Tax increase limits in Proposal 5 stir debate

By: Eric Czarnik | C&G Newspapers | Published October 24, 2012

A simple majority vote could decide a proposal this November to require supermajority support among Michigan lawmakers in order to pass tax increases legislatively.

Proposal 5 gives voters a chance to change the state constitution and make the rules more difficult for tax increases. If the measure were adopted, the state House and Senate would each need at least two-thirds supermajorities in order to send new or increased taxes to the governor for possible approval.

This would mean that a tax increase would need yes votes from 74 out of 110 state representatives and 26 out of 38 state senators — instead of the simple majorities required today.

However, the amendment also would let Michigan voters circumvent Lansing and pass tax increases with a simple majority vote in a statewide November referendum.

The proposal is being supported by the Michigan Alliance for Prosperity, which could not be reached for comment by press time. Michael LaFaive, director of fiscal policy at the free-market promoting Mackinac Center for Public Policy, said he has found more things in the proposal to support than oppose.

LaFaive said the proposal, if passed, would put Michigan in a club of around 17 other states that uphold tax-limiting amendments, though he added that people may disagree on the number due to differing definitions.

He said states with tax-limiting amendments tend to have 8-23 percent lower tax burdens than states that don’t have them.

“The academic literature generally shows favorable outcomes,” he said. “It generally restrains taxes relative to states without them.”

LaFaive said the tax cuts could still be passed with a majority under the proposal, and he argued that a supermajority to increase taxes is still possible when times are desperate. “Maybe they would’ve had to find an alternative, such as cutting spending,” he said. “The Mackinac Center pointed out that there was plenty (left) to go.”

On the other side of the argument is Defend Michigan Democracy, an anti-Proposal 5 group.

Spokesman Roger Martin said Democrats, Republicans and some tea party members have endorsed a no vote on Proposal 5. He also said his position is backed by labor groups, municipal groups, the Michigan Chamber of Commerce and Gov. Rick Snyder.

Martin said Proposal 5 would make it virtually impossible to increase taxes or close tax loopholes. He said it would empower as few as 13 senators with the ability to scuttle tax reform. And every single tax reform or tax increase passed in the past 50 years never reached a supermajority level, he said.

“It’s not supermajority rule as the other side contends,” he said. “It’s superminority rule.”

Martin counted approximately 10 states that have a full-fledged supermajority limitation for tax increases. He argued that some states with such restrictions tend to shift their tax burden to local entities or, in the case of California, fall prey to political gridlock and dysfunction.

“Sixteen out of 20 years, the (California) Legislature has failed to pass a budget by the constitutional deadline,” Martin said.

Learn more about Defend Michigan Democracy at www. The Mackinac Center for Public Policy can be reached at Michigan Alliance for Prosperity’s website is