president of the Livonia-based nonpartisan policy group Citizens Research Council of Michigan (CRC).

A constitutional amendment is necessary to enact a graduated income tax, unlike some other tax changes like Snyder’s business tax overhaul — which makes it a steeper climb for advocates.

Michigan voters have previously rejected a graduated income tax, the last time in 1976, as the Advance has previously reported.

For Lupher, the issue of a graduated income tax — sometimes referred to as “progressive” — offers both pluses and minuses.

One upside, Lupher said, is that a graduated income tax at least has the potential to put more money in state coffers as Michigan’s wealthy are taxed at higher levels. But he also notes that those who would incur the higher tax rates would be naturally inclined to protect their money through other means like moving to places with lower tax rates.

“For every economic action, there’s an economic reaction,” Lupher said.

Business groups like the Michigan Chamber of Commerce have strongly opposed such proposals, referring to the tax as “class-warfare” that would create an “immediate and blatant redistribution of wealth that punishes individuals and job providers for being successful.”  

In a graduated tax system, states have multiple levels of taxation based on taxpayers’ income level, similar to the federal tax code.

Democratic state legislators have introduced what they call “fair tax” legislation this session that would put the system into place.

House Bills 4481, 4482 and House Joint House Joint Resolution G were introduced by state Reps. Robert Wittenberg (D-Huntington Woods), Jim Ellison (D-Royal Oak) and Rebekah Warren (D-Ann Arbor), respectively. State Sen. Jeff Irwin has introduced Senate Joint Resolution D.

The legislation has yet to receive a hearing in the GOP-controlled chambers.

“We should not be asking our working families to pay a larger percentage of their income into a broken system than we do millionaires and billionaires,” Wittenberg said in a statement when the bills were introduced.

“We can’t fund our local governments or pay for the roads and schools our families deserve if those who make less are asked to shoulder more of the weight. … When our state’s tax rules result in massive funding gaps for the things that matter most to the people of our state, it is time to rewrite the rules.”

The House members say their proposal would generate $2.5 billion in state revenue in the first year.

That revenue estimate is in line with what Whitmer hopes to raise with a 45-cent increase to the gasoline tax, proposed as part of her initial budget. Legislative Republicans have said the proposal is a non-starter.

Asked last month by the Advance if she’d push for a graduated income tax ballot proposal, absent a road-funding deal in the Legislature, Whitmer didn’t rule it out.

“You know, that’s something that I have said in the past [is] a philosophy that I subscribe to and that I would support,” Whitmer said. “I can’t build a budget this year based on the prospect of a ballot initiative next year, but if that were to proceed, I think that there could be some powerful reasons that have been made [for it to pass].”