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Original article URL: http://bridgemi.com/2014/08/foul-on-snyder-for-playing-word-games-with-pension-tax/
19 August 2014
|Who:||Gov. Rick Snyder|
|What:||“Governor Snyder’s special message on aging”|
|The call:||Regular Foul|
“It’s a topic that comes up quite often and it’s the quote unquote pension tax. And I want to be proactive and let people know it’s not a pension tax.”
In a video published June 2 from a speech at the OPC senior center in Rochester, Gov. Rick Snyder gave what was billed as a special message on aging. Covering a variety of subjects, Snyder referenced a 2011 change to the Michigan tax code that slashed taxes for businesses by $1.65 billion, and made up for most of that cut by increasing income taxes. A big and controversial part of that income tax increase was the taxing of public and private pension income. That change alone was expected to raise for the state, and cost pension-receiving taxpayers, about $343 million in fiscal year 2012-13.
The changes are phased in, with those reaching the age of 67 in 2020 or after facing more taxes.
According to a House Fiscal Agency analysis, a retired couple born after 1952 with $48,000 in pension income would pay $3,130 more in taxes.
Snyder’s claim that Michigan residents now taxed on their pensions are not dealing with a pension tax is based on this: There is no specific pension tax. Instead, Snyder and the Legislature removed a tax exemption that had previously barred pension income from being counted as income.
“To your specific question, the governor is right,” said Snyder campaign spokesperson Emily Benavides. “There is no new tax on pensions. People with pensions had a special-interest carve out in the tax code for years, while working seniors paid the same income tax as the rest of us.”
Snyder’s logic appears be that, as he said in the speech, “eliminated exemptions, exclusions, ways people weren’t paying tax” on pensions is different from a pension tax – a semantic distinction that he’s had a difficult time selling outside his administration, as shown here here or here, or by the Michigan office of the American Association of Retired Persons.
|The call:||Regular Foul|
Snyder has been a vocal supporter of tax reform since he entered office in 2011, and has been steadfast in his belief that pensions should not be immune from income tax, even when several Republican legislators tried to repeal the tax on pensions in 2013. To tell a room full of seniors that a change he created that forces them to pay taxes on pensions is not a pension tax borders on sophistry and crosses the line of common sense.