Michigan Capitol, by Allie Osmar Siarto, licensed under CC
As budget negotiations continue in Michigan, House Speaker Matt Hall and Michigan Republicans should continue holding the line in opposing new or higher tax on Michiganders.
This commitment paints a sharp contrast between Republicans and Democrat Governor Gretchen Whitmer, whose budget proposal included a slew of new and higher taxes.
Included in the Governor’s proposal are a brand new 4.7% digital advertisement tax, an increase in from $2 to $3 in the wholesale tax on cigarettes, an 8% increase in online casino gambling taxes, a brand new 57% wholesale tax on vapes and other nicotine products like pouches, and a tiered per-wager tax on sports betting with elevated rates based on the usage of a particular platform. Whitmer’s proposal also includes a drastic hike in the solid waste fee from 36 cents to $5 per ton over the next five years.
Supporters often frame higher taxes on tobacco and gambling as a method to curb “bad behavior.” Yet these taxes conveniently serve as “politically easy” revenue sources for state government. Rather than addressing underlying spending pressures, they ask a narrower group of taxpayers to shoulder a larger share of the state’s budget. Sin taxes are simple money grabs disguised as moral enforcement.
Digital advertisement taxes are framed in a similar way. Democrats will act like these taxes force large companies to “pay their fair share,” but the added costs get passed down directly to small businesses who use those platforms to elevate their products and services. This drives economic growth downward and pushes small businesses directly out of markets.
Michiganders will bear the burden of these tax hikes, regardless of what types of businesses are targeted directly by Whitmer’s administration. They will still buy these goods, engage in the growing online gambling market, and they will certainly still take out their trash. Their behavior will not change – nor should it change at the government’s request – but the impact on their finances will.
Whitmer’s budget includes the array of new and higher taxes as many of Michigan’s neighboring states have moved in the opposite direction by reducing tax burdens and simplifying their tax codes. Their neighbors to the south, Indiana and Ohio, both now have a flat income tax rate. Adding new taxes on advertising, nicotine products, gaming, and other industries risks making Michigan an even less attractive place to invest and do business.
Michigan Republicans understand this. The Republican-controlled Michigan House has advanced proposals to eliminate the state’s property tax, while Republican House Speaker Matt Hall shuts down potential tax hikes before the idea can even marinate. He has explicitly stated that “we’re not going to do any of that” when speaking about Whitmer’s batch of tax hikes.
With the initial budget deadline fast approaching, it is paramount that Michigan Republicans continue to stand their ground and use their leverage to ensure that no tax hikes advance to Whitmer’s desk in the final budget. Americans for Tax Reform applauds Speaker Hall and House Republicans for holding the line.
