Here at the Michigan League for Public Policy, we believe that strong investments in education will not only benefit our state’s kids but also make Michigan a better place to live, work and raise a family for everyone. That is why the Invest in MI Kids ballot initiative is so important.

The initiative proposes a tax surcharge of 5% on wealthy households — single filers making more than $500,000 and joint filers making more than $1 million — that would effectively raise over $1.5 billion annually for Michigan’s schools. Only the most affluent Michigan taxpayers, accounting for .5% of all of the state’s taxpayers or 18,300 filers, would pay the surcharge, and, despite what some opponents of the initiative have said, it is not a business tax.

While a small portion of the richest business owners will have to pay the surcharge based on their incomes, the average small business will not. In fact, most pass-through entities (a business structure where profits, losses and other items of income pass directly through to its owners, shareholders or partners) will not be subject to the surcharge. In Michigan, only 12% of S-Corporation and Partnership filers make $500,000 or more; however, they claim 79% of pass-through entity income. Similarly, taxpayers who claim income from self-employment earning more than $500,000 represent less than 2% of filers, but they collect nearly 15% of all income.

The argument has also been made that the initiative will make Michigan one of the highest taxed states in the country and drive out business owners, when in actuality Michigan will still remain a relatively low-tax state if it passes. Additionally, research has shown that taxes are not the sole factor that people, including business owners and the wealthiest of Americans, look at when they choose where they locate. For many, a well-structured state tax system is considered a good thing because it delivers on what many people value most: affordable housing, a quality education, vibrant communities and a healthy job market.

The reality is that the Invest in MI Kids ballot initiative is a smart and commonsense way to help build on the progress of recent state budgets that have raised per-pupil spending and targeted funds toward the students who need it most. While progress has been made in this area thanks to recent investments, the state still has a long way to go in making up lost ground given that over two decades ago funding for Michigan’s public school system began to decline. In fact, studies show that the state’s schools are now underfunded by a staggering $4.5 billion annually, and, if recent per-pupil funding is adjusted for inflation, Michigan is still well below peak funding levels from the early 2000s.

Our latest Kids Count in Michigan data paints