If Michigan's tax burden is so low, why do taxes seem so high to YOU?

Just because the state’s tax revenues have gone down, that doesn’t mean individual taxpayers are paying less. Truth is, a variety of individual Michigan taxpayers have, indeed, seen higher taxes in recent years.

One of the biggest reasons is a major tax shift. Six years ago, newly elected Governor Rick Snyder fulfilled a major campaign promise and drastically cut state business taxes in concert with the Michigan Legislature.  

Today, Michigan offers the 12th best tax climate for business in the nation – up 17 spots from 29th a decade ago, according to the nonprofit Tax Foundation.  

Individual Michigan taxpayers paid for the bulk of that business tax cut. From 2013 to 2015, Michigan businesses received a collective tax cut of $5.2 billion. In turn, individual taxpayers endured a tax increase of $4.7 billion – through repeal of various tax loopholes, reduction in tax credits for low-income families, and more than $1 billion in new taxes on pensions.

Bottom line: That tax shift from business to individuals has amounted to a per capita tax increase of $150 a year.

In addition, a decade ago former Governor Jennifer Granholm and the Legislature hiked the state income tax from 3.9 percent to 4.35 percent during a severe state budget crisis. (The income tax rate dropped back to 4.25 percent in 2013.) A variety of other taxes have also increased. For example, gasoline taxes are up 17 percent to help pay for a half-measure road funding package the governor and legislature approved in 2015. (Then again, gasoline prices have remained low, so consumers haven’t felt the gas tax hike as much as they might have otherwise.)

Finally, and critically, Michigan workers have had a very tough time in the 21st Century. Collectively, we’ve simply made less money than our peers nationwide. That’s one of the biggest and most damaging outcomes of the Great Recession and resulting loss of manufacturing jobs in Michigan. From 2000 to 2010, Michigan workers’ wages rose a total of only 15 percent – the slowest wage gains in the nation. Nationwide, wages rose 44 percent over the same period.

If Michigan wages had grown this century at the national rate, the average worker here would make $5,000 more this year. With low or stagnant wages, many Michigan workers have less ability to pay taxes and may be understandably less tolerant of them.

(Want more details? Read this official state report.)

NEXT: Why do legislators want to cut the state income tax?

About The Author

John Bebow

John Bebow is president and CEO of the Center for Michigan. Prior to joining the Center in 2006, he worked for 16 years as a professional journalist.

Mike Wilkinson

Mike Wilkinson is Bridge’s computer-assisted reporting specialist. He can be reached at mwilkinson@bridgemi.com.

Ted Roelofs

Ted Roelofs is a Bridge contributor based in Grand Rapids. He can be reached at ted.roelofs@gmail.com

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Tue, 05/09/2017 - 1:46pm

With all those big tax breaks why can't Michigan businesses use that money to train the workers that they say they can't find? Businesses in Michigan want everything handed to them on a silver platter with as little effort as possible on their part.

Mark W.
Sun, 05/14/2017 - 11:22am

10 years ago Michigan was in shambles. Economy in ruins taxes high, getting higher. Unemployment sky high. Today....low unemployment, more businesses employing more workers, positive state revenue. How many hundreds of millions spent on Flint and Detroit? Take the debt of these two DNC controlled strongholds and you have even more money. California just raised its gasoline tax and its residents and the press drawing attention to how high it is...its about the same as Michigan's now after the recent hike where Democrats screamed and fought tooth and nail about keeping the gas tax money for roads. There is still billions of dollars in unfunded pensions...Obama talked about businesses hiding assets and moving headquarters overseas to avoid the high taxes...if Michigan continues to raise its taxes on business the same thing will happen. Not really sure where bridge got their info about Michigan's tax burden, but perspective is everything.