STATE BALLOT ISSUES–III

PROPOSED CONSTITUTIONAL AMENDMENT TO PERMIT GRADUATED INCOME TAXES
Council Comments No. 861, October 17, 1972

Proposal Don the ballot at the November 7, 1972, general election is an amendment to Article IX, Section 7 of the Michigan constitution to permit graduated income taxes. The proposed amendment provides:

An income tax at flat rates or graduated as to rate or base may be imposed by the state. Political subdivisions of the state may levy an income tax at flat rates or graduated as to rate or base as may be provided by the legislature.

The proposed amendment would replace the present constitutional provision which provides “No income tax graduated as to rate or base shall be imposed by the state or any of its subdivisions.” The proposed amendment was placed on the ballot by initiative petitions circulated by the Michigan Education Association.

The present constitutional prohibition against a graduated’ income tax was incorporated in the constitution of 1963 as an express 1imitation on the power of the state or any of its political subdivisions to impose a graduated income tax. At the present time, flat rate income taxes are imposed by the state and, pursuant to the provisions of the uniform city income tax act, cities are authorized on a local option basis to adopt city income taxes. No other type of political subdivision (counties, townships, villages, school districts) is authorized by state law to impose local income taxes. The state income tax is now levied at a flat rate of 3.9 percent on the taxable income of individuals, a flat rate of 7.8 percent on corporate net income, and a flat rate of 9.7 percent on the ·income of financial institutions. The uniform city income tax act provides for a rate of one-half percent on the taxable income of non-resident individuals and a flat rate of one percent on the taxable income of resident individuals and corporations, except for Detroit where the rate on resident individua1s and corporations is two percent.


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