The history of MI's sales tax

On election night, we take a closer look at Proposal 1 by exploring the history of Michigan's sales tax. It's one 'yes or no' vote, but deals with two issues - roads and the state sales tax.

Michigan enacted its first ever sales tax through Public Act 167 in 1933. The 3% sales tax was on retail sales of tangible goods. In 1960, voters approved an increase of the 3% sales tax to 4%, effective January 1, 1961. Then, another constitutional amendment increased that to 6% in 1994 through another vote. The state's sales tax has remained at 6% since then.

If Proposal 1 passes, Michigan's sales tax - at 7% - would be the 2nd highest in the United States.

The sales tax option was not the first choice for the House, Senate or for Governor Rick Snyder, but lawmakers were unable to agree on a solution, leading Snyder and bipartisan leaders to create the plan that's on the ballot Tuesday.

Proposal 1 is expected to cost the typical Michigan household about $500 next year.

It would generate an additional $700 million in new tax revenue, and about $2 billion in 2016. of that, about $1.3 billion will go to funding public roads, $300 million is to public schools and $100 million to local government revenue sharing. The earned income tax credit will cost the state budget about $260 million and the proposal includes money for future spending on local bus and transit agencies.

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