For Immediate Release:
May 2, 2016
Contact: Robert Schneider
Michigan Tax Burden Remains below National Average
A new interstate comparison shows that Michigan has remained a low tax state. Following Michigan’s “lost decade” of economic malaise, the Great Recession, and a number of significant tax policy changes, 2013 U.S. Census Bureau data show that Michigan’s state and local tax burden was ranked 35 among the 50 states and Washington, D.C. Michigan’s total tax burden per capita was 82 percent of the national average, and the state’s tax burden as a percent of personal income was 93 percent of the national average.
A new report from the Citizens Research Council of Michigan, 2013 Revenue Comparison: Michigan and the U.S. Average, examines the 2013 data, considers the causes of changes in Michigan’s tax burden over time and the tax policy changes since 2013 that will cause future changes.
“Michigan personal income growth has not kept pace with personal income in other states, which has resulted in fewer tax receipts for Michigan when compared to the other states,” said Bob Schneider, Citizens Research Council Director of State Affairs. “Reductions in tax rates and shrinking the bases of some taxes have also contributed to Michigan falling below average.”
In addition to the total tax burden falling below average, the decline in tax burden has played out for each grouping of major taxes – property, sales, and income.
Thirty years ago, Michigan was among the top ten states for the property tax burden levied at 150 percent of the national average. In 2013, Michigan ranked 26th in the nation for per capita property tax revenue, at 92 percent of the national average. At the same time, Michigan ranked 18th in the nation for property tax revenues per $1,000 in personal income at 104 percent of the national average.
Before Proposal A of 1994 increased the sales and use tax rates to increase, the Michigan general sales tax burden was among the bottom ten states. That ranking increased as a result of Proposal A, but has declined in recent years such that 2013 general sales tax revenues per capita were 32nd highest and 83 percent of the national average. Michigan ranked 29th highest in general sales tax revenues per $1,000 in personal income, 94 percent of the national average.
Personal income tax revenues reflect Michigan’s relative decline in personal income. In 2013, Michigan ranked 34th in the nation at 81 percent of the national average of tax revenues per capita and 92 percent of tax revenues per $1,000 of personal income.
Michigan was in the bottom ten states in corporate tax revenues at 54 percent of the national average for per capita tax revenues and 61 percent of the national average of tax revenues as a relative to personal income.
“Michigan tax revenues are below average whether you judge Michigan against itself over time or against other states in a snapshot of 2013 tax revenue,” said Schneider. “These are the primary resources used to fund state and local government services and the decline is borne out for many of our governments in the service reductions and cutbacks experienced over the past decades.”
2013 Revenue Comparison: Michigan and the U.S. Average is available at no cost on the Citizens Research Council’s website, www.crcmich.org.
Founded in 1916, the Citizens Research Council of Michigan works to improve government in Michigan. The organization provides factual, unbiased, independent information concerning significant issues of state and local government organization, policy, and finance. By delivery of this information to policymakers and citizens, CRC aims to ensure sound and rational public policy formation in Michigan. For more information, visit www.crcmich.org.