tax on pensions

February 18, 2011

Snyder calls tax on pensions ‘a tough call’

The Detroit News
Detroit— The decision to tax pensions was a “tough call” but is fair, Gov. Rick Snyder told The Detroit News today.
“It was a very tough call, but if you think about it, was it equitable?” he said. “They’re being asked to pay the same rate the rest of us are paying.”
Snyder unveiled a budget Thursday that offers a $1.8 billion tax cut to businesses while taxing pensioners and restraining the spiraling costs of public employee compensation.
His comments today came after Snyder was asked if he was prepared to take on some of the strongest lobbies in the state. Snyder said the proposal should be presented and discussed.
“We haven’t been fiscally responsible,” he said of prior budgets by previous administrations. “We’re talking about solutions for the future.”Snyder has said his $46 billion plan, which makes deep spending cuts and removes a wide range of personal and business tax credits, is “about setting the foundation for the reinvention of Michigan.” Snyder has said this week he is dealing urgently with an economic “crisis” in Michigan — the only state to lose population between the 2000 and 2010 censuses. He presented his budget a month earlier than required and wants the Legislature to approve it by May 31 — months earlier than the norm in recent years.
Among the changes Snyder has proposed: — Reducing the income tax rate to 4.25 percent from 4.35 percent this year, but freezing it there and abandoning further scheduled reductions.
— Taxing all public and private pensions, with the exception of Social Security income.
— Phasing out the $3,700 personal income tax deductions starting in 2013 for individuals making at least $75,000 or couples making at least $150,000, a change that will result in higher state taxes for many Michigan residents, not just pensioners.
— Eliminating or reducing many other personal income tax credits, including a reduction in the homestead property tax credit to 80 percent of the difference between property taxes and 3.5 percent of income for most homeowners.
— Increasing fees totaling about $15 million for services such as Michigan State Police fingerprinting and certain permits from the Department of Environmental Quality.
— Eliminating the dairy farm inspection program in the Department of Agriculture and Rural Development.
— Eliminating the Workers’ Compensation Appellate Commission.
— Eliminating six trial court judgeships to save close to $1 million.
— Removing business credits for brownfield redevelopment, the Michigan Economic Growth Authority, Next Energy, advance battery, film and renaissance zones, and others, although commitments already made will be honored. Incentives such as ones for the film industry would be capped at $25 million for the short term.

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