El-Sayed's Vow to "Uncap the Payroll Tax" Would Impose a 57% Tax Rate on Michigan Small and Midsized Businesses and the Self-Employed

October 9, 2026 - 07:08

A recent vow from a Democratic senate candidate has sparked serious concerns among Michigan business owners. The proposal centers on removing the payroll tax cap, a move that critics argue would result in a staggering 57 percent tax rate for small and midsized businesses, as well as self-employed individuals across the state.

The pledge was made during a Thursday night event, where the candidate promised to "uncap the payroll tax." Currently, the payroll tax only applies to income up to a certain threshold. Removing that limit means every dollar earned beyond the current cap would be subject to the tax. For business owners who file taxes through the individual code, this effectively doubles their tax burden on a significant portion of their income.

Economists warn this could force many small operations to cut staff, freeze hiring, or close entirely. Self-employed workers, from contractors to shop owners, would feel the pinch immediately. Supporters claim the change would fund social programs, but opponents say it punishes the very people who drive local economies. With Michigan still recovering from recent economic shifts, business groups are urging voters to consider the real world impact of such a drastic tax increase before casting a ballot.