The Economic Gardener: Investing in Michigan’s Kids

A version of this column originally appeared in Michigan Advance.

For the last several years, my family has attempted a small vegetable garden in our backyard. After every attempt, we learned new things. We bought raised beds to keep the rabbits out and fencing to keep the deer from eating everything. We researched and purchased special soil and drip water systems. We also learned that you can’t crowd plants, so we bought more raised beds so we could grow what we wanted. Throughout the years, we’ve had varying success, from an overabundance of green beans to a watermelon that was 100% rind.

Now what does gardening have to do with tax policy and budget? To be honest, everything. When we invested time, energy and supplies in our garden, it flourished. And when we invest time, energy and support in our people, we thrive. And like my green bean bounty and my inedible watermelon, the data we look at continues to confirm this.

Michiganders have an opportunity to directly participate in decision-making about investments in our school-aged children. Currently, the Invest in MI Kids proposal is gathering signatures to get on the November ballot. If approved, the proposal would add a 5% surcharge to households with taxable incomes of over $1 million for a married couple, $500,000 if single, and would dedicate over $1 billion to improving K-12 education. These improvements would include smaller class sizes, better access to career and technical education (CTE), and teacher recruitment and retention. And, according to a new analysis by the Institute on Taxation and Economic Policy, it will help make our tax system more fair by raising the overall effective state and local tax rate for the top 1%, who currently pay the lowest effective tax rate, to be more in line with peer households.

The surcharge makes no changes to the basic structure of the tax code. It treats all income — whether through wages, business ownership, self-employment or gig work — the same. It’s the taxable income of the individual filing the tax form that matters, not a family’s gross income or a business’s total revenue. Households and business owners will still be eligible for all of our existing tax deductions to reduce taxable income, such as deductions for business costs. And ultimately, most filers, including many owners of profitable business organizations, won’t be subject to this surcharge.

Let’s be clear: Fewer than 1% of Michigan taxpayers will be impacted; more than 99% of us, including many local bookstore owners, restaurant and coffee shop owners, teachers, nurses, and child care providers, won’t pay a penny more. Regardless of the arguments otherwise, this is not a small business tax. According to recent IRS data, only about 3 out of 25 Michigan households that include an owner of a pass-through entity, such a partnership or S-Corporation, have adjusted gross incomes above $500,000, but not all of these would be subject to the fair share surcharge. But we’ll all benefit from better schools.

Unfortunately, for far too long, Michigan’s students have suffered due to inadequate investment in public education. Based on recent research, more than three-quarters of Michigan students attend an under-resourced school district, and Michigan needs to invest an additional $4.5 billion in order to achieve adequate funding that meets the needs of all students. Unfortunately, this disinvestment has resulted in opportunity gaps. Only 1 in 4 Michigan students is reading proficiently in fourth grade, and the same rate holds for eighth-grade math proficiency. More than 70% of 11th-graders are not college ready. And due to a history of discriminatory practices, like redlining and segregation, children of color and students learning English often have worse outcomes.

Additionally, despite increased interest in opportunities for career and technical education — in which student enrollment has remained strong and program completion has more than doubled in the past decade — access to these courses is not universal. According to research by the Youth Policy Lab, nearly half of Michigan’s school districts are CTE deserts, and Black and Hispanic students and students from families with low incomes have less overall access to CTE programs. The inequitable access only deepens disparities along geographic, racial and socioeconomic status lines. 

Our children deserve better. They are our future small business owners, teachers, health care workers, engineers, and artists, and it is our obligation to give them the best opportunity to grow their potential. 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.

We can plant all of the seeds we want, but if we don’t give them an appropriate, safe and sufficient environment, nothing is going to grow. The same goes for our students — they need trained teachers who are respected as professionals, more individualized attention and access to opportunities to really reach their goals. Instead of doing the same thing we’ve always done and expecting different results, let’s truly invest in Michigan’s kids.