State documents obtained by the Center for Michigan offer some of the most detailed glimpses yet of Gov. Rick Snyder’s income tax and pension tax plans.
The graphics below provide 16 scenarios approximating the proposed state income tax for many Michigan residents. See where you might fall, based on your income and family situation, and compare these charts to the bottom line on your most recent state income tax filing to see how you may be impacted if Snyder’s tax plan becomes law…
These conclusions were drafted by the tax experts in the Michigan Department of Treasury before the governor presented his budget proposal last week. Here are the raw printouts in four PDF documents: 1, 2, 3, 4. (Apologies for the somewhat confusing format of the PDFs – we’re reprinting exactly what we obtained.)
The documents shed light on early misinterpretations of the income tax plan, especially regarding taxes on pensions.
Outcry grew quickly when Snyder announced he’d tax pensions of both public sector and private sector retirees.
The Mackinac Center for Public Policy reported: “The most unfortunate part of the budget is the proposal to raise taxes on pensions … State officials must remember that taxpayers are not gentle sheep waiting to be sheared, and many won’t. In effect, the move charges a retiree with a $40,000 annual pension $1,700 a year for choosing to remain in Michigan rather than move to sunny, income tax-free Florida.”
More colorfully, a relative of mine living in Florida on a state of Michigan pension tossed this email grenade more representative of some of the talk radio buzz and feedback coming into politicians’ offices in Lansing: “This boiling pot called Michigan certainly needs fixing. On the other hand, I feel no responsibility to fix it just because I busted my ass for many years as a state employee. I’m sure many of the people calling for taxing our already taxed pensions are the same ones who always complained about state workers ‘doing nothing for big pay,’ the very same people who didn’t try to take a state exam (or weren’t smart enough to pass one), who didn’t know what they were talking about, who were just plain jealous. I hired in with the State and I always earned my pay. There were benefits promised me and ‘so to speak’ etched in stone. Now the Governor and politicians want to say ‘just kidding?’ I cut a bargain with the State in 1958, and now they want to back pedal and say ‘we don’t like what we agreed to?’ Looks to me like Rick Snyder and friends are Indian givers… Now I’ve really got myself riled up. Might as well get ready to march in Lansing.”
Under five different Treasury Department scenarios above, retirees with total pension and other income of $42,000 or less would pay no state income tax under Snyder’s tax plan.
Snyder’s tax plan may be many things, but according to the Treasury Department analysis it is NOT a tax on destitute grandmothers or other retirees with low fixed incomes.
In keeping with the governor’s stated ethic of transparency in government, The Center for Michigan has urged the Snyder administration to create an online calculator so every Michigan resident can see exactly how the tax plan would impact their pocketbooks. We’re told that idea is under consideration.