LANSING, Mich. — The Mackinac Center for Public Policy, along with a broad coalition of leading business associations, taxpayer advocates and policy organizations, has issued a joint letter to Michigan legislative leaders urging them to reject a proposed digital advertising tax. The coalition warns of severe consequences for small businesses, consumers, and the state’s economy.

Addressed to Senate Majority Leader Winnie Brinks and House Speaker Matt Hall, the letter strongly opposes legislation like House Bill 4142, which would create a new, sliding scale tax on digital advertising revenues. The signatories argue that such a tax would hinder economic growth, drive up costs for consumers and invite costly legal challenges.

“Advertising is a major driver of economic activity in Michigan,” the letter states. “Hundreds of thousands of Michigan workers and businesses benefit from digital advertising and would be harmed by a digital advertising tax.”

Key Concerns:

• Harm to Small Businesses and Consumers: The tax would likely be passed down to small businesses and consumers. A Deloitte study of a similar tax in France found that 55% of the tax burden was borne by consumers. Small business could be forced to raise prices, cut services, lay off workers or face even more severe consequences.
• Negative Economic Impact: The tax threatens Michigan’s more than 900,000 small businesses that rely on digital platforms to market and grow.
• Legal and Constitutional Risks: The letter cites legal uncertainties similar to those faced by Maryland’s digital ad tax, which has led to prolonged and expensive litigation. If a law like that in Michigan were deemed unconstitutional, the state could be forced to pay back every cent (plus interest) it collected under the tax.
• Detriment to Michigan’s Competitiveness: The tax could deter investment and innovation at a time when the state should be fostering a pro-growth environment.

“This legislative session presents an opportunity to focus on policies that strengthen Michigan’s economy and make it more competitive,” the coalition wrote. “Taxing digital advertising does the opposite.”

The coalition calls on lawmakers to focus on sustainable economic development and infrastructure funding strategies that do not place additional burdens on Michigan entrepreneurs or expose the state to costly lawsuits.

Organizations Signing the Letter Include: The Mackinac Center for Public Policy, Americans for Digital Opportunity, Americans for Prosperity–Michigan, Americans for Tax Reform, Association of National Advertisers, Council on State Taxation, Grand Rapids Chamber, Michigan Association of Broadcasters, Michigan Chamber of Commerce, Michigan Freedom Fund, National Federation for Independent Business–Michigan, National Taxpayers Union, NetChoice, and the Small Business Association of Michigan.

Read full letter here.