Dear Michigan GMRA Member:

Governor Snyder’s amended budget proposal was announced on April 13. The proposal passed the House of Representatives on April 29.

The modified proposal does lighten the load for some groups of retirees who are collecting pensions. For others, it increases the tax burden. In either case, the tax burden remains disproportionate.

We understand this can be a polarizing issue and not all of our members oppose the pension tax proposal.But resolving Michigan budget deficit issues at the expense of Michigan retirees who rely on fixed incomes is not an acceptable solution.

The primary role of GMRA is to advocate for retirees -- protect pensions, our remaining benefits and the retirement future of our members and all retirees. We remain committed to this responsibility and oppose the revised budget plan -- and any proposal -- that would place an unfair share of the tax burden on private pensioners.As I’m sure you know, the proposal raises taxes on pensions by eliminating or reducing the pension tax exemption for private pensioners. At this point, public pensions remain tax exempt based on Michigan Constitutional law.

In many cases, retirees and seniors in Michigan have already experienced significant retirement benefit reductions, with little or no way to increase their future income. In addition and like almost everyone else, these seniors are affected significantly by rising costs of fuel and food, staggering increases in costs for health care and prescription drugs and the additional economic impact of a cut to the Homestead Property Tax Credit, also included in the Governor’s revised proposal.

We encourage you to understand the facts and details, as outlined on the summary of the revised proposal on the next page. The summary has been compiled from various sources and is accurate, as best as we can determine, at this point in time.

The Michigan tax is an important issue that will be crucial to the financial security for many of you. If you support the GMRA position, we encourage to act immediately you to communicate your position to your State Senator and Representative. The proposal is expect to move to the Senate for a vote the week of 5/2.

We are also including a sample letter that you can modify to reflect your personal views.

Thank you for your support.

Sincerely,

John Christie

President

Proposed Michigan Tax Proposal Fact Sheet

Current situation

There is a great deal of confusion regarding who is impacted by the new Michigan Pension Tax proposal.

The amended proposal announced April 13, outlines a three-tiered plan for State income tax on pension income. The proposal passed the State House on April 29.

Details of the proposal:

• Those born before 1946 would be treated exactly as they are today: First $41,120 (single) / $90,240 (joint) pension/IRA income is excluded from State taxes for the rest of their lives (plus this exclusion would b adjusted upward each year for inflation). Social Security is also free of State tax for everyone.

• Those born between Jan 1, 1946 and Dec. 31, 1952 would get a $20,000/ 40,000 exclusion for pensions/IRAs until they turn 67. Once they turn 67, they would only get a senior income exemption of 20K/40K which also now includes all Social Security income and $3,700 personal exemptions. In other words, if by the time they turn 67, one spouse gets 20K in Social Security and the other one gets 10K in Social Security and the personal exemption has grown to $4,500 each, there is only an additional $1,000 of pension/IRA income exempt from State tax - everything else is taxed.

• Those born after 1952 would be taxed on all pension/IRA income until they turn 67 then they would get the same "deal" as those in the next bracket (most likely they would be taxed on all pension/IRA income).

• The proposed law effectively makes it possible for someone born one minute later than someone - a New Year Baby (Dec 31, 1945 vs. Jan 1, 1946) to pay over $100,000.00 more in state taxes in their lifetime than the person born the day before.

In addition:

• State income tax would remain at 4.35% (4.25% beginning in 2013).
• Replaces Michigan Business Tax with 6% flat corporate tax; exempts most small businesses.
• $300 million projected to be raised from phased-in pension tax.
• Further cuts to Homestead Property Tax Credit:
• The Homestead Property Tax Credit would go from 60% to 100% for household incomes from $0-$20,000,
• For household incomes from $20,001 - $30,000, the Tax Credit would go from 100% to 60%,
• For household incomes greater than $30,000, the Tax Credit would be 60%.
• The credit for persons with disabilities would remain at 100%,
• The maximum credit would remain at $1,200 and would be phased out for incomes between $41,000-$50,000.
• Previously proposed cuts to public education, local communities, State Universities, infrastructure repair and construction, film industry, etc. remain in effect.

If this does not seem like the fairness and equality you thought we were getting please use one of the links below to contact your State representatives and the Governor. The Senate is most important since the House has already passed this bill.

If this change in taxes is what you wanted then do nothing.

SAMPLE LETTER

(Edit/Personalize)

Dear _____________:

Re: Opposition to Governor Snyder’s Proposed Pension Tax increase

I am a General Motors retiree and a member of the GM Retirees Association (GMRA). 

I strongly opposed Governor Snyder’s revised proposal and solution to balancing the Michigan budget by implementing taxing private pensions with an unfair and inequitable share of tax burdens. 

This proposal does not represent “shared sacrifice!” The proposal unfairly shifts the burden of the Michigan budget deficit to retirees and seniors who are on fixed incomes. Many of these retirees have already experienced significant benefit reductions and have little or no way to increase their retirement income.

In addition to this unfair burden, these same senior retirees are affected by significant benefit losses, rising costs of fuel and food, and staggering increases in cost for health care and prescription drugs. Cuts in the Homestead Property Tax Credit included in the Governor’s proposal would have additional adverse affects on retirement security and the communities where these retirees reside.

As my representative, I strongly encourage you to vote against the proposal, as it stands.

Sincerely,

###

Contacting the Governor, and elected officials

Enter zipcode + 4 to find all elected officials
http://www.votesmart.org/

see example list here
http://www.votesmart.org/search.php?search=+48309-3324+

find your zip+4 at USPS.com
http://zip4.usps.com/zip4/welcome.jsp

find your state senator here
http://www.senate.michigan.gov/FindYourSenator/byaddress.htm

find your state representative here
http://house.michigan.gov/find_a_rep.asp

Governor’s website link, also his email shows as: [email protected]
Phone for constituents is (517) 335-7858
http://www.michigan.gov/snyder/0,1607,7-277-57827-249747--,00.html