Fact Check: Perry Johnson's Tax Cut Promise Overstates Savings While Michigan Budget Struggles

Perry Johnson's Tax Cut Promise Overstates Savings While Michigan Budget Struggles

Perry Johnson is filling television airwaves and social media feeds with a promise to save taxpayers $4,747 a year by eliminating the state income tax. But an analysis shows most families would not save as much as he claims, and major questions remain about how he — and other candidates with similar proposals — would operate state government after cutting one of its primary funding sources.

The "Magical Number" Doesn't Add Up

Johnson's campaign points to a social media video in which he explains: "The median income for a family of four is $111,690. A savings of 4.25% in income tax would be $4,747 every year in your pocket."

On its face, that math essentially checks out. Michigan currently has a 4.25% income tax, and the median family of four actually earns a bit more than Johnson claims. But taxes aren't so simple.

After exemptions, subtractions and credits, single and joint filers who earn between $110,000 and $120,000 paid an effective Michigan income tax rate of 3.01% in 2021, the most recent year for which state data is available. Filers with gross incomes of $111,691 paid an average state tax of $3,406 that year — about 30% less than Johnson claimed.

Treasury Data Tells a Different Story

According to the most recent U.S. Census Bureau data, Michigan's median income for a four-person household is currently about $123,010. Filers who earned that much in 2021 paid an effective tax rate of 3.11%, or about $3,826. So those families would save significant money if the income tax were eliminated — just not as much as Johnson has suggested.

Bob Schneider, a state budget expert with the non-partisan Citizens Research Council of Michigan, noted that Treasury data is a better way to look at it.

The 2.7 million Michigan filers with adjusted gross incomes of $50,000 would have saved an average of $162 in 2021, per state data. Higher earners would save more on a dollar-by-dollar basis if the tax is eliminated, since Michigan has a flat tax — 4.25% regardless of income.

The Bigger Problem: How to Fund Government

The purported $4,747 in savings touted by Johnson is, in part, a nod to President Donald Trump, who is the nation's 47th commander-in-chief. Johnson calls it a "magical number." But major questions remain about how he — and other candidates with similar proposals — would operate state government after cutting one of its primary funding sources.

Michigan's personal income tax is one of the state's primary revenue streams. Eliminating it would require finding alternative funding for essential services including education, infrastructure, and healthcare. The state currently spends billions on these programs, and there's no clear plan for replacing that revenue.

Michigan's Budget Reality

The state government is already operating with significant budget pressures. Sen. Mallory McMorrow, a Republican state senator, has been vocal about the need for tax reform, claiming that "adjusted for inflation, the state of Michigan is operating with the same revenue we had in 1968 despite gaining more than 3 million people from then until today."

That claim doesn't align with the facts. Michigan's population increased from 8.7 million in 1968 to 10.1 million in 2025, an increase of 1.4 million, not 3 million. State revenue was $2 billion in the 1967-68 fiscal year. If the state government revenue trend were flat, state revenue, adjusted for inflation, would be $18.9 billion. Instead, it was $48.9 billion in 2024-25, an increase of 2330%.

This means the state spent $2,178 per person in 1967-68 but $4,832 in 2024-25, for a 122% increase. The tax burden has shifted, and residents feel the pressure.

Where Did the Money Go?

Michigan lawmakers had $9 billion in expected surplus funds at their disposal in January 2023. Many people today wonder what happened to that money. The short answer is that lawmakers spent it.

The state's various taxes collected $31.5 billion in fiscal year 2018-19, before COVID, and they collected $40.1 billion in fiscal year 2021-22. So it wasn't just disagreement that led to more money available in 2024; tax levies collected more revenue for legislators to spend.

Schools were the biggest beneficiaries of Michigan's surplus. The school aid budget increased from $13.0 billion before the pandemic to $18.9 billion in the current budget, a $5.8 billion gain. That equals 40% of what the state collects from the income tax.

Between state, local and federal sources of money, schools receive an average of $23,867 per student.

Medicaid received the next biggest increase in annual spending. The federal government decided not to enforce eligibility rules during the pandemic, and the number of recipients in Michigan increased from 2.5 million to 3.2 million. Enrollment has since returned to 2.5 million people.

Total spending at the Department of Health and Human Services increased from $26.5 billion in 2018-19 to $39.3 billion today. The federal government pays the bulk of Medicaid costs, and total state spending on the department increased from $7.5 billion to $11.4 billion, a $3.8 billion increase.

Roads were the next biggest priority, and the transportation budget increased from $3.5 billion in 2018-19 to $5.4 billion in the current budget. Part of the extra spending comes from a marijuana tax hike, but 80% of the money came without tax hikes.

Lawmakers have also spent on various expensive but nonrecurring priorities. Lawmakers authorized $6.8 billion in selective business subsidies since 2020 and $4.4 billion on pork projects. When Democrats took majorities in both chambers of the Legislature in 2023, corporate welfare was their top priority. They authorized $4.7 billion in selective subsidies over their two years of control.

The Bottom Line

Michigan's budget situation is complex, and the state faces real fiscal challenges. But promising to cut taxes without addressing how the state will fund essential services is a dangerous approach.

The state currently spends far more per capita than it did in 1968, yet the quality of public education here falls behind that of other states. The state also spends much more on Medicaid to chase federal matching funds. Expensive business subsidies have not paid off.

As Michigan prepares for the upcoming election, voters should be skeptical of tax cut promises that don't account for the reality of state government funding. The $4,747 figure Johnson touts is misleading, and eliminating the income tax would require difficult choices about what services the state can afford to provide.

Sources:

• Fact check: Perry Johnson's $4,747 plan overstates Michigan tax cut savings — Bridge Michigan
• McMorrow budget figures don't add up — Michigan Capitol Confidential — Mackinac Center
• [Where did Michigan's surplus go?] (https://www.mackinac.org/blog/2026/where-did-michigans-surplus-go) — Mackinac Center