Last summer, we alerted you about a proposed constitutional amendment being circulated by a group called Invest in MI Kids. Their campaign was messaged around a simple, and easy-to-understand slogan: “Tax the rich to pay for schools.” But as we explained at that time, the proposal was far more consequential than what the slogan suggested. Behind the surface-level appealing messaging was a permanent rewrite of Michigan’s tax structure that would have doubled the top-level tax rate for many of our state’s small businesses.
In mid-March, Invest in MI Kids announced that they were suspending their effort to qualify for the 2026 ballot, citing an inability to gather enough signatures before the deadline. After months of organizing, the committee reported that it had collected nearly 250,000 signatures, which is well short of the nearly 450,000 signatures required to appear on the ballot before voters in November.
For those who were concerned about the implications this proposal would have on the business community, this announcement is a meaningful victory. Over the last year, a broad coalition of organizations representing various facets of the small business community worked to raise awareness about what this proposal would do. While the campaign’s messaging focused on “billionaires”, the reality was that the largest group targeted by the proposal would be small business owners whose companies are structured as pass-through entities. Because these businesses report their income on the owner’s individual tax return, many entrepreneurs would have been subject to a new tax increase regardless of how much money they bring home at the end of the year.
While appearing on the surface to be a debate over ‘billionaires versus schools’, the true debate was about how Michigan treats business growth, investment, and job creation. The initiative would have amended Michigan’s constitution to replace our flat income tax with a graduated system and would impose a new 9.25 percent top rate. This new rate would have moved Michigan from the middle of the pack to among the highest income tax rates in the country, and double or even triple that of some of our Midwest competitor states. For businesses who must compete every day for talent and investment, this shift would have been yet another obstacle to growth and a hit to our entrepreneurial ecosystem.
Fortunately, these concerns did not go unheard. Over nearly the past year, advocates for small businesses have ensured that the full implications of the proposal were part of the public conversation. These concerns were heard loud and clear, as we saw the public discourse around this initiative change to align with the true impacts, not just the snappy slogans. While advocates branded this new proposal as a “fair share surcharge” to avoid the unpopular word “tax”, we quickly saw the proposal referred to as a graduated income tax proposal, which is what it was. These changes in public perception made all the difference. Campaign organizers acknowledged the challenges they faced gathering enough signatures to make the ballot. Even with a large influx of out-of-state dollars, Invest in MI Kids was unable to meet the threshold.
Thank you to every advocate who shared information about this proposal, talked to a fellow business owner about it, or just made sure you were up to date on the latest news.
As result of these efforts, Michigan voters will not see this proposal on the ballot in 2026. This win provides a moment to assess. For the small business community, this victory is a reminder that thoughtful advocacy and sharing the truth can shape the direction of public policy, even when the issues are more complex than they initially seem.
It is also important to note that this proposal is likely to return. Campaign organizers are already looking at 2028 as their next opportunity to get on the ballot. But for now, the pause until the next election is an opportunity for policymakers, business owners, and advocates to continue educating the public about how Michigan’s tax structure works and why initiatives like this would be harmful to Michigan’s economic future.
This time also allows for a broader conversation about education funding and student outcomes – small business owners are heavily invested in the future workforce of the state, and the topic deserves serious attention. Michigan’s schools continue to fall behind and improving educational outcomes is a priority for SBAM. Real solutions to our state’s education system require more than sweeping tax changes that antagonize our state’s small businesses and dump funding into a system in need of real reform.
Continued engagement will be vital in the coming years. The temporary victory is a big win, but public policy debates are never settled once and for all. Ideas will stick around, campaigns will resurface, and new proposals will arise. We thank all our members who engage in the public policy process as we continue to ensure that small business remains front of mind in major decision making.
Article written by SBAM Advocacy team