STATE BALLOT ISSUES – PROPOSAL D
THE GRADUATED INCOME TAX

Council Comments No. 890, October 7, 1976

Proposal D on the November 2 ballot is a proposed constitutional amendment that would eliminate the present constitutional prohibition against graduated income taxes, require a graduated state income tax in 1977, and beginning in 1978 authorize the legislature to impose either a graduated or flat rate income tax. The proposed amendment to Article IX, Section 7 of the Michigan Constitution, which was placed on the ballot by initiative petition would:

• remove the present constitutional prohibition against graduated state or local income taxes;
• require that for calendar 1977 the legislature impose a graduated income tax at a maximum rate of 3.9 percent on the first $20,000 of the taxable income of individuals after allowing personal exemptions of at least $1,500 for each taxpayer and dependent and require that the rate on taxable incomes over $20,000 be increased to the rate needed to make up for the revenue loss. It is estimated that the rate on taxable income in excess of $20,000 would be 8.5 – 9.0 percent;
• establish the present statutory $1,500 personal exemption as a constitutional minimum exemption and authorize the legislature to allow other exemptions, credits and deductions;
• authorize the legislature to impose after January 1, 1978, either a graduated or a flat rate state personal income tax;
• permit the legislature to impose a graduated corporate income tax; and
• permit the legislature to authorize graduated local income taxes.