Jinkies! Uncovering the truth behind the Invest in MI Kids spooky tales

Today’s blog is co-authored by League Fiscal Policy Analyst Nicholas Hess and League Education Policy Analyst Alexandra Stamm.

Nicholas Hess

Alexandra Stamm

‘Tis the spooky season again — one of our favorites! Halloween’s atmosphere is hard to beat. It’s a time when we confront our fears, kind of like a pumpkin-spiced version of exposure therapy. We all have things that send shivers down our spines. Sometimes, though, the scariest stories are a bit silly.

One such spooky tale we’ve come across is the idea that the taxman is lurking, ready to put our job creators out of business with the Invest in MI Kids ballot initiative. Just like Scooby-Doo and the gang unmask the monsters, we’re here to peel back the layers of these scare tactics. When we remove the mask, what’s left is just treats and no tricks.

Scare tactic #1: This tax is a business tax.
When we pull off the mask: This is a tax on high-income households, not businesses. The Invest in MI Kids ballot initiative proposes a tax surcharge of 5% on rich households (single filers making more than $500,000 and joint filers making more than $1 million) and use the funds to invest in Michigan’s schools. The tax will raise over $1.5 billion annually for the state, and only the richest 0.5% of Michigan taxpayers (or 18,300 filers) will pay this surcharge. It applies to all income earned by households regardless of whether it is business income or income from capital gains, wages or other sources.

Scare tactic #2: Small business owners will be overwhelmingly responsible for paying for it.
When we pull off the mask: The term “pass-through entity” is not always synonymous with “small business” — in fact, some are large. Nearly a third of the pass-through labor force work in businesses with more than 100 employees! We need to stress that the vast majority of 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 pay the surcharge. Only 12% of filers that claim partnership or S corporation income — and less than 2% of filers claiming self-employment earnings — on their tax forms made at least $500,000 in 2022. Despite them being small in number, these taxpayers take home a huge share in profits. 79% of profits earned by S corporations and partnerships are collected by this small group of rich taxpayers. Therefore, while a small portion of the richest business owners will have to pay the surcharge on their incomes, the vast majority of small businesses will not.

Scare tactic #3: This will make Michigan one of the highest taxed states in the country and drive out business owners.
When we pull off the mask: No single tax defines a tax system, and research shows that taxes are not the sole factor in determining where people live or businesses move. If this ballot proposal passes, Michigan will still remain a relatively low-tax state. The relationship between taxes and its impact on migration both in and out of the state is unclear, because taxes are one of the many reasons why people choose a place to settle down. What matters most to people are quality of education, affordable housing and health of the job market — all of which can be improved by a healthy stream of tax revenue.

Scare tactic #4: Our public schools just had years of “historic” budget gains; they don’t need more funding.
When we pull off the mask: The truth is, while recent budgets have made progress through raising per-pupil spending and investing in important categoricals like at-risk and special education funding, we still have a long way to go. In fact, the funding decline in Michigan’s public schools started over two decades ago, and studies show that our schools are underfunded by a staggering $4.5 billion annually. If we adjust the “record” per-pupil funding to inflation, we’re well below our peak funding levels from the early 2000s. The recent gains are important, but they don’t erase decades of disinvestment.

Scare tactic #5: Our public schools are not performing well, and more money isn’t going to fix the problem.
When we pull off the mask: In reality, research consistently shows that increased, sustained and equitable investment in public education leads to better student outcomes. That includes higher test scores, improved graduation rates, increased college attendance, and even long-term economic benefits like higher earnings. Funding is most impactful when it is targeted to the populations that need it most and is maintained for at least four years.

Like, zoinks! It was scare tactics all along!
Now that we’ve unmasked the true story to only reveal a fraud in disguise, are you ready to join the gang?

You may see an Invest in MI Kids signature gatherer at your local farmer’s market or football tailgating event. To support the initiative, sign the collection sheet (but just one time per registered voter) and ask how you can get involved by collecting signatures or spreading information. The initiative seeks to collect 700,000 signatures by the February deadline to get on the November 2026 ballot. For more information visit https://investinmikids.org/. 

Let’s split up to gather signatures and get this initiative to the voting booth!