New numbers out of Michigan show that sixty percent of registered voters support ditching the state's 4.35% flat rate income tax, and moving toward a graduated rate system that imposes higher tax rates on wealthier Michiganians. These numbers are virtually unchanged from when a similar poll was conducted two years ago. As the Michigan League for Human Services (MLHS) recently noted, enacting this popular reform would do much to remedy the state's structural deficit since the current flat rate system is incapable of "capturing the growth in income that has been occurring among the state's higher income taxpayers". Unfortunately, since Michigan unwisely enshrined the flat tax standard in its constitution, such a reform would require a constitutional amendment. These recent polls make clear, however, that such an amendment would be well received.
Other good news from Michigan comes in the form of a recent flurry of interest in reforming the state's numerous costly and ineffective tax breaks for businesses. This discussion comes on the heels of a lengthy report, commissioned by the Michigan Education Association and the National Education Association, which analyzes in detail a number of these special tax breaks. This report represents a positive first step forward in implementing a better system for keeping track of these hidden giveaways. As the report notes, "unfortunately, there exists no comprehensive assessment of the effectiveness of Michigan's tax incentive programs." In the future, having government itself undertake such studies could pay enormous dividends in the form of enhanced transparency.
Unsurprisingly, the report found a number of these programs to be wildly ineffective. Chief among the most wasteful programs is the state's film tax credit, recently lambasted in this op-ed. Unfortunately, the same poll mentioned above also found significant support among Michiganians for this program. Hopefully with the release of this new study, residents will take the time to give that opinion a second thought.