June 14th, 2011, 06:24 PM
Join Date: 11-06-05
Sen. Geoff Hansen
Even though I am not a full time fire fighter, my sister inlaw is, and a lot of my friends are FF and Cops. I wonder if this will affect turn keys, seeing how they aren't real cops anyways.
LANSING – Police officers and firefighters who don’t receive Social Security benefits would not pay state income tax on their pensions, under a bill that passed the state Senate overwhelmingly today.
Because other retirees’ Social Security benefits are not taxed under the state’s revised income tax, it’s unfair to tax public safety officers’ retirement income that doesn’t include Social Security, said bill sponsor Sen. Goeff Hansen, R-Hart.
Hansen said the proposed change has been under discussion since Gov. Rick Snyder signed the revised tax system into law in May. The new law stirred controversy because it reduced or eliminated generous income tax exemptions for retirees under age 67.
Social Security benefits remain untaxed by the state as before.
The Senate’s income tax exemption also would apply to federal and railroad retirees who do not receive Social Security benefits.
The Senate approved the bill on a vote of 35-2. The bill goes to the House.
Most police officials in Michigan do not pay into Social Security or receive its benefits. About 80% of roughly 50,000 retired police officers in Michigan do not receive Social Security benefits, and have pensions that average $27,500, said Jim Curran, spokesman for the Michigan Association of Police Organizations.
Curran said about 16,000 of the state’s 26,000 active police officers are not part of the Social Security system.
The number of firefighters who would not pay tax on their pensions was not immediately available.
Sen. Toya Schuitmaker, R-Lawton, was one of two senators who voted against the bill. She said police and firefighter pensions are typically much higher than Social Security benefits, and said only an equivalent amount of pensions should be exempt from the state income tax.
Schuitmaker said a complete exemption of their pensions is overly generous, while other retirees pay taxes on at least a portion of their pensions and private retirement income.
In 2004, the Free Press documented instances of metro Detroit police and fire officials retiring with large pensions – in some cases bigger than their salaries when they were working.
In Warren, at least a dozen retired police and fire chiefs were drawing pensions of $77,000 to $86,000. In Taylor, the 20 largest police and fire annual pensions ranged from $67,200 to $150,000 for a retired police chief.
Curran said those cases represent a small percentage of police and fire retiree pensions, but they create a misperception of lucrative retirements for all retirees.
Curran said more cities have switched to 401(k)-style retirement plans for police and firefighters, who also will qualify for Social Security benefits when they retire