Anderson Economic Group Work

Definitive Study Analyzes “2/3” Ballot Proposal and Michigan’s Current Tax Limitations

East Lansing, Mich., October 17, 2012 – Anderson Economic Group (AEG) today released a report “Analysis of the “2/3” Ballot Proposal and Michigan’s Constitutional Tax Limitations” that examines the proposed legislative supermajority vote requirement for new and increased state taxes in light of existing state tax limits. 

Michigan voters are being asked at the November 6th general election to amend the 1963 Michigan Constitution to add a new state tax limitation. Proposal 12-5, also known as the “2/3” proposal, would require a two-thirds vote in each legislative chamber to impose new state taxes or increase existing state taxes. This limit would be added to existing tax state tax limits in the Michigan Constitution, but would not interfere with these existing provisions in any way. Tax limitations have a long-standing history in Michigan constitutions going back at least 100 years. The most notable limits include 1978’s Headlee Amendment and Proposal A of 1994.
The Anderson Economic Group issued this report, commissioned by the National Federation of Independent Business, to help better inform the public debate on Proposal 12-5.  The report does not advocate for either a “yes” or “no” vote on the proposal.
AEG’s key findings resulting from its objective analysis of Proposal 12-5 include:
  1. State tax limitations are appropriate subjects for state constitutions.  The current Michigan Constitution is replete with state and local tax limitations, including the landmark Headlee Amendment and Proposal A.
  2. New state taxes or increases to existing state taxes would not be prohibited under the proposed language. While it makes it more difficult (higher vote threshold) to raise taxes, the proposal does not prohibit future tax increases, nor does it prevent increases in tax revenue, under existing laws, due to economic growth in the future.
  3. The supermajority vote requirement would only apply to state taxes, not local taxes. The proposal is written clearly to apply only to state taxes.  Existing local tax limits would remain in effect, including the requirement that new local taxes must be approved by voters.
  4. The supermajority vote requirement would not conflict with existing state tax limitations. A careful review of the proposed language and existing tax limitations reveals that there would not be any conflicts.  Furthermore, the proposal includes a provision that clearly states it is not intended to limit or modify existing limits.
  “Considerable rhetoric and ‘talking points’ have dominated the public discussion and airways surrounding the ‘2/3’ proposal on the November ballot,” stated Craig Thiel, one of the study’s authors, “But, little attention has been paid to the fundamental concepts behind Proposal 12-5 or how the proposal would fit within Michigan’s existing framework of established tax and expenditure limitations.  This report is intended to fill this gap.”
Patrick Anderson, Principal and CEO of AEG, was the principal author of the Headlee  Blue Ribbon Commission’s report in 1994 that was tasked with determining how well the Headlee Amendment was working.  Also, Mr. Anderson was involved in the interpretation of tax limits approved under 1994’s Proposal A and advising Governor John Engler on the matter.  Commenting on AEG’s recent report, Mr. Anderson stated, “Going to the polls on November 6th, voters should be assured that Proposal 12-5 does not conflict with the existing provisions of the Headlee Amendment or Proposal A.”
CONTACT: Craig Thiel at (517) 333-6984 or