Constitutionality of Taxing Pension Income and Awarding Exemptions Based on Age or Household Income at Issue
The Michigan Supreme Court has issued an order stating that it would hear arguments regarding the constitutionality of several personal income tax changes that were enacted earlier. Pension benefits are taxable under certain circumstances and personal exemptions are phased out in some cases.
The particular questions the court will consider are:
- if reducing or eliminating the statutory exemption for public pension income impairs accrued financial benefits of a pension plan or retirement system of Michigan or its political subdivisions under the state constitution;
- if reducing or eliminating the statutory exemption for pension income impairs a contract obligation in violation of the federal or state constitutions;
- if determining eligibility for exemptions on the basis of total household resources, or age and total household resources, creates a graduated income tax in violation of the state constitution; and
- if determining eligibility for exemptions on the basis of date of birth violates equal protection under the federal or state constitutions.
Oral argument is scheduled for September 7, 2011.
Order, In Re Request for Advisory Opinion Regarding Constitutionality of 2011 PA 38, Michigan Supreme Court, Docket No. 143157, June 15, 2011