Michigan Voters Trounce Tax-Restraint Measure

Michigan Voters Trounce Tax-Restraint Measure
November 7, 2012

Michigan voters in the November 6 election rejected a statewide ballot initiative for a constitutional amendment to make it more difficult to raise state taxes .

Proposal 5 called for a two-thirds supermajority vote of both the Michigan House and Senate, or a simple majority vote of the people in a November election, to impose new state taxes or raise existing state taxes that currently need only a majority vote of the Legislature.

The measure failed by a 69 to 31 percent margin.

Initiatives Swept to Defeat

“It looks like Proposal 5 got swept up in the enthusiasm to reject each of the six proposals on the ballot this year,” said James Hohman, assistant director of fiscal policy for the Mackinac Center for Public Policy. “This is unfortunate since it would have improved Michigan’s fiscal landscape.”

Proposal 5 stated the amendment “shall in no way be construed to limit or modify tax limitations otherwise created in this constitution.” This language means Proposal 5 would have left unaffected the state constitution’s 1978 Headlee Amendment, which contains a variety of tax and revenue limitations on state and local government. The proposal also would not have changed the state’s constitutional requirement of a three-quarters supermajority vote of both the state House and Senate for any increase in the state education property tax.

Opponents Joined Forces

Prominent Michigan politicians and government unions led the fight against Prop 5. Those publicly opposing the measure included Republican Gov. Rick Snyder, Democrat Mayor Virg Bernero of Lansing, Chief Randall Talifarro of the Lansing/East Lansing Fired Department, the Michigan Manufacturers Association, and numerous Michigan labor unions.

In a video ad against the measure, Snyder said it would establish “minority rule” on tax policy.

Among the supporters were the Michigan branch of the National Federation of Independent Business, and Michigan Alliance for Prosperity.

Sixteen states have a legislative supermajority tax vote requirement, and 30 have a tax or expenditure limit like the Headlee Amendment. Michigan would have had both types of limitations under Proposal 5 (and to some extent already does, given the state’s supermajority tax vote requirement for raising state education property taxes).

Michigan’s recent history does not suggest a supermajority tax vote requirement would have made raising taxes impossible. When the legislature passed a $1.4 billion increase in personal and business taxes in 2007, the state House and Senate did not meet the two-thirds threshold that Proposal 5 would have required. Nevertheless, most of the Republicans who voted against the tax hike ended up voting for much of the spending associated with the new tax revenue. Had they been faced with the possibility of not having this money due to a two-thirds tax vote requirement, many of them might have provided votes for the tax hike after all.

Michael D. LaFaive (LaFaive@Mackinac.org) is director of the Morey Fiscal Policy Initiative at the Mackinac Center in Midland, Michigan.