Michigan Governor Floats Tax Hikes to Fund Road-Building Plan

Michigan Gov. Gretchen Whitmer proposed a long-term plan to inject an additional $3 billion into road improvements through an increase in the corporate income tax, closure of a cannabis tax “loophole,” and a new tax on digital advertising.

Whitmer, a second-term Democrat, released her “MI Road Ahead” plan to “fix the damn roads” and close a nearly $4 billion structural deficit, according to road builders, in the state’s transportation infrastructure budget. The proposal would redirect hundreds of millions of dollars of existing funding to transportation, but roughly $1.7 billion in new revenue would come from taxes and fees.

It comes one month after House Speaker Matt Hall (R) offered a competing plan that would generate $3.1 billion to fund road improvements without raising taxes.

Whitmer’s Monday proposal was thin on details, but she blamed large corporations and technology companies—“such as Amazon, X (formerly known as Twitter), Facebook, and TikTok”—for failing to pay their fair share to operate in Michigan and use the state’s roads.

“To deliver goods and services to Michiganders these corporations haul heavy weights using semi-trucks that deteriorate roads and bridges faster than commuter vehicles,” the administration said in a statement. “They also bombard Michiganders with nuisance pop up advertisements that inconvenience consumers. The governor’s plan will make sure that corporations pay their fair share to do business in Michigan and rebuild roads proportionally to the damage they cause.”

Whitmer plans to raise $470 million by treating cannabis and tobacco the same for tax purposes by closing a loophole that exempts marijuana from wholesale taxes applied to cigarettes and other smoking products.

The Michigan Chamber of Commerce released a statement indicating the governor’s office wants to raise the corporate income tax rate from 6% to 8%. In addition, the chamber said the plan envisions new fees or taxes on digital advertising, delivery services, and heavy trucks. The chamber objected to the corporate revenue raisers, suggesting they would have “a chilling effect on future business investment.”

At the same time, chamber President and Chief Executive Jim Holcomb applauded Whitmer’s “good faith attempt” to solve the transportation structural deficit.

“We have been struggling with road funding here in Michigan for decades and at some point they are going to have make some hard decisions and put out a stable funding stream going forward,” he said.

The Michigan Infrastructure and Transportation Association applauded the initiative.

“We need at least $3.9 billion more annually in transportation funding to get our roads and bridges up to 90% in good or fair condition,” said Lance Binoniemi, the association’s vice president of government affairs. “The $3 billion is a very large portion of that and would control the deterioration of our roads. So we are very supportive of her proposal and Speaker of the House Matt Hall’s $3.1 billion plan.”