Monday, March 3, 2025
Dear Legislators,
The West Michigan Policy Forum opposes proposals by Gov. Gretchen Whitmer, or any others, that make it more expensive to create jobs or drive to work or school in our state.
While good roads and bridges are an integral part of a thriving economy, tax increases and fee hikes will only hurt our ability to grow jobs and become a Top Ten state.
While we certainly support efforts to fix Michigan roads, tax hikes in general and the CIT proposal in particular are rooted in a fundamental misunderstanding of who actually pays the costs of higher taxes. For example, although the governor’s news release said her road funding plan would ask “massive corporations and Big Tech industries, such as Amazon, X, Facebook, and TikTok” to “pay their fair share to do business in Michigan,” the large majority of job providers that pay the CIT are small- and mid-size businesses.
According to the Michigan Chamber of Commerce, 87% of businesses that pay the CIT have fewer than 100 employees. The Small Business Association of Michigan says 62% of businesses that pay the tax have fewer than 10 employees.
Raising the cost of living, working and creating jobs in Michigan is the wrong approach because Michigan already struggles to attract and retain businesses compared to lower-tax states like Indiana, Tennessee, and Texas. Raising the CIT will push companies to invest in states with more competitive tax climates, reducing job opportunities for Michigan workers.
Further, despite common rhetoric to the contrary, corporate taxes are not absorbed by businesses. They are passed down to consumers through higher prices and to employees through stagnant wages or reduced hiring. Increasing taxes on employers will make Michigan’s cost of living and cost of doing business less competitive.
Higher taxes in general also disproportionately harm small- and mid-sized businesses, which are the backbone of Michigan’s economy. A tax increase will make it harder for startups to scale, discouraging innovation and new business formation at a time when Michigan should be fostering economic growth.
Too often government has provided large subsidies to favored businesses and then asserted a need for more money from hardworking taxpayers. Billions have been given out in recent years, often with few jobs being created. Further, despite having a surplus of $9 billion as recently as 2023, our elected officials funded special projects instead of essential road funding.
Therefore, we commend Speaker Matt Hall for taking a leadership role when it comes to fixing our roads. Hall has proposed a $3.1 billion road funding plan that relies only on re-prioritizing existing state revenues. As he points out, about $1 billion could be freed up from the tax credits currently given to a select few businesses at the expense of all Michigan taxpayers, $500 million could come from redirecting legislative earmarks and $600 million in additional revenue is available from the recent Consensus Revenue Estimating Conference.
Instead of burdening small- and mid-sized businesses – and the people of Michigan – with higher taxes or fees, lawmakers should prioritize smart, sustainable solutions that fix our roads without jeopardizing jobs or Michigan’s competitiveness.
For more information on the WMPF, please visit wmpolicyforum.com.
