Michigan eyes a tax on private jets, limos, and country clubs to save homeowners $5B

Hall unveils biggest tax shakeup in decades

Michigan House Speaker Matt Hall wants to expand the state’s 6% sales tax to cover services he calls “discretionary,” like private jets, country clubs, and ski resorts.

The Republican from Richland Township says the plan could bring in roughly $4.7 billion a year. Most of that money would offset a separate proposal to cut nearly $5 billion in property taxes.

Hall has called it the biggest tax reform in Michigan history since Proposal A in 1994.

Private jets and golf courses make the list

Hall has named a wide range of services that would get hit with the 6% tax. Think limousines, marinas, golf courses, travel agencies, and country club memberships.

The list also includes some less obvious targets: AI services, environmental consulting, performing arts, newspaper publishing, and even political ads.

But Hall’s office has not released a full list yet, and the details appear to still be in the works. These are examples, not the final word.

Everyday services would stay untaxed

Hall says working families would barely feel this tax.

Health care, child care, legal fees, car repairs, veterinary visits, barbers, nail salons, landscaping, and dry cleaning would all stay exempt. Streaming services would remain untaxed too.

Hall argues most working families would rarely, if ever, pay the new tax directly. His pitch is simple: this hits luxury spending, not the stuff people need to get through the week.

Property tax cuts drive the whole plan

The roughly $4.7 billion in new revenue would mostly fund Hall’s property tax overhaul, which totals about $4.9 billion in cuts.

That plan would wipe out the 6-mill State Education Tax, the real estate transfer tax, the personal property tax, and what Hall calls the “pop-up tax” that raises a home’s taxable value at the time of sale.

Hall’s office puts the net result at about a $270 million overall tax cut for the state.

Homeowners could save hundreds a year

Hall estimates the average homeowner would save about $900 a year just from eliminating the education tax.

Small businesses could save roughly $6,000 from ending the personal property tax, plus another $2,400 from the education tax cut.

Homeowners selling a house could keep an extra $2,000 to $3,000 by dropping the transfer tax.

Hall says residents would need to spend $15,000 a year on newly taxed services to break even, a threshold he says most people would fall well below.

Hall ties utility rate cuts to the deal

Hall wants to pair the personal property tax cut with a mandated $1 billion rollback in utility rates.

His argument: the personal property tax discourages utilities from upgrading their power grids because their tax bills climb when they invest in new equipment.

A state Treasury report found that nearly half of Michigan’s personal property tax value in 2022 came from utilities.

Hall says he would not move forward without requiring utilities to lower rates, which he estimates could save the average resident hundreds of dollars a year.

Both parties push back on the plan

The proposal has drawn skepticism from both sides of the aisle.

State Sen. Sam Singh, a Democrat from East Lansing, said he approaches Hall’s plans with skepticism but remains open to talking.

Republican Senate Minority Leader Aric Nesbitt, who is running for governor, said lawmakers should look for waste and fraud in the current budget before considering new taxes.

Multiple outlets described the Capitol reaction as deeply skeptical.

Business groups want more details first

The Michigan Chamber of Commerce said the plan raises serious questions about the state’s economic competitiveness.

The Chamber supports property tax relief but wants transparent revenue assumptions and a full economic impact study before signing on.

The Michigan Golf Course Association struck a friendlier tone, saying it looks forward to working with Hall to protect the golf industry.

Michigan has the third most golf courses in the country. Some industries are already pushing back, while others are waiting for more specifics.

School groups warn of funding gaps

Hall has pledged that schools and local governments would not lose a dime under his plan. But he has not explained exactly how he would replace billions in lost property tax revenue beyond the service tax.

Several school groups have come out against the proposal, including the Michigan Association of School Administrators and the Michigan Association of School Boards.

Peter Spadafore of the Michigan Alliance for Student Opportunity said the plan could “blow massive holes in the state budget.”

Michigan tried a service tax before and repealed it fast

This is not Michigan’s first attempt at taxing services.

In 2007, under Democratic Gov. Jennifer Granholm, the state passed a broader service tax that covered many everyday personal services.

It lasted just 17 hours before lawmakers repealed it after heavy lobbying and public backlash. Granholm tried again in 2010 to address a budget shortfall, but that effort also failed.

Hall says his plan is different because it exempts the personal care services that made the 2007 version so unpopular.

Whitmer offers a much smaller alternative

Gov. Gretchen Whitmer has her own property tax proposal on the table, but it is far more limited.

Her plan would spend about $90 million to give seniors 65 and older a refund of roughly 10% of their annual property taxes, saving the average eligible senior about $345 a year.

Both Whitmer and Senate Majority Leader Winnie Brinks are term-limited and in their final months in office.

Hall has publicly challenged Whitmer to negotiate on his broader plan.

Election year makes passage a long shot

Hall says he plans to push the service tax through legislation, not a ballot measure. But Michigan’s government is split.

With the governor’s seat, all House seats, and all Senate seats on the ballot in November, passing a tax overhaul this big faces steep odds.

Republicans hold a 58-52 majority in the House, while Democrats control the Senate 19-18. Hall says more details on which services would be taxed are coming soon.

This article was created with AI assistance and human editing.

Read more from this brand:

• Why was Michigan tied to nearly 20,000 announced job cuts in January?
• The US submarine that dove 150-ft deep with a man’s guts on the table
• Michigan’s mastodon room contains something you literally can’t see anywhere else