Advocacy News – June 6, 2025
What’s happening: A new progressive coalition is pushing a 2026 ballot initiative to amend the State Constitution and create a 5% surcharge on higher earners – effectively instituting a graduated income tax – that would hit Michigan’s small businesses hard.
- The proposal, which doesn’t have a lot of specific details yet, would increase Michigan’s income tax rate for individuals earning over $500K and couples earning over $1M. For some, this could more than double the rate to as high as 9.5%.
- The impact would be particularly devastating to smaller businesses, most of which are pass-through entities (sole proprietorships, partnerships, S corporations, LLCs), whose income is taxed at the owner’s individual rate. The increase, estimated at $1.7B, is slated to be earmarked for education funding.
Why it matters: If passed, this proposed tax hike would penalize success, discourage hard work and entrepreneurship and hurt Michigan’s economy by stifling investment and growth.
- While some have argued that Michigan’s education system is underfunded, the state’s rankings continue to plummet despite record investment. Michigan recently fell behind Mississippi, ranking among the bottom 10 states in education outcomes.
- The Michigan Chamber supports education reforms that enhance student skills and workforce/college readiness. A massive tax hike without real policy change or accountability won’t address the root causes and Michigan’s lagging economy cannot afford these burdens.
What we’re doing: The Michigan Chamber is closely following this proposal as details emerge and assessing negative impacts and consequences. We will continue to advocate for policies that improve education outcomes and build a skilled workforce — while maintaining a competitive environment for employers.
What’s next: The proposed tax hike needs 422,000 valid signatures to make it to the ballot. The coalition has said it intends to propose language to the State Board of Canvassers at its June 20 meeting, and then begin collecting signatures to meet that threshold.
Your input needed! Have questions or feedback on this proposal? Reach out to Randy Gross.