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Michigan group rushes to get graduated income tax on 2020 ballot

LANSING — A new group led by Democratic activists wants voters in November to decide whether Michigan should switch to a graduated income tax, a measure that would likely face opposition from conservatives and business groups. 

The proposal from Fair Tax Michigan would amend the state constitution and direct officials to replace the state’s 4.25 percent flat tax with a version that would adjust rates based on annual income, imposing a higher rate on higher earners.

The plan calls on the Legislature and governor to cut taxes for individuals with incomes up to $175,000 and joint filers who make less than $350,000. Higher earners would pay higher rates to generate at least $1.5 billion in new revenue that would be split between schools and infrastructure.

“For too long, our schools, roads and critical water infrastructure have been underfunded or outright ignored,” Branden Snyder, executive director of Detroit Action, said in a statement announcing the initiative. 

“All the while, the wealthiest Michiganders have not paid their fair share. This ballot proposal will make our tax system fair and raise the revenue needed to fund the critical services that we all need.”

Organizers announced the initiative Friday after submitting proposed language to the Secretary of State. They plan to wait for the Board of State Canvassers to approve the form before beginning to circulate petitions. 

All the while, the wealthiest Michiganders have not paid their fair share. This ballot proposal will make our tax system fair and raise the revenue needed to fund the critical services that we all need.”

They’ll need to collect and submit at least 425,059 valid voter signatures by July 6 to qualify for the November ballot.  Ballot committees typically have 180 days to collect signatures, but the July 6 deadline is just 129 days away. 

Campaign manager Eli Isaguirre told Bridge Magazine the group can meet the signature threshold despite the short window, pointing to the unexpected success of the anti-gerrymandering Voters Not Politicians petition drive in 2018. 

“We saw that it could be done just a couple of years ago with an all volunteer group,” he said. “We think that we can do this, and we wouldn’t be submitting the language at his point if we didn’t see a path.”

Asked how the petition drive will be funded, Isaguirre said the initial effort is spearheaded by “truly grassroots groups,” but he anticipates the coalition will grow in coming weeks and months. 

“We’re expecting to have a fully funded ballot initiative that gets on the ballot and has the resources needed to win,” he said. 

The proposal does not spell out details of the potential graduated income tax but would direct the Michigan Legislature and governor to finalize a plan by June 2021 with new rates to take effect by 2022. 

That would be a big ask for Lansing, where Democratic Gov. Gretchen Whitmer has clashed with the Republican-led House and Senate on tax policy, including her failed plan to hike fuel taxes by 45-cents per gallon to fund road repairs. 

If elected officials don’t agree on a new tax code by June 2021, the proposal would direct Whitmer to create a graduated income tax by executive order. 

Michigan Chamber of Commerce President and CEO Rich Studley had not seen the full proposal Friday afternoon but was quick to signal opposition to what he called a “massive” tax hike proposal. 

“Our concern at the Michigan chamber will primarily be for taxpayers and the extremely negative impact this proposal would have on job creation, job retention and the state’s economic competitiveness,” Studley said. 

“We're in a fierce competition with other states for jobs, including states like Florida and Texas that have no income tax, so anyone who works and pays taxes should be concerned.”

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