Michigan Democrats, Michigan Republicans, Taxes — April 19, 2017 at 12:27 pm

Turning Michigan blue again: Dem proposal for a graduated income tax is precisely what they should be fighting for


In March of 2015, Michigan Democrat Jim Townshend introduced legislation in the House – House Bill 4341 – that would change Michigan’s regressive flat state income tax to a graduated tax. Not surprisingly, it never went anywhere in the Republican-controlled House. And that’s a shame because, if implemented, it would increase state tax revenues by as much as $700,000,000 $870,000,000 and still lower taxes for 95% of Michiganders.

This is the sort of populist, across-the-board, tax policy that could appeal to even people who found themselves voting for Donald Trump in November of last year. Why do I say that? Have a look at these results from a recent EPIC-MRA poll on this topic:

Click to embiggen

A full 70% of Michiganders favor this tax proposal. It doesn’t matter how you slice the respondents demographically, a majority of people like this idea. A LOT. Even people with incomes over $100,000 a year support it 64% to 27%.

The breakdown on the tax rates looks like this:

3% tax rate on incomes up to $20,000
4% tax rate on incomes between $20,000 and $40,000
5% tax rate on incomes between $40,000 and $80,000
6% tax rate on incomes between $80,000 and $125,00
7% tax rate on incomes between $125,000 and $200,000
8% tax rate on incomes between $200,000 and $500,000
9% tax rate on incomes between $500,000 and $1,000,000
10% tax rate on incomes over $1,000,000

UPDATE: These tax rates are not for ALL of your income, they are for the income up to that point. So, if you make $135,000 a year, the first $20,000 is taxed at 3%, the next $20,000 is taxed at 4%, the next $40,000 is taxed at 5%, the next $45,000 is taxed at 6%, and the final $10,000 is taxed at 7%.

Fortunately, the bill has been reintroduced by Democrat Robert Wittenberg as House Bill 4436.

There’s a lot of talk about why Democrats got their clocks cleaned in 2016 (and in many cycles before 2016.) There’s consensus that, in part, it’s because we focused too much on minority groups and failed to offer anything to “average” middle class Americans. A tax cut for 95% (95%!!!) of Michiganders that raises as much as $700,000,000 is precisely the sort of policy Democrats should be promoting. And the data suggests it would be widely and wildly popular.

Be sure to let your state legislators know that H.B. 4436 has YOUR support and should have THEIR support, too. And, as the graphic above indicates, if they don’t, the citizens of Michigan may well bypass them entirely and put it on the ballot themselves.

[CC image credit: Donkey Hotey]

  • Where can I validate that 95% number?

    • Jim Townsend and Jeff Irwin had a great presentation on this that broke it down. I’d suggest contacting Robert Wittenberg, the House Democrat who is sponsoring the current legislation. I’m sure he’s got the data you’re looking for.

  • Don_K

    Maybe since it’s starting out at 70% it might stand a chance. I foresee the “Vote No” ads focusing on the marginal rates and saying “If you make $50,000 a year your income will be taxed at 5% instead of 4.25%, and the Lansing politicians will send the money straight to Detroit!”

    Assuming the definition of taxable income stays the same, my 2016 taxes would have been almost $800 higher, but I would totally vote Yes on this, because I think Michigan needs more nice stuff like, mmm, education and local aid.

  • Don_K

    I also would like to see the backup behind the 95% number, because, again assuming no change in the definition of taxable income, the break-even income is $80,000, and while I will agree 80K is a pretty solid income, I’m not sure I buy that it’s at the 95th percentile.

  • BurinMRB

    Your details showing the evidence for a graduated income tax here in Michigan makes a lot of sense. Obviously, that’s what we need. [Don’t know why we in Michigan have wasted a decade or more of being silly about this.]
    I remember John Engler, while governor, sending me refund checks for 50+ dollars as he went about eliminating our state income tax. Those checks didn’t make a difference in my life. [I always what the point was?]
    I remember looking at one of these checks and saying, ‘Mr. Engler, why don’t you just give this money to our schools? They could use it more than the rest of us”.