Michigan Supreme Court agrees to decide pension tax question

Jun 16, 2011

The state Supreme Court has agreed to Governor Rick Snyder’s request to make an early ruling on whether the new income tax on pensions violates the Michigan Constitution.

Governor Snyder made the request to avoid what potentially could be years of litigation.

The governor is trying to preempt an expected lawsuit from state employee unions. They say the tax on pensions will illegally reduce their agreed-to compensation under collective bargaining agreements.

The Michigan Constitution says the state may not “diminish” nor “impair” the financial benefits of pension plans.

The governor wants the question settled before the pension tax takes effect next year. The law extends the state income tax for the first time to pensions of people born after 1945.

The Supreme Court ordered oral arguments to be held in the case in September. The court has a Republican majority.