LANSING — Democratic Gov. Gretchen Whitmer, who is nearing an impasse with Republican legislative leaders on the 2020 budget, says Michigan needs an extra $2.5 billion a year to fix the roads.

A set of bills introduced in the House this spring would amend Michigan's constitution to create a graduated income tax, under which those who earn more would pay a higher tax rate. The estimated annual revenue boost? $2.5 billion.

The fact those numbers match is not a coincidence.

Whitmer, who has proposed a 45-cent-per-gallon hike in Michigan's fuel tax, said during her 2018 campaign that if lawmakers are not prepared to approve higher user fees to fix the roads, she is prepared to take her case to the voters.

It's looking increasingly likely that if Whitmer and Republican leaders don't reach a deal on significant revenue increases, Michigan voters could be asked to approve a graduated income tax, often referred to as a progressive income tax, possibly as early as the November 2020 election.

"It's my understanding that there are some that are working on that kind of a proposal," Whitmer told the Free Press during an appearance in Flint Tuesday.

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"That's something that certainly I've supported in the past and something that I would take a close look at."

Asked whether she would take her proposed gas tax increase to the voters, Whitmer said "it's too early to speculate" and she remains committed to reaching a budget deal with GOP lawmakers that will "fix the damn roads," while allowing her to commit additional funding to education and the environment.

State Rep. Robert Wittenberg, D-Huntington Woods, a main sponsor of the income tax legislation who worked with Treasury Department officials to make sure his plan arrived at the same "magic number" the governor is seeking, said several grassroots groups — none ready to go public — are exploring plans to get the question on the ballot.

"It's an equity issue," Wittenberg told the Free Press. There is an "appetite of the people in this country for making sure people are paying their fair share."

How would the system work?

The package Wittenberg and his co-sponsors introduced in the House this year is not necessarily the same one that would go to voters, if backers are able to collect the more than 425,000 valid signatures required to get it on the ballot.

But House Bills 4481 and 4482 provide one example of how a Michigan graduated income tax system might be set up.

Rather than the current rate of 4.25% imposed on taxable income, the bills would:

Impose a 4% rate on the first $5,000 of taxable income, a 4.25% rate on taxable income between $5,000 and $75,000, and an 8.4% rate on taxable income above $75,000

Set a $5,000 personal exemption, up from $4,050 currently, but reduce that exemption for filers with taxable income over $80,000 (or joint filers with income over $160,000)

Eliminate the exemption for filers with taxable income above $100,000 (or joint filers above $200,000).

The Michigan Treasury Department analyzed the bills package without taking a position on it.

Treasury spokesman Ron Leix confirmed the bills would raise an extra $2.5 billion in their first full year of implementation, and that 92% of Michigan filers would either get a tax cut or have their taxes stay the same under the plan.

The roughly 400,000 filers receiving a tax increase — single filers with taxable incomes above $75,300 and joint filers with taxable incomes above $150,600 — would receive tax increases averaging about $6,250, Leix confirmed. Though that would be the average increase, in order to get an increase as high as $6,250, a married couple filing jointly would need to have taxable income of at least $300,000, Leix said.

Is a graduated income tax used elsewhere?

Higher tax rates for higher income earners has been part of the federal income tax system for more than a century, and it is more the rule than the exception among states.

Of the 41 states that impose an income tax on wage and salary income, 32 use a graduated system.

While Michigan taxes all personal income at 4.25%, even some states that are seen as much more conservative tax higher-income earners at higher rates. Alabama, for example, taxes some earners at 2%, others at 4%, and still others at 5%. Tax brackets in Oklahoma range from 0.5% to 5%. In Louisiana, the rates range from 2% to 6%.

Though Kentucky just moved from a graduated income tax to a flat tax system, Illinois, which, like Michigan, replaced a Republican governor with a Democratic one in 2018, will vote on moving to a graduated income tax in 2020.

What is the status of budget negotiations?

Whitmer said Tuesday she remains in regular contact with House Speaker Lee Chatfield, R-Levering, and Senate Majority Leader Mike Shirkey, R-Clarklake, while the Legislature is on summer recess, and she expects to meet with them in the next week.

But she and GOP lawmakers remain far apart on her $2.5-billion gas tax proposal, and Whitmer describes as "non-starters" plans the Republicans have floated to raise road money by borrowing against teacher pension funds or sell off assets such as the Blue Water Bridge.

Why wouldn't Whitmer just take the gas tax hike to voters?

Though Michigan residents want their roads fixed, the idea of a 45-cent-per-gallon gas tax hike has been hugely unpopular.

An April poll by Marketing Resource Group found that 75% of Michigan voters — and even a majority of Democrats — oppose the plan.

A recent poll suggests a proposal to move Michigan to a graduated income tax would fare much better.

The May poll, conducted by TargetSmart for the State Innovative Exchange, found that 76% of respondents supported a graduated income tax under which "millionaires pay more and working people get a tax cut."

Because of the way she constructed her budget, the proposed 45-cent gas tax increase would help fund more than just improved roads.

Though it would increase gross revenues by $2.5 billion, the plan would actually increase road revenues by a net amount of $1.9 billion. That's because it would allow Whitmer to shift $600 million in general fund money that is now targeted for roads to help pay for other priorities, such as schools and the environment.

A $2.5 billion revenue boost from a graduated income tax would allocate 22.7% of net revenues to the School Aid Fund, according to the bill. It would allow Whitmer and lawmakers, if they so choose, to take the sales tax off of gasoline and replace it with fuel taxes, while having more than enough School Aid Fund revenue to replace revenues lost through removing the sales tax from fuel sales.

How would a graduated income tax proposal get on the ballot?

A graduated income tax is banned under Michigan's constitution, which would have to be amended by voters.

To get the question on the November 2020 ballot, organizers would have to submit at least 425,059 valid signatures by July 6 of next year.

Though several progressive, school, environmental and good government groups are looking at such a proposal, according to Wittenberg and others, none is ready to go public. Several sources told the Free Press that planning is at an early stage.

That means it would be tough, though not impossible, to get a proposal on the 2020 ballot, said Kathy Barks Hoffman, vice president of the Lansing-based public relations firm Martin Waymire.

It would cost millions to organize the proposal and collect the signatures, and Hoffman said it would have a well-funded opposition from groups opposing such a change.

A graduated income tax "would be another way to raise money," Hoffman said. "Some folks prefer this over a sales tax increase as more progressive. But one reason we don't have a graduated income tax is there are people willing to oppose it."

Michigan residents have actually voted three times on a graduated income tax: in 1968, 1972, and 1976. They rejected the idea all three times, by percentages of 77-23, 69-31, and 72-28, respectively.

The question is whether growing concerns about unequal distribution of wealth would be enough to reverse those numbers.

"The hard-working people of Michigan are eager for a fairer tax structure," said Tom Lenard, Michigan director of the State Innovation Exchange, a national strategy and resource organization for progressive state legislators.

" As we’ve seen in other states, it's possible to create a revenue system that reduces tax rates for lower-income families, finally requires the wealthy to pay their share, and provide enough resources to improve our infrastructure, schools, and communities."

Where do Republicans stand?

Michigan Republicans oppose such a change, partly because it would result in a net tax increase.

Like the proposed 45-cent gas tax hike, "it doesn't seem like it's a very innovative solution," said state Rep. Lynn Afendoulis, R-Grand Rapids Township, chairwoman of the House Tax Policy Committee.

"I think that the state has come a long way financially during the last administration," of former Republican Gov. Rick Snyder, Afendoulis said.

"We've taken into consideration many options, and I think that we shouldn't touch where we are right now," she said. "We're in a better place."

Who else is opposed?

Many business groups oppose a graduated income tax.

Most notable is the Michigan Chamber of Commerce, widely considered to be the state's most influential business lobbying group.

The Michigan Chamber "is strongly opposed to proposals to impose a massive tax increase on families, entrepreneurs and job providers by eliminating Michigan’s long-standing taxpayer protection against a graduated income tax," the group said in response to an earlier proposal from Democrats.

"This sends a clear message about the direction that Michigan Democrats want the state to go: immediate and blatant redistribution of wealth that punishes individuals and job providers for being successful."

Contact Paul Egan: 517-372-8660 or pegan@freepress.com. Follow him on Twitter @paulegan4. Read more on Michigan politics and sign up for our elections newsletter.