Know the Facts: What the Petition Really Means for Small Business

A ballot petition making the rounds could dramatically alter Michigan’s Constitution and tax structure – with serious consequences for small businesses, jobs and our economy.

A Massive Tax Hike in Disguise

You may be approached at a farmers’ market, festival or event this summer or fall and asked to sign a petition to “Invest in MI Kids” that may sound great at first.

But here’s what the signature gatherers won’t tell you:

• “Surcharge” = tax hike. It would be a significant shift in Michigan’s tax structure that’s been prohibited by Michigan’s Constitution since its inception, replacing Michigan’s flat income tax with a graduated (progressive) one. 

• Tax on small business, not “billionaires.“ It doubles the rate on income over $500K (individuals) and $1M (joint filers) — around 75% who are small to mid-size business owners! 

• Sky-high outlier. It raises taxes to 9.25% — the 7th highest in the country and highest in the Midwest.
  
• Middle class squeeze. These proposed income thresholds would be locked into our State Constitution, with no adjustment for inflation. Over time, as wages and cost of living rise, more and more middle- and upper-middle-income taxpayers will be pushed into the staggeringly high tax bracket. 
  

The big picture: Despite how it’s being sold, this proposal isn’t about taxing high-income earners. According to IRS data, about 18,300 Michigan taxpayers would be hit by the new 9.25% tax bracket — and around 14,000 of them (about three-quarters) are small to mid-size business owners operating in every community across our state.

This kind of steep, targeted tax increase puts jobs at risk, raises prices, deters investment, and undermines Michigan’s competitiveness — all while the state is already struggling with population loss and sloweconomic growth.

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