How Wars Get Started

There is absolutely nothing like misinformation.  Remember how when we were kids we would whisper something to someone and they would pass it down the line through another ten people?  'Your sister is cute' ends up being 'your mother wears army boots'.  So, it should not be a surprise that the new pension tax in Michigan has lots of info floating about that is not quite correct.

First, the Supreme Court decision was not unanimous and still needs some clarification as to whether or not they created a 'graduated income tax'.  And from what I have read, there is talk of an appeal of the entire decision.

But the issue that seems to have caused a lot of discussion and misinformation is one regarding taxing pensions of non-Michigan residents.  Huh?  Taxation without representation.  Isn't this why we had a Boston Tea Party?

The first time I saw anything about this was in reading a piece of legislation that had been introduced to implement the tax.  I was sure I was reading it wrong when it talked about 'non-residents' and sent it off to someone whom I thought would know the answer.  I did not receive a response and figured they either didn't know or were too busy to answer.

Curious about withholding, I contacted the payer for my local community and got even more confused.  The State W-4 form did not address pensions and the payer said not to use their form if the State had one, which at the time they did not.

Yesterday, I was speaking with a fellow public retiree who had bought a home in Florida.  I asked if they were moving there and they said 'no' because they were told they would still have to pay Michigan income tax.  I was not going to get into it at a perfectly nice luncheon.

I came home and after an hour gave up looking for an answer on the internet.  I figured this had to be wrong as I could not imagine that all of those Ford and GM retirees now living in Florida were paying taxes here on their private pensions. I went to bed.

This morning I called the knowledgeable friend who said that while my prior email was intriguing, they had not had a chance to investigate.  He did inform me that the state does have a form MI W-4P for pensions.  After some searching we found it online. 

I got back with my local person to give them the form.  They informed me that they were told by the State that non-resident pensions were subject to tax.  Email back to the other friend who then calls to say that they are NOT and sends me a link to the State's question and answer page:  There are answers to many of your questions on the state website.

So, this is how wars get started.  Susie tells Bill something that may or not be true and by the time it has passed around the 81 counties in Michigan it is totally false and everyone is moving to Texas and buying a gun to protect themselves from the tax collectors in Michigan. 

Bottom line:  Leave the State for one that doesn't tax your money.  No one will come looking for you.  Or at least not today anyway.