Michigan voters have resoundingly defeated Proposal 1, a taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. package designed to raise an additional $2 billion a year, largely through sales and gas taxA gas tax is commonly used to describe the variety of taxes levied on gasoline at both the federal and state levels, to provide funds for highway repair and maintenance, as well as for other government infrastructure projects. These taxes are levied in a few ways, including per-gallon excise taxes, excise taxes imposed on wholesalers, and general sales taxes that apply to the purchase of gasoline. increases. Our pre-election analysis of the ballot initiative can be found here.
As of this writing, preliminary results show opposition to the proposal garnering 80 percent of the vote. Originally proposed as an alternative to a defeated proposal to raise the gas tax to fund transportation maintenance and improvements, the voters’ verdict on this tax increase sends legislators back to the drawing board.
Michigan has undertaken substantial reform of its tax code in recent years, changes which are reflected in a much more competitive ranking in our State Business Tax Climate Index, on which Michigan now ranks 13th. Addressing the state’s legitimate infrastructure needs while preserving the state’s growing economic competitiveness will not be easy—but few things worth doing are.
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