Headlee’s signature amendment has worked for all Michigan residents

Patrick L. Anderson is Principal & CEO of Anderson Economic Group LLC, a consulting firm headquartered in East Lansing.

The recent “Tax Facts” columns in Bridge made available to the citizens of our state, in time for the upcoming elections, basic information about our taxes and our fiscal structure. I applaud the Center for Michigan, and the handful of other entities attempting the same feat, for this effort

However, one particular column – which purported to discuss the Headlee tax limitation amendment – would dumbfound many citizens familiar with our constitution. Instead of observing the recurring instances where our state and local governments have pushed up against constitutional tax limitations over the recent decades, it argued that one part of the amendment was largely “academic” to today’s taxpayers.

To make sure readers have the opportunity to learn about their taxes and tax limitations, I will quickly summarize what the Headlee amendment says, what it means about taxes in Michigan, and how it enforces the rights of state residents. Such a review quickly reveals how tax limitation remains critically important to taxpayers in Michigan.

Michigan voters adopted the Headlee constitutional amendment in 1978, after a vigorous public debate. Far from being conjured up by “an affable insurance executive” as the previous column implied, it was actually the third iteration of a series of increasingly better-crafted tax limitation amendments that Michigan citizens had placed on the ballot through petition drives.

Those involved in its drafting included some very serious thinkers of that time, including Bill Niskanen (chief economist for President Gerald Ford, key advisor to President Ronald Reagan, and chairman of the Cato Institute), Milton Friedman (Nobel prize winner in economics, and one of the most influential thinkers of the 20th century), Alan Schmid (a national leader in both tax and term limitation), Richard Headlee (the aforementioned chief executive of a large insurance company, and later candidate for Michigan’s governor), and Bill Shaker (who had led a previous tax limitation effort in the state). Four of these five individuals have now passed away, but their work endures in Michigan, Missouri, and in other states.

Headlee limited both state and local taxation, and required the state to fund specific services of local governments. During the past 35 years, Headlee has been invoked repeatedly to protect local governments from excesses in state power, to protect taxpayers from excesses of government spending, and to protect the state’s citizens from excesses of state power. For example:

On multiple occasions, the Headlee limit on state taxation (expressed as a fraction of our personal income) has forced the state to lower taxes. In 1995 it produced a one-time income tax rebate. I was a deputy budget director at the time, and recall outlining to the Governor and other state officials how the constitution required the state to send back the extra money. I like to think the state would have done it anyway – but it was the Headlee amendment that gave the argument teeth.



Although the Bridge column noted there is a large buffer between the limit and the current state tax burden, that doesn’t mean the limit is “academic.” Limits, after all, are limits, not targets. History shows that a tax limit forces those in charge of government to return to the voters when they want to make major changes – as we did in adopting Proposal A in 1994, and as we may again as we face future fiscal challenges such as funding roads.

Across the state and for over three decades, local taxpayers whose assessments grew faster than the inflation rate had their property tax increases limited by the Headlee amendment.
Note that I said “limited;” the Headlee amendment is a tax limitation provision, meaning that taxes can and do go up, and can do so without additional voter approval as long as they remain below the limit. The Headlee amendment does not force governments to cut spending or taxes unless they go above the limit. Furthermore, it allows citizens to vote to approve an increase in taxes above those limits.

Just a couple months ago, it was the Headlee amendment that forced the state to put Proposal 1 on the ballot. Because Prop 1 involved a new “local” tax, it required a vote of the people. Again, Headlee is a tax limitation amendment; it did not prohibit the state’s voters from authorizing this new tax. It just forced the government to ask for approval. 
This shows, again, why constitutional provisions such as tax limitation matter: they help preserve the rights and powers of the citizens.

The Headlee amendment has repeatedly prevented ill-advised efforts by local governments to impose taxes on their citizens, and then attempt to deceive them by claiming the new charges are somehow “not taxes.” The battle over the infamous Lansing “rain tax” went all the way to the Michigan Supreme Court before taxpayers won relief, and the case has been cited around the country as a precedent in the frequent battles between the rights of citizens and the powers of government. 



Indeed, just last year Jackson citizens won relief from a similarly constructed non-voter-approved property tax, due again to Headlee. All across the state local citizens have successfully fought inventive schemes to impose upon them new local taxes without their approval (for recycling services, drain improvements, infrastructure, and other expenditures), using their rights under the Headlee amendment.

I had the opportunity to learn much of this history first-hand, from several years working early in my career directly with Richard Headlee, as well as in writing much of the Blue Ribbon Commission report on the Headlee amendment in 1994 and 1995. It was the words from that report that the Michigan Supreme Court used to strike down the infamous Lansing rain tax; the Michigan Court of Appeals followed that precedent last year in the Jackson case. All Michigan citizens have benefited from the efforts of this man, as well as the others that joined him in the historic effort that produced Michigan’s tax limitation amendment in 1978.

However, Michigan citizens needn’t have known Headlee personally (even though he was indeed “affable”) to understand their constitutional rights. All they need to do is read Article IX, sections 25 of our constitution to understand the purposes of the amendment, and then the following sections to see how each provision works. It’s part of our supreme law now, and it has more than stood the test of time.