A divided Michigan Supreme Court has given the green light to the extension of Michigan’s 4.35% personal income tax to pensions, one of the cornerstones of the Gov. Rick Snyder-led overhaul of the state tax system that was approved amidst partisan rancor earlier this year.
The court did, however, unanimously strike down provisions in the new tax law that would have phased out the use of personal tax exemptions by wealthier taxpayers. That provision, effectively raising the taxes on higher income earners, is barred by the state constitutional ban on a graduated income tax, the court said.
With today’s decision, the state can go ahead with plans to implement the tax changes on Jan. 1. The new tax on pensions was expected to raise more than $300 million in 2012. It was not immediately clear how much lower that number will be because of the court’s decision to strike down the personal exemption phase-out.
MIRS already crunched the numbers and found "$54.4 million hit to '12 budget, $82.9 million 4 full year." But we are sitting on a surplus right now, so don't make any moves to hurt the poor folks with more cuts, OK?
It was a 4-3 partisan decision from the court as well; all Republicans for, all Democrats against. No shocker there.
That election of 2010 just keeps on giving...
Instant update: From a Gongwer tweet: "Public employees considering filing new lawsuit against pension tax in federal court."
Give it a shot. You never know.