Should we tax pensions? Your opinion.

[Gene Clem]

We have heard a lot about whether to tax pension income on the Michigan income tax.  This was included in Gov. Snyder's budget proposal for the next two years. 

 

Our state senators and representatives have many tough choices to make and are reaching out to friends for advise.  They are asking Tea Party members all across the state what they are thinking.

 

This is your chance to voice your opinion.  Please go to the poll I constructed on google/docs and vote your opinion, yea or nay!  Then post your opinion on this forum.

 

If this works out well, we will forward the results to our reps in the SW MI area and the Tea Parties in other areas of the state.

 

Now, don't feel like some genius if you discover that you can vote more than once; just don't bother.  This is not a scientific survey, just a sense of where the folks in SW MI are at this point in time.

 

(Click Here to Vote)

[Cindy]

Gene,

 

 To be honest I think it is the wrong solution for a tax problem.  Why is this the only choice the governor is giving?  Maybe we should be pushing for alternatives such as a flat tax.  Property taxes are the most inefficient taxes as it costs so much to have the systems in place to collect them and they are frequently challenged due to irregularities, so you lose a portion of the ROI right off the bat with property taxes, maybe they should be looked at.  Some states don't have income tax at all but replace it with a higher sales tax so no-one is exempt.  I guess I am saying that I would like to see a few options on the table so that there can be some debate on what is the best approach instead of an all or none on the pension tax.  Not as clean of an answer a you probably wanted but I am tired of politicians giving false bad choices and then saying we have to pick on of their proposed options.  

[Nathanniel Martin]

In principle, I agree with Janet, of course. The fairtax would be optimal. Until we get that passed though, we are saddled with the current system...That in mind,  I agree with Lori. If contributions to one's pension were not taxed as income before, then receipts from that pension should be subject to taxes. Otherwise, the employee gets financial benefit without being subject to tax on either end. However, if the contributions were taxed as income at the time, then that financial benefit has already been subject to taxation, and the proceeds from a fund that has already been taxed should not be subject to taxation again.

Some may argue that the interest on the pensions, if received post-tax, would not be subject to taxation at all. That's a tough call, economically, from an individual standpoint. I'll leave that one alone, except to say that the issue puts the spotlight on yet another reason that a consumption tax is the more equitable form of taxation.

[Patti Buxton]

There are few who would deny the need for drastic measures in order to turn Michigan's economy around. Once enacted, taxes have a way of taking on a life of their own and become permanent. This measure can only be acceptable if a 'sunset clause' is a part of the tax law. At some future date, the issue would either go away or be renewed after extensive debate. 

[Steven Zimberg]

I think the pensions should be taxed at least to the extent they were generated with before tax dollars.  At least while we have the enormous debt.  I would also be in favor of an exemption on the first $10,000 of annual pension income.

[Mary L. Martin]

Since I always have done our taxes, I was shocked when we became 65 that our interest and IRA distributions were not taxed.  All the other states tax that income.  I asked a CPA, and he told me that it was started by the Michigan legislatures so they didn't have to pay tax on their generous pensions (and probably for the union workers too).  2010 pension/IRA deduction was $90240 and no interest/dividend/capital gains were allowed.  Even if you made $20000 in pension/IRA, most of your interest/etc was taxed. 

 

I remember when our family of four made taxable income of $24000 a year, $10000 deduction for four and we paid $624 to Michigan.  So now, the two of us get $11800 for deductions and we do not pay tax on our Social Security, as we also do not pay to the Federal Gov.  We have no gripe with paying tax on our IRA distribution, which we financed with our own money.  We will still get money back from our property tax credit. 

[Abigail Nobel]

I agree with much said here, especially references to The Law by Frederic Bastiat and the Fair Tax.

I think Snyder is wrong in evading the Fair Tax. He's also wrong to increase taxes instead of cutting more spending. I'm no accountant, so I can't judge how really necessary that is, but I do agree it should be a level playing field for taxing retirement funds.

My ideal solution would be, tax pensions as income, sunset the earliest day the Fair Tax could be implemented. And start working on it NOW.

[Timothy J Banks]

Thought about it a little longer and it seems these pensions are tax exempt, while I have to pay on my Roth IRA when I begin drawing. If  these pensions are merely being put in the same bracket as the rest of us then I'm all for it. Why shold they get a free ride just because their unions bought off legislators?

[Gene Clem]

Some more input:  The state constitution exempts unionized public employees from reduction in pay or benefits and that includes after retirement as far as I know.  Gov. Engler then had private pensions excluded to even the playing field.  I am not sure, but I believe that IRA and 401k either are, or were at one time excluded from income tax in Michigan (may have changed lately).  Roth is taxed going in and cannot be taxed coming out.

[Steve Klooster]

It should have been taxed to begin with, just as the rest of us are

[Dr. Scott Davis]

Here's the single thing I want all Tea Party and 912 groups to understand: SHARON TYLER, MATT LORI, AND JOHN PROOS ALL THREE SIGNED ON TO THE "IN OR OUT 2010" PLEDGE. THAT PLEDGE STATES:

2. I BELIEVE GOVERNMENT SHOULD NOT INCREASE THE FINANCIAL BURDEN ON ITS CITIZENRY DURING DIFFICULT ECONOMIC TIMES THEREFORE I WILL OPPOSE ALL TAX INCREASES UNTIL OUR ECONOMY HAS REBOUNDED.

That was an absolute promise they made. I intend to hold them to that.

Dr. Scott

[Gene Clem]

Shifting taxes from one group to another, while technically not raising taxes, is not an answer.  Only cutting the size and cost of government will do. 

 

FairTax guys are making hay while the sun shines here!

Dr. Scott Davis said:

Here's the single thing I want all Tea Party and 912 groups to understand: SHARON TYLER, MATT LORI, AND JOHN PROOS ALL THREE SIGNED ON TO THE "IN OR OUT 2010" PLEDGE. THAT PLEDGE STATES:

2. I BELIEVE GOVERNMENT SHOULD NOT INCREASE THE FINANCIAL BURDEN ON ITS CITIZENRY DURING DIFFICULT ECONOMIC TIMES THEREFORE I WILL OPPOSE ALL TAX INCREASES UNTIL OUR ECONOMY HAS REBOUNDED.

That was an absolute promise they made. I intend to hold them to that.

Dr. Scott

[Christine Paver]

I don't agree with any new tax, especially one that excludes public employees.