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Politics & Government

Snyder defends “pension tax” in special message on aging

Gov. Rick Snyder
Governor Rick Snyder delivering his State of the State address Wednesday night.

Governor. Rick Snyder is firing back against critics of his so-called “pension tax.”

Snyder gave a special address on aging Monday in Rochester. He used part of the speech to defend his 2011 decision, which ended the practice of exempting pensions from state income tax.

He says it wasn’t fair to assess pensions and other types of income differently. Instead, the tax changes allowed seniors making less than $40,000 a year for a family or $20,000 a year for an individual to avoid paying state income taxes altogether. That’s whether they have a pension, a 401(k)-type plan, or if they’re still working.

“That’s much fairer, because if someone has income – whether it’s from working or from a retirement income – they’re all treated the same, then,” Snyder told Michigan Public Radio before the speech. “And isn’t that how the system should work?”

But Democrats say many seniors are still losing thousands of dollars a year because of that decision.

“I routinely talk to seniors every day who are paying $100, $200, $300 more a month on income tax, as well as even more on increased property taxes,” said former Congressman Mark Schauer, Snyder’s Democratic challenger in this year’s election.

“And some are even leaving the state of Michigan as a result of Rick Snyder’s tax shift.”

Schauer vowed to restore the income tax exemption for pensions if elected governor.

Earlier in his speech on aging, the governor urged the state Legislature to make Michigan a “no wait state” for in-home senior services.

Lawmakers are set to finalize a state budget in the coming weeks. Snyder is calling for an extra $20 million for programs which deliver food to seniors and allow them to get in-home care instead of going to a nursing home.  

“Today in Michigan, we have people that are looking to get Meals on Wheels, we have people looking to get in-home services, we have the MI Choice Waiver Program where we have a waiting list. All situations where we don’t have the full resources we need to really service people the way we’d like to,” said Snyder.

The governor first asked for the funding increase during his State of the State speech in January.