Benton Harbor income tax now in effect

BENTON HARBOR, Mich. -- After city residents voted for an income tax in November, the business community in Benton Harbor is figuring out how to embrace something they continue to be against.

“The income tax will have a significantly negative impact on our ability to attract new business and grow jobs in Benton Harbor,” said Rob Cleveland, the president and CEO of the Cornerstone Alliance. “It will make it more difficult to do those things. One-percent may not sound like a lot, but Benton Harbor is the highest-taxed community in Berrien County.”

Cornerstone Alliance is an economic development organization based in Benton Harbor.

Its board was against the income tax, but Cornerstone hosted two seminars in December to help local business owners prepare for the new law.

Back in November, the ‘Vote Yes’ and ‘Vote No’ signs were all over the city.

But on Election Day, a majority decided they were ok with having an income tax in Benton Harbor.

Now city residents and businesses have to pay one-percent of their income to the city. And people who work in Benton Harbor but don’t live in the city have to pay 0.5-percent of their income.

“I think it’s been fairly rushed,” Cleveland said. “The income tax was passed in early November and we had about six to eight weeks to prepare for it.”

“I think the implementation of the income tax has been rushed,” said Jon Koch, who owns City Auto Repair on Main Street in downtown Benton Harbor. “The city is not prepared for it. To this day, we still have not received any paperwork from the city on how the forms and what not are supposed to be filled out.”

Koch has owned his business for 15 years.

Like much of the business community – the local chamber of commerce surveyed 700 businesses before Election Day and 84-percent said they were opposed to the tax – he’s against the income tax.

City leaders project it will raise $2 million each year, which will go toward fixing the city’s crumbling roads and infrastructure.

“I’m not against fixing the roads,” Koch said. “I’m against having a tax imposed on me when I didn’t have a say in the tax. I am a business owner; I own property in the city of Benton Harbor. But the only way that I can actually have a voting say is I actually have to be a resident of Benton Harbor.”

Koch added: “I feel that I have no representation from the city commission. And the city commission has not been very business-friendly towards the business community.”

Cleveland said there’s concern that some businesses may move out of Benton Harbor so they don’t have to pay the income tax.

But he did say he’s had a good experience working with the city manager, Darwin Watson, as they roll out the tax.

Cleveland was recently selected to sit on a 9-person committee that was formed by Benton Harbor Mayor Marcus Muhammad to oversee how the income tax dollars are spent.

Cleveland said Benton Harbor is the only city in Michigan to form a committee like this after adopting an income tax.  

For more information about the city income tax, you can click here.