Hoffa: Repeal Pension Tax On Michigan Seniors

By Teamsters General President James P. Hoffa
Published in the Detroit News, June 11, 2014

Gov. Rick Snyder talked a good game during a forum last week in Rochester about how to improve the lives of older Michiganders. But he keeps on missing the most obvious way to do so — repealing a pension tax he championed three years ago.

While he acknowledged during his delivery of a special message to the Legislature on aging June 2 that the state has “work to do” to improve the lives of Michigan’s growing population of seniors, evidently ending the tax on hard-earned pensions of thousands of retirees is not part of the solution.

In fact, Gov. Snyder defended the move ending the exemption of pensions from state income tax, saying in an interview before his speech that it wasn’t fair to assess income sources differently. But those who worked decades in return for their pensions certainly see it otherwise, as they are now in some cases paying hundreds of dollars a month in income tax.

A Michigan House study conducted in 2011 showed the financial bite for many is significant. For instance, a retired couple born after 1952 with more than $50,000 in income, including $48,000 in pension benefits, paid $1,930 more in taxes than they would have if pensions weren’t taxed.

Why was this done in the first place? To give big business an 86 percent tax break, that’s why! At a time when many in the middle class are struggling, approving a pensions tax wasn’t a good move when it was implemented, and isn’t good policy now.

When studies are finding people are working more than ever and receiving little in return, shouldn’t lawmakers be standing up for the average worker? After all, corporate America and the nation’s wealthiest are riding the wave of a near-record stock market. Meanwhile, wages are down even for many of those lucky enough to have a job.

Hardworking Michiganders shouldn’t have to pay more so those living high on the hog can continue to do so. They have done their part, helping their employers’ weather difficult economic times by accepting lower wages and reduced benefits. Now that companies have emerged from the storm stronger than ever, though, workers are still being expected to give more.

Many are struggling to make ends meet. And that includes retirees who scrimped and saved to contribute to their pensions but have seen the value of those nest eggs severely diminished by Gov. Snyder and his Statehouse cronies.

There is a reason this issue is being raised in advance of the November election. It just doesn’t seem right that the middle class should have to give up a portion of their hard-earned retirement so corporations can report even fatter bottom lines to their shareholders. Electioneering politicians aren’t the only ones who realize that; regular people do too!

So while it may be noble that Gov. Snyder came to visit the Older Persons’ Commission last week and talked about the launching of a new website and the creation of programs that support senior citizens and allow them to stay independent, something was missing.

There needs to be a realization that it’s hard for retirees to afford Internet service and stay in their homes if they don’t have the means to do so. And taxing pension benefits makes it that much harder.

To read archived articles from General President Hoffa, click here.