Politicians load the dice in their favor on taxing pensions
The "Snyder Tax Plan" summary on page A4 (Sunday, Feb. 27, print edition) is erroneous in its statement about "Retirement Exceptions" where it is stated that "Current law exempts all Social Security payments." It is only the taxed portions that are exempt. The exemption applies to US Form 1040 Line 20b, NOT Line 20a (See the instructions for MI 1040 Schedule 1 Subtractions, Line 14). I suppose that it makes some people feel good to believe that Social Security benefits are untaxed in Michigan but it is not quite true. Regarding the "Pension Tax" which Snyder is supposedly going to "equalize,” I find it quite interesting to note how these politicians - past and present - have loaded the dice in their own favor.
The "Michigan Taxes" four page "Pension and Retirement Benefits" (www.michigan.gov/taxes) publication lists the favors that these people have bestowed on themselves: Federal and Michigan public pensions are totally exempt. This includes benefits received from the federal civil service, State of Michigan public retirement systems and political subdivisions of Michigan, military retirement and Tier 2 railroad retirement. In addition, Michigan residents who receive public pensions from 14 other listed states are also totally exempt because these states do not tax Michigan Public Pensions. Since private pension subtractions are limited, those of us who have spent our working lives outside of government employment appear to have been not much more than sacrificial animals at least as far as pension taxation is concerned. Your article states that the AARP is suddenly mobilizing its 1.4 million members in opposition to both the pension tax and the MEITC. This sounds quite like the hypocritical AARP. When was the last time that you heard of the AARP protesting the taxation of Social Security benefits, let alone pension and investment earnings? Look at the US Form 1040 to see what is included in Gross Income. Why aren't they marching on Washington rather than picking on poor little Michigan? Your "Snyder Tax Plan" summary says nothing about Snyder's plan (if any) for what I consider Lansing's biggest success in lining their own pockets: the lifetime of health plan payments for those politicians who have survived 6 years or two terms in office. Perhaps those hard-working worthies such as Engler and Granholm deserve such largesse, although I have my doubts. Lastly, I'm certainly glad to see that Snyder wants to eliminate the "film tax incentives." All of the supposed "benefits" of this are merely sustained by the movie producer's inability to compete in the open market without special favors. "At whose expense?" is a question seldom asked. Arno C. Buhrer Ann Arbor
Comments
Dennis
Fri, Mar 11, 2011 : 3:15 p.m.
Back to the Future – They say the "History Repeats Itself". It does! One only need to look at the "Great Depression" of the 30's to see it. A Republican President, Wall Street running unchecked, Banks Failing, Soup Kitchens, Home Foreclosures, Unemployment, and Homeless Families. Sound familiar? Again, after 12 years of Republican control, we are suffering what could be called the "Second Great Depression". Wall Street is again out of control, Banks have been in serious trouble, we have record Home Foreclosures, High Unemployment, Soup Kitchens, etc.. Just like the Getty's, J.P. Morgan, and the rest of the super-rich, the rich continue to get richer while the "average joe" continues to struggle to keep their homes, feed their families, and find work. "In 1936, main economic indicators (except unemployment) regained the levels of the late 1920s...but after the federal government cut spending with the expectation that the private sector would step in, the economy took another sharp downturn until WWII." Sound Familiar? Unions gained popularity and the working class started to make gains. "Causes of the Great Depression are widely debated but typically include a weak banking system, overproduction, bursting credit bubble, the fact that farmers and industrial workers had not shared in the prosperity of the 1920s, and a government-held laissez faire policy" The working class and unions are again under attack by an uncaring Republican Party. Wisconsin is just one example. You can see other examples where Republicans have gained control and are passing laws that limit the rights of all workers, not just union workers. We would be better served by working together rather than letting ourselves be divided by a concerted effort of Republicans and Corporations.
mireader
Sun, Mar 6, 2011 : 11:53 p.m.
If Gov. Snyder wants to run the state like a private-sector business, he needs to show the public evidence of private sector businesses who provide healthcare for life after only six years. What happened to "shared sacrifice?"
E. Manuel Goldstein
Sun, Mar 6, 2011 : 5:37 p.m.
What Michigan needs (Ohio, Wisconsin, etc) is a referendum which ensures that all States legislators pay for their health care, contribute greatly to their pensions, and not simply rely on the taxpayers for these benefits. It would only be fair.
TheUnitedstreetsofAnnArbor
Sun, Mar 6, 2011 : 4:02 p.m.
The exemption applies to US Form 1040 Line 20b, NOT Line 20a (See the instructions for MI 1040 Schedule 1 Subtractions, Line 14). I suppose that it makes some people feel good to believe that Social Security benefits are untaxed in Michigan but it is not quite true. You need further research on your topic. The Michigan Income tax is based on adjusted gross income which happens to be line 37 on Federal form 1040. This is the beginning number Line 10 on form MI 1040. The reason that line 20a is not excluded on MI 1040 Sch1 is that it isnt included in income in the first place. People who's Social Security benefits arent taxed at the Federal level are never taxed at a state or local level.
DonBee
Sun, Mar 6, 2011 : 3:29 p.m.
Mr. Buhrer - Thank you for taking the time to do the research. It dovetails with what I have found. It is nice to see Facts in an opinion article.