Great Lakes Wire

The fudge may be sweet, but Lansing’s new idea isn’t.

On Mackinac Island, where chocolate still melts in copper kettles, lawmakers want to tax the ads that keep ferries full and Main Street businesses open.

A proposal in the statehouse by state Rep. Jason Morgan would slap a 6% tax on nearly every ad—digital, print, radio, television, and billboard alike. Lawmakers say it’s about fixing Michigan’s roads. But for small businesses, it’s another pothole on the path to survival.

Generations of fudge makers, innkeepers, brewers, and farmers rely on marketing to keep Michigan’s economy humming. In Frankenmuth, chicken dinners don’t sell themselves. In Ann Arbor, Zingerman’s newsletters remind loyal fans to return. Bell’s Brewery in Kalamazoo advertises to stand out from national brands. And Robinette’s Orchard near Grand Rapids fills its tasting rooms because people hear about them first.

These aren’t luxuries. They’re lifelines. And if Lansing taxes the act of reaching customers, it won’t just make advertising more expensive. It’ll make doing business in Michigan harder to afford.

Michigan wouldn’t be the first state to test this bad ad tax idea. Florida tried it in 1987. National advertisers pulled out, conventions canceled, and lawmakers repealed the tax in six months flat. Maryland passed a digital ad tax in 2021; it’s been tangled in lawsuits ever since, with revenues far below projections and refund claims already looming. Even Washington state, gearing up for a similar tax this fall, is facing complaints that its rules are “clear as mud.”

Further, business groups warn Michigan’s proposal would hit the state’s 900,000 small businesses hardest—those that rely on affordable digital ads to reach their neighbors. Economists agree: taxes on business inputs like advertising don’t stay put. They ripple through supply chains, raising prices for everyone.

Beyond tourism, this tax kneecaps Michigan’s opportunity for an economic comeback. Entrepreneurs, startups, and family manufacturers rely on affordable digital outreach to grow. At a time when other states court new investment, Lansing’s plan would tell job creators the digital welcome mat is out—and the tax bill is in.

Plus, tourism isn’t fluff. It’s Michigan’s backbone. In 2024, visitors spent $30.7 billion in the state. The industry supported more than 351,000 jobs—one in every 17 workers—and generated $54.8 billion in economic activity.

The Pure Michigan campaign alone once delivered $8.33 in tax revenue for every advertising dollar spent. Raise ad costs, and you choke off the very jobs and tax revenue Lansing depends on.

When politicians raise the cost of advertising, a fudge shop trimming its ad budget hires fewer seasonal workers. A brewery cuts hours. A winery that can’t reach new customers cancels tours. Families pay more for meals, drinks, and souvenirs as businesses try to absorb the hit.

And if the law is later overturned, as Maryland’s was, Michigan taxpayers could be stuck paying refunds with interest.

The irony writes itself: Lansing wants to fix the roads by draining the lifeblood of the economy that fills them with cars and commerce.

Families won’t travel around Michigan for flawless roads. But they’ll continue to travel for the fudge, chicken dinners, beer, wine, water, and festivals—the heart of a key industry for the state.

Work for better roads, yes. But don’t fund them by taxing survival for small businesses. The lesson from other states is clear: ad taxes don’t pave the way—they block it.

Mattias Gugel is the Director of State External Affairs for the National Taxpayers Union