Question about the Pension Taxes on Michigan Residents

[mwilbert]

And those Catch 22's only benefit those in power. Redistributionists don't seem to notice that as long as they see some redistribution -- they're happy. But they've been hoodwinked.

As a dyed-in-the-wool redistributionist, I think we need both redistributional taxes and redistributional spending. However, I don't in general favor narrow tax breaks for particular classes of activity--as you say, they are easily abused. I don't favor pension tax breaks in principle, but I might favor them in Michigan's specific situation.

[Hermod]

Back in the 1950s when the fed tax rate was 91% on all income over $250,000 [[and Michigan didn't have an income tax), there was a provision made in the tax code to help Christmas tree farmers. All of the expenses of the operation were deductible at straight tax rates, but when the trees were sold, the income was taxed at capital gains rates [[half of the 91%). The upshot was that a significant portion of the doctors and dentists in the US became part-time Christmas tree farmers deducting their expenses at 91% and paying only 49.5% on their sales. They didn't even have to break even on their operation to come out with an after tax profit. Someone just wanted to "do something" for marginal tree farmers and the industry ballooned [[probably hurting the real farmers who didn't have 91% tax rate income to expense against).

[Wesley Mouch]

As a dyed-in-the-wool redistributionist, I think we need both redistributional taxes and redistributional spending. However, I don't in general favor narrow tax breaks for particular classes of activity--as you say, they are easily abused. I don't favor pension tax breaks in principle, but I might favor them in Michigan's specific situation.

Maybe I'm an ultra-libertarian... but I favor through 100% estate taxes.

[emu steve]

Most people on THIS forum are in favor of pensions being taxed. They say that they have to pay taxes while working, but totally ignore the fact, one day they'll be retired. That's the first thing Gov "Snydley" did when he got elected. He couldn't wait to inflict pain on pensioners. I think it's a crock for them to be taxed as hard as it already is for seniors to get by. Obviously, the pensioners who are getting 100K a year or more should have to pay the most, but don't penalize the majority who net 20 to 30K annually or less.

The ones who are contradictory are those who favor a 0% capital gains tax.

Their logic is that the principal which has produced those gains has already been taxed [[i.e., when it was earned).

By that logic, shouldn't Social Security Benefits not be taxed?

Isn't FICA taxes collected on all wages, up to the limit, before income taxes?

Someone who makes 50K would pay FICA taxes on 50K and income taxes on that same 50K [[kind of a tax on an income which has already been taxed).

By the logic of the 0% [[capital gains) folks, social security benefits should not be taxed a 2nd time. The money to fund Social Security was taxed when those dollars were earned by the wage earner.

[Wesley Mouch]

The ones who are contradictory are those who favor a 0% capital gains tax...

I don't see this connection. Sure, this issue can be approached from a 'tax or not' angle -- but the most basic angle is fairness. Why should a single class of retirees be given a benefit not given to all retirees. There are plenty of non-governmental retirees who are 'struggling' too. Equal protection under the law.

[Kevgoblue]

I don't see this connection. Sure, this issue can be approached from a 'tax or not' angle -- but the most basic angle is fairness. Why should a single class of retirees be given a benefit not given to all retirees. There are plenty of non-governmental retirees who are 'struggling' too. Equal protection under the law.

Well in the interest of fairness, I know some people who are currently working who are also 'struggling'.

[Wesley Mouch]

Well in the interest of fairness, I know some people who are currently working who are also 'struggling'.

With you brother.

Wesley's new 25/25 tax code: Everyone pays 25% of all income over $25,000 from all sources with absolutely no exemptions. Married couples must file jointly.

Fair and just and compassionate.