Opinion: Repeal Michigan’s pension tax
It’s unfair to change the rules in the middle of the game.
I’m a former baseball player, so let me use a baseball analogy.
Imagine if the umpires suddenly decided certain teams would get only two outs in the late innings, and others would still get three. It wouldn’t make sense, and it wouldn’t be fair.
Yet that’s what Michigan did in 2011 when the rules for taxing pension income were changed.
For nearly five decades, Michigan had the same rules in place for pension income. Hard-working Michiganians planned ahead for retirement with expectations based on unwavering state law.
That all went out the window in 2011, and people nearing retirement suddenly were told they wouldn’t have as much income as they were counting on.
The fact that state government now claims a chunk of previously untaxed pension income is bad enough. To make it even worse, people are treated differently depending on when they were born.
People such as my dad – born before 1946 – do not have their public pensions taxed, which is the way it always was under the long-standing Michigan system. But people such as my uncles – born from 1946 to 1952 – are now paying taxes on pension income they expected would be tax-free. People born after 1952 will be on the hook to pay even higher taxes based on the complicated three-tiered system adopted in 2011.
My legislation to change all that — and turn the clock back to 2011 — is advancing in the state Legislature.
Although there were a lot of tax-related issues I did not like in Gov. Gretchen Whitmer's budget proposal for the next fiscal year, I am encouraged she proposed a pension tax repeal in line with my legislation. I will keep working to make sure a repeal becomes reality.
My bill would restore the tax-free status of public pensions and give those with private pensions much more relief compared to current tax rates. Income exemption levels for the 2018 tax year would be set at $51,570 for single filers and $103,140 for joint filers.
The three-tier system based on age would also be repealed, so all Michiganians – regardless of when they were born – would have the same rules.
Michigan should not be balancing its state budget on the backs of senior citizens. Many of them are on fixed incomes – yet their utility bills, medical bills and rents continue to rise. And don’t even get me started on the cost of their auto insurance.
It’s time to do the right thing and repeal the pension tax.
Rep. Joe Bellino, R-Monroe, represents the 17th District in the Michigan House.