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The Pension Tax is Not Right for Michigan

State Rep. Joseph Graves, R-Argentine Township, shares his opinion.

A lot of great progress has been made to get Michigan back on track, with one problem: implementation of the pension tax. When the 96th Legislature began, our state was in serious debt and unemployment was at an all-time high. Bold reforms were necessary to start Michigan's revitalization. I was extremely proud last year to see the Legislature eliminate a billion dollar deficit and complete a budget based on real dollars months before the deadline.

To really jumpstart the turnaround for our state, a new tax structure also was needed that would once again make Michigan a good place to do business. The Michigan Business Tax was causing businesses to pack up and move out of state, leaving our hard-working taxpayers without jobs. In addition, small businesses were being double taxed, which only made matters worse. As a small business owner, I supported the implementation of a simple, flat tax plan that provided relief for small businesses and would help draw job providers to Michigan.

There was one big problem with the new tax plan, however. It took away the tax exempt status of public pensions, adding a financial burden on many Michigan residents who were unable to prepare for the costs. Although the plan included a tiered approach based on age, those who are already retired were left with extra taxes to pay out of their fixed incomes. While I support most of the new tax plan, which took effect at the start of this year, I cannot support the pension tax. I have said from the beginning that I do not support this and since taking office I have learned that my constituents feel the same way as I do. I made the promise to my constituents that I would oppose and work to repeal the pension tax and I recently introduced legislation to do so.

My legislation, House Bill 5601 would completely repeal the 2011 pension tax changes return public pensions to being tax exempt and increase the exemption amount on private pensions. The pension tax takes money out of our economy and sends it to state government.

That is not going to help revitalize our economy and get Michigan back on track. This legislation is about protecting families in our community and giving our economy the boost it needs. Now that I've introduced this bill, I will continue to advocate for this change in state government and push for a hearing in the House Tax Policy Committee on this issue. If you have any questions on this issue or other issues I'm working on in state government, feel free to contact my office toll-free at (866) 989-5151 or via email at JosephGraves@house.mi.gov.

- By state Rep. Joseph Graves, R-Argentine Township

Steve Losey June 01, 2012 at 01:50 PM
Really Joe? How stupid do you think the voters of the 51st are? You and your Republican thugs created and shoved that legislation down everyone's throats. You voted to approve the budget, that tax is part of it. Now you want us to believe that you're so noble that you've created something special to speak out against it? HB 4818 has been sitting in committee for almost a year now. HB 4818 is the same bill that you say YOU created? Republicans have refused to even discuss it? Appears that you've been wasting a lot of time and money (taxpayers) creating and introducing something that's already been done. Must be election time? Is that nice pension that you're receiving from GM getting taxed Joe? Figured that the 70k that you're making in Lansing (creating legislation that's already been created) would off set that.
Robert Marr June 05, 2012 at 02:50 PM
Steve, It was just in March when you challenged Mr Graves to step outside his party lines to fight against the pension tax. He has done just that, yet you blast him. You politickers are a tough crowd...
Steve Losey June 05, 2012 at 03:24 PM
Exactly my point. The "other" party has already drafted and introduced the same bill almost a year ago. It's been sitting in committee because the majority refuses to even discuss it. Is Mr. Graves to important to side with the Democrats on the same issue? Does the same bill have to be credited to him to get his support. How much time and money are we wasting to get to the same results? My guess - You wouldn't have heard a thing if it wasn't #1. election time or #2. Graves is having his own pension taxed. Think about it.
Robert Marr June 07, 2012 at 04:45 AM
All of us in retirement are having our pensions taxed. Where did Gov. Snyder think we, "seniors" would get additional the money to make up the difference in lost spendable income? How does this help the economy? It doesn't. It only helps him satisfy his commitment to balance the budget. Bottom line, it stinks, and I hope someone can do something about it, by whatever means. As for Joe reissuing 4818 as a separate bill with he alone as supporter, maybe he felt he had to do it in order to reduce the possibility of committing political suicide. I don't know. While I would like to hear his reasoning, I, more importantly want to partake of his success.
Kathy Sanders July 19, 2012 at 10:17 PM
Robert, No not all pensions are being taxed. If you were born before 1946 you will pay "NO" state tax on your pension. As long as either husband or wife is born before 1946 no pensions in that household will be state taxable. If you are born between 1946 and 1952 you are taxed on amounts over $20,000 if you are single and $40,000 if you are married. Anyone born after 1952 is going to have their pensions taxed for the rest of their lives. If that piece of legislation isnt self serving I dont know what is. It is so unfair. So in other words, if you are older and have a very lucrative pension you are NOT going to have to pay state taxes on you pwnaion, if you are younger and have a moderate pension, too bad, you have to pay taxes on it all. I hope retirees that were born after 1952 will leave the state of michigan and go to Florida. why didnt they just make it fair and tax everyone over the $20,000 single and $40,000 married, but I guess that is just too easy.

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