Detroit City Wire

On February 10, Governor Gretchen Whitmer announced a plan to increase the corporate income tax for C-corporations in Michigan by up to two points or 33%, raising it from 6% to 8%. The Detroit Regional Chamber expressed gratitude towards Whitmer and Speaker Hall for seeking long-term solutions for road funding but emphasized the need to focus on user fees instead of potentially driving businesses out of Michigan.

The proposed tax hike affects not only large corporations but also smaller businesses. Data shows that 87% of C-corps have fewer than 100 employees, and these entities employ half of Michigan’s private sector workforce. This means that many residents could face budget cuts, decreased wages, and reduced spending power.

In addition to this proposal, Michigan's business climate faces several other changes. Next week will see an increase in minimum wage and a new requirement for sick time for all employees. An increase in unemployment benefits was enacted earlier this year, along with new tariffs on imported materials used mainly in the automotive industry. These actions are expected to impact the state’s economy negatively.

While sixteen states have reduced their corporate income taxes over the past seven years, Michigan seems poised to join states like California, Illinois, and Minnesota with high corporate tax rates. In contrast, states such as Arizona, Colorado, Florida, North Carolina, Texas, and Nevada offer lower or equal rates while adding jobs and residents.

Infrastructure improvement remains a critical priority according to both the Chamber and MichAuto. They advocate for focusing discussions on existing revenue sources for roads rather than raising taxes on small businesses. Meetings between the Chamber’s Public Policy and Business Advocacy team along with MichAuto representatives with the Governor's office are ongoing as they push against tax increases.

The Chamber urges its members to contact legislators across party lines promptly about potential negative impacts of this proposed tax change. Members can reach out directly or contact the Chamber’s Public Policy and Business Advocacy team for guidance or questions regarding these developments.