The letter to the editor that inspired Michigan's pension tax and created $4.7 billion in revenue (so far)

January 31, 2022

It was a letter to the Lansing State Journal published April 5, 2009:

Paul Roney of East Lansing, a former market specialist for the Lansing Area Chamber of Commerce, was questioning the exemption way back in 1992. I wasn't really aware of the exemption until after I retired in 2002 and started receiving a state employee pension.

I believe the comparison of the retired couple and the struggling single mom in my letter struck a cord and inspired newly-elected Governor Rick Snyder's proposal to replace the awful Michigan Business Tax with a 6% corporate income tax and finance the change by phasing out the pension exemption. I say that because of this passage from a February 17, 2011 Snyder position paper on Reforming Michigan's Tax Structure:

Michigan’s pension exemption and other tax preferences targeted towards seniors result in an extremely inequitable tax burden distribution across senior and non-senior taxpayers. An example from actual tax return data highlights this problem. Currently a senior couple with household income of $59,000, made up mainly of pension income and social security, could have no tax liability and actually receive a check of several hundred dollars back from the state. At the same time, a non-senior working couple with children, whose household income is $10,000 less, could have to pay over one thousand dollars in Michigan income tax.

And there was this from Doug Rothwell, president and CEO of Business Leaders for Michigan, in a March 20, 2011 article in the Lansing State Journal:

I calculate that the pension tax has brought in over $4.7 billion in the 11 years it has been in effect, which is about $427 million a year. Details of my calculation are here.

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