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