At Capitol rally, seniors speak out against Gov. Snyder's plan to tax pensions
Jacqueline Morrison, interim state director of AARP Michigan, speaks to a crowd of seniors and supporters Tuesday rallying at the state Capitol in Lansing.
Peter Luke | Grand Rapids Press
About 1,000 seniors holding signs with phrases such as “Don’t Tax Gramps” rallied on the east lawn on the Capitol today to oppose Gov. Rick Snyder’s proposal to begin taxing public and private pensions.
Organized by AARP Michigan, today’s rally was designed to put pressure on lawmakers in both parties to reject what senior advocates say is an unfair, $1.7 billion shift in the tax burden from businesses to individuals.
“The governor’s plan slaps more than $1 billion in new taxes on seniors’ pensions and other income to give business a huge tax break. How can we call that shared sacrifice?” said Mary Lee Woodward of Oxford, an AARP member who helped organize the rally. “What part of 'fixed income' does Gov. Snyder not understand?”
Over and over, the crowd banged drums and yelled “it’s not fair” when prompted by a dozen speakers opposed not just to taxing pensions, but to education cuts to K-12 schools and universities.
“We pay $1.7 billion in more taxes and we get worse services,” AARP Michigan President Eric Schneidewind told the rally. “Is this budget going to make Michigan the place you want to retire? Is this budget going to build a Michigan that any sensible business would want to come to?”
Eliminating the tax exclusion on public and private pensions, and eliminating the Earned Income Tax Credit, would provide about $1.3 billion of the $1.7 billion cost of replacing the Michigan Business Tax with a 6 percent tax on corporate profits.
Snyder said today the plan promotes equity on the income tax side of the ledger and gives Michigan a more competitive business-tax climate that will attract and retain employers.
“Our economy is moving in a positive direction,” but Snyder said Michigan has to begin growing faster than the nation. His tax plan “is not a magic bullet by itself, but it is a very important component of our future economic success.”
Senate Majority Leader Randy Richardville, R-Monroe, says he agrees with parts of the governor’s plan, but in regards to the tax on pensions, “it wasn’t my idea.”
“I don’t necessarily agree with what the governor put out, the way he put it out, but we’re going to talk about it as a caucus and see if there’s a reasonable solution,” he said.
Senate Republicans are going to propose an alternative by the end of the month.
Gilda Jacobs, a former Democratic senator who now heads the Michigan League for Human Services, said lawmakers have a right to be skittish given that the next election isn’t far off. For Republicans whose control of the House will be at stake, it’s only 19 months.
She called the combination of taxing pensions, wiping out the EITC and cutting K-12 schools a political “recipe for disaster.”
“You don’t want to have hundreds of thousands of ticked-off seniors,” Jacobs said. “Seniors have long memories.”
Contact Peter Luke at (517) 487-8888 ext. 235 or e-mail him at pluke@boothmichigan.com.
Comments
4Reason
Thu, Mar 17, 2011 : 1:29 a.m.
A rich businessman, a tea party follower, and a union member, have all been instructed by R. Snyder to share a plate of twelve cookies. The businessman reaches over, takes eleven cookies, and says to the tea party follower on his way out the door: "Watch out! That union member wants a bite of your cookie!"
seasons
Wed, Mar 16, 2011 : 10:16 p.m.
Forget the political ideology and pay attention to the facts of what is/isn't happening. The ACLU just sent out a notice of the effort of this legislation to negate a collective bargaining agreement for state employees and an aspect of their health insurance. Read about the emergency management act that was passed without discussion and think about the implications. This isn't just a taking away from the poor and elderly, its also about union busting and about giving more to the corporate wealthy. Sharing the pain is a great concept that few can disagree with; Governor Synder's budget doesn't share the pain.
SonnyDog09
Wed, Mar 16, 2011 : 8:23 p.m.
I have yet to hear a valid reason for failing to close this tax loophole. If one takes money out of an IRA or a 401k, it is taxed as income. Even an unemployment check is taxed as if it were income. Think of this as your contribution to civilization....that's what I get told every time that some government wants to raise *my* taxes.
Anne
Wed, Mar 16, 2011 : 8:08 p.m.
Please don't call the taxing of my pension anything but what it is: a 4.9% Michigan income tax hike. Governor Snyder believed he could balance the state budget without tax hikes. This is a tax hike for senior citizens, who by definition are on fixed incomes. I emailed one of our local representatives who called this change a "budget adjustment". If you are going to raise taxes, raise them for everyone. (By the way, as a recently retired Michigan public school employee, the next couple of years I will be getting my own money back in the form of a pension. We get our own money first, then the money from the state after our money is exhausted.)
Jay Thomas
Wed, Mar 16, 2011 : 7:26 p.m.
Mosts states don't exempt pensions. Michigan is an exception and it was because of Union clout, nothing more. Many people don't have pensions and their savings are taxed at regular rates. They are at quite a disadvantage here. You could be making seventy thousand in a pension and pay nothing. You could work for government, "retire" after twenty years, get another .gov job and end up collecting two very nice government pensions. If you are against taxes in general... well, at least that's consistent. But all the "social justice" folks need to look in the mirror already.
Corey
Thu, Mar 17, 2011 : 11:18 a.m.
If you only make $12,000 you probably aren't getting a pension and its only Social Security you're getting and thus won't be taxed. Where are people getting their numbers for this????
sh1
Wed, Mar 16, 2011 : 10:14 p.m.
You could also be making $12,000 and still be taxed. Most states have a minimum amount under which the poorer seniors would not be taxed. Snyder wants to tax them all.
paul wiener
Wed, Mar 16, 2011 : 3:40 p.m.
What Gov. Snyder and all his well-meaning, deficit-brained, clueless supporters are doing is a beginning, but no serious inroads will made on trimming the state deficit until some really serious taxes are imposed. Here's a start: erect toll booths on every road in the state, as well as pay-per-entry gates for driveways and home garages; eliminate all free radio and television; tax the size and number of tires you use; tax doctor's bills over $25; tax all bills paid "late;" a menopause tax; tax those who wear eyeglasses, hearing aids, use crutches, prostheses, don't vote, check out library books, spend more than $35 at supermarket checkouts, eat potato chips, own pets, drink carbonated beveridges, own computers, enroll their kids in public school, wear t-shirts or high heels, cross the street, wear dirty underwear, are born out of state, die in state, or who file taxes. At present Gov. Snyder is not imposing any of these taxes. We should all be grateful to him!
T. Kinks
Wed, Mar 16, 2011 : 2:58 p.m.
I'll be going to Lansing shortly (Weds) & I urge everyone else to do the same!
A2Since74
Wed, Mar 16, 2011 : 1:18 p.m.
Kay: I can sympathize. I am retired from a major local manufacturer. Two years ago, they eliminated all medical and dental health care coverage for their salaried retirees. My wife and I have a Prescription Drug policy. In the past two years, our costs have gone up 100% mainly due to increases in deductibles and premiums. There is only one solution to the health care dilemma in this country: single payer universal health care. With this, no private or public employer would have to worry about providing health care coverage to any active employe or retiree.
Townie
Wed, Mar 16, 2011 : 1:04 p.m.
Macabre Sunset: It would be nice if there were some facts in your argument. Some facts: Social Security is not a Ponzi scheme and will not go 'bankrupt'. 1) The Congressional Budget Office estimates the trust won't run out till 2052, and the SSA makes a wide range of estimates with 2041 listed as most likely. 2) Raise the cap on the payroll tax funding SS - it's at the first $106,800 now and is really outdated. If this is done we push the date out 40 years. Then you quickly jump into what appears an attack on the public sector pensions (no, I'm not a public sector worker) and again say they are extravagant. The public sector workers accepted longer salaries in exchange for more generous pensions. Then what happened was many states funded tax cuts for the wealthy on credit and used the pension funds to fill the income gap and did not make the legally required pension obligations. Now the governors are claiming that the pensions are the problem. That's like shooting your parents then asking the court for mercy as an orphan. Our present national deficit was caused by: a huge tax cut to the wealthiest with no funding behind it, 2 unfunded wars and the Great Recession (the least of the 3). Until we understand what is behind the present mess and who caused it, we'll never come to an intelligent solution.
Corey
Wed, Mar 16, 2011 : 4:47 p.m.
Why do we need to focus on who caused it?? Just so we can point fingers. Finding who caused won't solve the problem. You are absolutely right that our past governors made very stupid decisions when it came to tax revenues and spending but we can't just say well they made stupid decisions so lets increase taxes. In Michigan our business climate is the 12th worst in the country. The only way we can increase revenues right now is by bringing in businesses to employ Michiganders, which in turn increases the tax base. This isn't a complicated problem, but it is a problem that only has painful solutions. Either we move forward and be smarter about our funds or we keep digging holes.
A2Since74
Wed, Mar 16, 2011 : 1:22 p.m.
Well said. I would like to understand why public pensions typically are adjusted for cost of living, but private ones are not.
kay
Wed, Mar 16, 2011 : 12:56 p.m.
I can't believe how senior citizens are being so disrespected. My mother can barely pay for her much needed prescriptions because she is totally living on social security, as are so many of our seniors. Why do people think they are staying in 5 star hotels---maybe a small minority but certainly very small. We should be giving to seniors, not taking away. The greatest generation, and they have to continue to fight and fight for what they so rightly deserve. I am saddened by this.
Corey
Wed, Mar 16, 2011 : 4:48 p.m.
If people are only on Social Security they will still not be taxed in Michigan. But there are a lot or retirees out there who bring in over 80K in pension income. Thats a lot of money that never was taxed at the state level. Those are the people who need to be taxed. I can almost guarantee that the state will not tax pensioners in the lower income levels.
michigan48103
Wed, Mar 16, 2011 : 12:10 p.m.
The best way to think of this is Rick was voted in, so anyone and everyone who did vote for him should be happy with what they are getting, he did not get my vote and because this is the type of thing a wealthy person would do to the poor people that are on a pension and are having a difficult time. When he shared that he would not move to Lansing and take a salary, I was sure some thing like this would happen. So just remember you get what you vote for.
YHS66
Wed, Mar 16, 2011 : 12:07 p.m.
As "greedy retiree" I thought I would take time out from rolling around in all my money to comment. First of all I would argue the assumption that pensions are "income". Pensions are savings that were either taxed before they were deposited or taxed when they are withdrawn. So essentially Snyder wants to tax our money twice. Secondly we "greedy retirees" spend this exorbitant amount of money on ever increasing prices that keep going up while our income does not. Social Security has not gone up in two years now while our out-of-pocket health-care costs have.
Corey
Wed, Mar 16, 2011 : 6:14 p.m.
Pensions are not going to be double taxed. If you made a contribution to a retirement plan after-tax then it is not taxable income on the federal return and thus not taxable income on the state return.
Jeremy
Wed, Mar 16, 2011 : 2:56 p.m.
Pensions are not savings... If so you would only get the money you put in and they would be completely solvent.
Glen S.
Wed, Mar 16, 2011 : 12:04 p.m.
To those leaving comments here supporting higher taxes for "greedy" retirees, congratulations, you are doing a wonderful job of falling into the trap being set for you -- and all of us -- by Snyder and his rich, corporate pals. While 98% of Michigan residents -- unemployed, working poor, middle class, private-sector, public-sector, parents of school-aged children, college students and retirees -- are busy fighting with other over what is becoming a rapidly-shrinking budget pie, Snyder is preparing to give the remaining 2% (his already super-rich corporate pals) the biggest tax giveaway in Michigan history. And the best part? -- They're trying to sell this fundamentally unfair plan as "Shared Sacrifice."
A2Since74
Wed, Mar 16, 2011 : 11:56 a.m.
MYTH #1: When I started working 35 years ago, people said Social Security would not be around when I retired. Well it is, and it is working just fine. There is absolutely no reason it cannot continue to work just fine, with some minor adjustment. I have contributed over my working years to Social Security, and now I am getting back a reasonable return on my investment, just as anybody else would who invests in government securities. And by the way, Social Security is extremely well run and efficient. Ask anybody who is receiving it. MYTH #2: Retiree pensions are not taxed in Michigan. Wrong. Employee contributions to public and private pensions are made with after tax money.
Jeremy
Wed, Mar 16, 2011 : 2:53 p.m.
So when you get the money back from social security you put in will you request they stop send you money?
Corey
Wed, Mar 16, 2011 : 12:53 p.m.
MYTH #2 incorrect! Pension distributions that include after-tax employee contributions are not-taxed the same way as other pensions. The portion that is considered a return of after-tax contributions is not included in federal adjusted gross income and therefore not included in Michigan income either (since you start with Federal Adjusted Gross Income to arrive at Michigan taxable income).
sh1
Wed, Mar 16, 2011 : 11:47 a.m.
Recently a millage asking people to pay an additional $300 a year for a $300,000 home was voted down because people did not want any additional taxes. How is it that it's now okay to raise taxes on any pension, no matter how small?
Jay Thomas
Wed, Mar 16, 2011 : 7:14 p.m.
We already pay property taxes. Taxing pensions is not a raise.
McGiver
Wed, Mar 16, 2011 : 11:07 a.m.
It's about time these greedy retirees pay their own way. And, by the way, corporations will pay 6% income tax. Sole proprietors, partnerships, and LLC's will be exempt, as I understand it. This is because they ALREADY pay the state income tax on profits personally. Current MBT and past SBT was, in effect, a double tax on these small businesses. The governors plan is far more equitable to all taxpayers than what we have.
snoopdog
Tue, Mar 15, 2011 : 11:45 p.m.
God Bless Rick and what he is doing. Pensions are income and they should be taxed just like the income I make. I have no pension to look forward to. The money I will take out of my 401K some day will be taxed, your free ride at my expense and the states expense is over. Good Day
sh1
Wed, Mar 16, 2011 : 10:10 p.m.
Actually, I would think God would not want his name invoked here for taxing the elderly.
Macabre Sunset
Wed, Mar 16, 2011 : 11:18 a.m.
You don't seem to understand that the state cannot take over a city unless it actually fails to meet its financial obligations. And then it just gives a city more tools to rearrange its debt. It's not like the citizens will be shipped off to Guantanamo. Right now, the public unions are royalty in America. We are bankrupting our nation to provide them with pretty crown jewels. This cannot be sustained.
Cash
Wed, Mar 16, 2011 : 10:25 a.m.
As for the "emergency" financial manager bill....close your eyes and imagine this...... Imagine if President Obama had pushed through a similar bill in his first 90 days...so that he could take over any state government and impose his own "manager", dissolve the state, merge the state with another state (We could be Oh-igan) and void any and all contracts the state had entered into. Would the right wing sit around and say "Oh he is just doing what he said he would do" or "Oh he is straightening up the State of Michigan"? Don't think so.
Macabre Sunset
Wed, Mar 16, 2011 : 2:58 a.m.
I think it will help once cities start failing to meet those financial obligations negotiated in (ha, ha, ha) good faith. But if the far left is right and we're not headed for bankruptcy, then the EML will never come into play.
WesternTownie
Wed, Mar 16, 2011 : 1:24 a.m.
I am sure you are absolutely loving the Emergency Manager Legislation then.
Roadman
Tue, Mar 15, 2011 : 10:35 p.m.
Conservative GOP state senators led by Joe Hune of Hamburg Township and Randy Richardville of Monroe are among those who will block any budget legislation to tax these pension payments. Without their support Snyder's ideas are going nowhere.
Macabre Sunset
Tue, Mar 15, 2011 : 9:35 p.m.
I see their point, to a certain extent. They have, for the last 20 years, supported the generation ahead of them. Now they feel it's their turn for a free ride. The problem is that there are fewer workers supporting more retired people. Social Security and Medicare are a giant Ponzi scheme, with more and more money required to fund more and more benefits. It's going bankrupt. I've accepted that I will not be able to retire at 65, and I'm planning accordingly. I realize Social Security won't be around when I retire. I realize I will never be able to extort an extravagant pension out of the public sector economy. I would imagine if I were 60, this would be much more upsetting. These pensions are completely out of line with what today's private workers can expect. I hope the people demonstrating understand that they're a lot like the millionaire football players arguing with the billionaire NFL owners over whether they receive 50% or 51% of the pie. Their private-sector counterparts realize that the retirement age will soon rise, and pensions largely don't even exist any more. These seniors are whining about the taste of their free cake when everyone else will be eating cat food. They are willing to bankrupt the entire country so they can upgrade to five-star hotels.
sh1
Wed, Mar 16, 2011 : 3:34 p.m.
Why do you think Snyder shifted the burden of the business taxes to the poor and education funds if times are as bad as you say?
Macabre Sunset
Wed, Mar 16, 2011 : 2:56 a.m.
The money just isn't there. Public sector pensions are now underfunded by at least three trillion dollars. Reagan could come back from the grave and triple- and quadruple-tax the baby boomers and there still wouldn't be enough money. The definition of a "living wage" seems to have been changed to "more than the average person will ever make in his life, except for the few who have seniority in unions."
WesternTownie
Wed, Mar 16, 2011 : 1:08 a.m.
Nice Ponzi Scheme remark... however, Social Security is not going broke. It is fully solvent for the next 27 years. It currently has a 2 trillion dollar surplus which will go up to 4 until it starts to come back down as it was designed to do. Reagan double taxed the baby boom generation in order to pay for their added burden to the system. After 27 years it can still pay 70 percent of its obligations. It has never not paid out for its entire 60-70 year existance. All you need to make it solvent forever is to make all income levels subject to social security tax and not merely on the first $106,000. For the life of me, I cannot understand why people have it out for someone being able to have a living wage when it comes to earnings and the notion that must because we are Americans, we cannot ever retire. A person shouldn't have to work until death.