Tax Fairness By Any Standard & Michigan's Generosity

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There isn't much in the world of state tax policy on which folks can agree, but surely most would say that someone's age shouldn't determine tax liability to the extent that it does in states like Michigan, which offers an exclusion upwards of $86,000 for married couples with qualifying pension and retirement income. All retired public employees (including teachers and government workers) enjoy a full income tax exclusion on those retirement benefits too. But the violation of horizontal equity is especially egregious when you consider that elderly workers earning wages actually have to pay taxes on their income.

Estimates are that ending this disparity could bring in about $700 million in revenue annually. The Michigan League for Human Services has been talking about these elderly preferences for awhile, asking the question, "Can Michigan afford such generosity?" As the state continues to grapple with budget shortfalls into the foreseeable future, the answer is an unequivocal no.

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