Legislation to forge ahead with Gov. Gretchen Whitmer’s plan to raise taxes on Michigan businesses for road repairs has landed in Lansing, and it’s worse than business leaders expected.

Michigan state Rep. Alabas Farhat, D-Dearborn, is sponsoring House bills 4143 and 4144 to increase Michigan’s corporate sales tax from 6% to 8.5%, with the goal of funneling at least $1 billion of the collections to the Department of Transportation.

The bills, along with another from Farhat to tax digital advertising, House Bill 4142, were introduced by the lawmaker on Feb. 26, and reproduced electronically online on Tuesday.

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The bills followed just weeks after Whitmer unveiled her plan to boost yearly road funding by about $2.75 billion to combat a $3.9 billion annual road maintenance shortfall with new taxes.

The plan included an unspecified increase in the corporate income tax, $470 million in new taxes on wholesale marijuana, and tax increases on heavy trucks, among other components.

The governor’s office will not divulge how much Whitmer plans to increase the state’s 6% business income tax to generate the $1.6 billion she’s hoping to realize, but the Detroit Regional Chamber predicted the rate would need to hit 8% to generate that revenue, putting Michigan among the highest in the nation.

“This increase penalizes the entire economy and creates a new challenge for doing business in Michigan,” Detroit Regional Chamber officials told MLive. “While the Detroit Regional Chamber thanks Whitmer and Speaker (Matt) Hall for seeking a long-term solution for road funding, that conversation needs to focus on user fees instead of giving more reasons to do business elsewhere.”

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Farhat’s HB 4144 would set Michigan’s corporate income tax at 8.5% “beginning on and after January 1, 2025.”

The Detroit Chamber noted 16 states have reduced corporate income taxes over the last seven years. An 8% rate would make Michigan the 14^th most expensive state in the country to do business, according to the Tax Foundation.

Michigan Chamber of Commerce President Jim Holcomb told MLive also noted the major negative impact Whitmer’s proposed tax hike could have on Michigan’s ability to attract and maintain businesses.

“We want to make sure a tax is necessary,” he said. “We think there has to be more money in roads, absolutely, but we want to make sure that we’re using current resources. When you have over an $80 billion budget, we just want to make sure that the current resources are being properly allocated and then have a conversation of how best to move forward.”

Last week, Whitmer insisted during her State of the State address that fulfilling her 2019 campaign pledge to “fix the damn roads” will require “new, fair sources of revenue,” and she called on lawmakers to “get back to the negotiating table … to find a long-term, bipartisan solution.”

She followed up by setting up an invitation-only meeting for Thursday to discuss long-term road funding, but did not invite Republican House Speaker Matt Hall, R-Richland Twp., who unveiled a plan in December to do exactly that with no new taxes.

Whitmer Press Secretary Stacey LaRouche told MIRS News the governor has “has been in touch with Republican leadership on roads” and will “continue to work with anyone who is serious about solving problems.”

Whitmer was elected in 2019 largely on her promise to “fix the damn roads,” but was forced to borrow $3.5 billion when lawmakers rejected her plan to hike the state’s motor fuels tax by 45 cents to the highest rate in the nation.

That money is now gone, and “roads are deteriorating faster than the agencies can repair them,” according to an annual road and bridges report.

Michigan taxpayers, meanwhile, are spending $340 million this year to pay off the $3.5 billion the governor borrowed for road repairs. Whitmer’s decision to borrow $3.5 billion cost taxpayers $2.5 billion in interest, according to Michigan Department of Transportation data cited by The Detroit News.

Republicans in December unveiled a $2.7 billion plan to fix the roads without new taxes that has since swelled to $3.1 billion with higher than expected tax returns.

That plan would maintain public safety and health funding, while shifting funds currently dedicated to corporate business incentives and legislative pork spending to local roads.

The plan would permanently dedicate $2.2 billion from the state’s corporate income tax to roads by stripping out $500 million each in legislative earmarks and Michigan Economic Growth Authority tax credits. Another $600 million would come from higher than expected tax returns outlined by the state’s revenue estimating conference, while about the same amount would be saved by reworking deposits into the state’s corporate attraction, placemaking, and development funds.

Other funding for the Republican roads plan would come from permanently dedicating all motor fuels taxes to roads, which would provide $945 million.

Whitmer’s road funding plan, which also included $250 million for public transit, would swell her proposed spending plans for next fiscal year to a record $86 billion – a 43% increase that amounts to about $30 billion more than when she took office.

“The problem isn’t revenue, it’s priorities,” state Rep. Ann Bollin, the Republican chair of the House Appropriations Committee, previously said in a statement. “The money is there. We don’t need higher taxes to fix our roads. We need leadership that respects taxpayers, spends responsibly, and makes roads a priority.”