While Rick Snyder and his policy team at Business Leaders for Michigan argue constantly for Michigan to be a low-tax state for businesses (right now, we're right in the middle), they don't like the idea of being a low-tax state for retirees.
Kiplinger rates Michigan as one of the ten tax-friendliest states for retirees, and one of the 18 friendliest states for pensions.
So let's concede Michigan can continue to be a magnet for retirees because it doesn't tax pensions. Is that a bad thing?
Seniors are an economic plus for Michigan. They tend to consumer fewer government services, but continue to pay other taxes (notably sales and property taxes, plus Lottery games) and spend most of their income in our state:
- They don't have kids in school
- Their major medical costs are covered by either insurance or Medicare
- They bring federal money (Social Security and Medicare) into the state's economy
- They are "economic givers" — they don't compete with younger folks for jobs but spend their money here
- They tend to stabilize neighborhoods by being less transient than younger people
- They generally don't create a lot of business for the police, the courts or the prison system
And it could happen. When you are retired, it's a lot easier to relocate. Many already succumb to the lure of a warmer clime, especially those senior-friendly states like Georgia and Florida which offer lower taxes and higher temperatures. Drastically increasing their taxes makes those sunbelt states even more attractive to those of us who are approaching retirement.
The last thing I want to do is take my pension, guaranteed to me by the Michigan Constitution, and spend it somewhere warm. The Snyder plan makes it much more tempting.
You'd think a nerdy accountant could have figured this out.