Invest in MI Kids is a ballot proposal to change the state constitution by increasing taxes on higher earners and sending the money to public schools. Doing so would make it easier for politicians to raise taxes in the future — not only on “the rich” but on everyone else.
The proposal would add a 5% income tax on those earning more than $500,000 per year (or $1 million for joint filers). This would be an enormous tax increase. In short, this constitutional amendment would do the following:
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Double Michigan’s income tax rates to nearly 10% for high earners, including business owners, farmers, and others,
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Give Michigan the seventh-highest state income tax in the nation,
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Leave some taxpayers in Detroit paying nearly half their income in taxes, the fourth-highest rate in the county once federal, state and local taxes are included.
And taxes matter; people will move or do other things to avoid paying taxes. That is why high-tax states are losing residents while low-tax states are gaining them. Consequently, most states are doing the opposite of what Michigan is pursuing; they are cutting and flattening their tax rates. The Invest in MI Kids proposal would make Michigan become even less competitive, both with its neighboring states and the rest of the country.
The extra money raised by the increase would ostensibly be used to fund education, but Michigan is spending billions more on schools and has increased spending tremendously over the last decade. Schools now receive $23,700 per student, or half a million dollars per classroom. This ballot proposal is not about helping schools — lawmakers can always appropriate more money for schools. It is instead about changing the Michigan Constitution to make it easy to raise taxes.
When flat tax systems turn into progressive tax systems, they always start by targeting “the rich.” The first federal income tax started out targeting just a tiny number of households. It grew into a monstrosity with higher and higher rates affecting almost everyone. We see the same pattern in the states. Connecticut eliminated its flat tax in 1996, promising a tax on the rich in exchange for cutting taxes for everyone else. Despite this promise, property and income taxes on the middle class quickly rose. In Illinois, it didn’t take long for lawmakers to begin proposing a bunch of different graduated income tax rates to put in place if voters changed that state’s constitutional flat tax.
The constitutional change envisioned by Invest in MI Kids would burden Michiganders with some of the highest rates in the country. It would drive people from the state, further exacerbating our population problem. And as far as helping kids in school goes, it would do nothing that couldn’t be done right now without changing the state constitution.
