Retiree Becoming Face Of 'Pension Tax' Collecting Generously

Capitol Confidential ^ | 4/22/2014 | Tom Gantert

[MichCapCon]

A retired school teacher with 30-plus years of service says he has to choose between food or medicine due to a law repealing tax exemptions for some pensions.

But James Pearson, a 66-year-old retired teacher from Milford High School with 33 years of service, is likely collecting enough compensation from a pension and Social Security alone to put him above the average state income.

He is also eligible for both Medicare and the state’s retiree health insurance, which should pay for most of the costs for medicine.

Pearson has become the face of protesters complaining about the pension tax, being quoted by the Lansing State Journal, Mlive and the Detroit Free Press.

The Huron Valley School District confirmed that Pearson had 33 years of experience when he retired from the district in 2010.

A teacher with 33 years of experience and a master’s degree would have earned a minimum of $72,546 in 2010, according to the Huron Valley School District’s teachers contract.

A teacher with a $72,546 salary with 33 years of experience would have an annual pension of $35,910. If that teacher retired in 2010 (as newspaper reports said Pearson did) and could have qualified for an early retirement incentive, that would increase that annual pension to $38,304.

The average Social Security annual benefit as of 2013 is $15,528.

That means a retired teacher in Pearson’s situation is likely receiving an annual income of at least $51,000 just based on pension and the average Social Security income. That doesn’t include any other savings that teacher could have accumulated or if that teacher had a spouse who also had a pension or was still working.

The Lansing State Journal reported that Pearson was now “clipping coupons” due to Gov. Rick Snyder’s tax on pensions.

"Many of us living on a fixed income now have to choose between putting food on the table and paying for our prescriptions because of the Republican retirement tax," Pearson told MLive.

The federal government estimates that only about 3 percent of private sector workers are eligible for a pension. Michigan retirees with 401(k)-type accounts pay taxes on those earnings.

Pearson did not respond to a request for comment sent to his personal email.

He also is union president of the West Oakland County Education Association-Retired, a union for school retirees that is an affiliate of the Michigan Education Association.

Ari Adler, spokesman for Michigan House Republicans, said the pension tax reform treats all Michigan income the same, but does provide exemptions for seniors. Social Security income is 100 percent exempt.

“The pension reform affects younger retirees, like the government worker who retires on a taxpayer funded pension at age 55,” Adler said. “All retirees who use 401(k) plans have always had to count their savings as income. This is about treating all retirees fairly. Under the old law, two seniors of the same age with the same overall income paid different amounts of taxes. A senior with a pension didn’t have to pay income taxes, but a senior working or retired on a 401(k) was forced to pay the tax. It wasn’t fair. Pensioners born before 1946 are grandfathered in and do not have to pay income tax on their pensions. Pensioners born after 1946 can qualify for a $20,000 (single) or $40,000 (married) exemption on income.”

Others from across the political spectrum have commented on the perceived lack of fairness in the old tax system. Macomb Daily columnist Chad Selweski has written, "Why should a couple of spry 68-year-olds who still work, earning $30,000 a year, plus a tax-free pension of $30,000, pay taxes on only half of their income when a couple of 60-year-olds with health problems, limping toward retirement on $30,000 in wages, pay taxes on all of their income?"

The changes to the tax laws a few years ago eliminated the Michigan Business Tax and was an overall tax cut.

[Vigilanteman]

The Lansing State Journal reported that Pearson was now “clipping coupons” due to Gov. Rick Snyder’s tax on pensions.

News flash: Those of us paying the freight for your pension have been “clipping coupons” ever since we started working due to gross disparities in income between the public sector and the private sector. Maybe your hero BO would like to start making those incomes more equal first.

FWIW, I am not a big fan of taxing pensions. In fact, I think it is a horrible idea since those of us who have been saving for retirement have already had to pay at least some tax on them when the money thus put away was earned.

But when big public sector unions use their political power to extract extraordinary pensions, it is inevitable that their political chickens will come home to roost and tax them back.

[Opinionated Blowhard]

I’m going to take a wild guess that this guy is doing just fine with his $50,000 + of pension and Social Security income (not to mention his savings) and that he’s just saying this because he’s a hardcore, liberal teacher’s union stooge who is willing to be quoted for a story that slams Republican attempts to reign in crazy spending.

The reality is that no state has a magic money machine that will let state employees live a life of relative luxury in retirement. And hopefully state taxpayers aren’t willing to pay more to let this dope live the good life.

[LostInBayport]

That means a retired teacher in Pearson’s situation is likely receiving an annual income of at least $51,000 just based on pension and the average Social Security income. That doesn’t include any other savings that teacher could have accumulated or if that teacher had a spouse who also had a pension or was still working. The Lansing State Journal reported that Pearson was now “clipping coupons” due to Gov. Rick Snyder’s tax on pensions.

"Clipping coupons"! Oh, the indignity! He probably has to buy store brands sometimes, too, and check the Sunday paper for sales. Call Oprah...she can make an Oscar-winning movie about this monumental struggle of human suffering (that most of us call "everyday living").

Didn't he save any of his salary during his 33 years of "service"?

His prescriptions are high, and he's not happy about it. My first question, before I decide whether I give a damn, is "Who did you vote for in the last few elections, Mr. Pearson, and how did they vote on Obamacare?"

[Hogblog]

I’m sure that with $51,000/yr retirement the union organizer won’t be eating any cat food...... maybe Zero will have him enroll in ZeroCare and he can pony up $2,400/month but have prescription coverage...... Oh wait he is exempt......

[wally_bert]

I get tired of whiny civil servants crying about their pensions. I was a state employee for a number of years and the number of over paid do nothings made me mad. Those were the ones that rose to the top most of the time.

It was uncommon for a person who cared and strove to do a good job to ever really move up. I found that out firsthand and got to the point of not caring about anything. I got it in me to get out to private sector land. I don’t miss much of the before time.

[RWGinger]

The guy is full of crap
BUT usually in most states teachers don’t contribute to SS.
Their state pension usually is in lieu of

BUT if the dude is in his 50’s is he too lazy to et another job.

These Dems lie all the time about stuff like this

[RWGinger]

sorry
I misread it
I see he is 66
and gets medicare

he is still lying about how tough it is
and he still could get a job

[oh8eleven]

I get tired of whiny civil servants crying about their pensions.
Couldn't agree more. However, I also have to disagree with how the state changed the (tax) rules AFTER he retired.
Just another example of greedy gubmint living beyond the taxpayers' ability to pay for it.

[sickoflibs]

RE :”“The pension reform affects younger retirees, like the government worker who retires on a taxpayer funded pension at age 55,” Adler said. “All retirees who use 401(k) plans have always had to count their savings as income. This is about treating all retirees fairly. Under the old law, two seniors of the same age with the same overall income paid different amounts of taxes. A senior with a pension didn’t have to pay income taxes, but a senior working or retired on a 401(k) was forced to pay the tax. ”

Good point

[nascarnation]

It says he’s 66 yrs old

[nascarnation]

35 out of 50 states teachers are covered by Soc Sec system.

15 that aren’t:

Alaska
California
Colorado
Connecticut
Georgia (certain local governments)
Illinois
Kentucky (certain local governments)
Louisiana
Maine
Massachusetts
Missouri
Nevada
Ohio
Rhode Island (certain local governments)
Texas

[RWGinger]

I see that
I am in Texas
and had read of problems with teachers in other states (Calif ad Col) where teachers worked on school time at other jobs too so they could qualify for SS and state pensions
so mistakenly thought most states had same policies

[kcvl]

Former teacher and union head likely receiving over $51K in pension payments alone

He (James Pearson) also is union president of the West Oakland County Education Association-Retired, a union for school retirees that is an affiliate of the Michigan Education Association.

The federal government estimates that only about 3 percent of private sector workers are eligible for a pension. Michigan retirees with 401(k)-type accounts pay taxes on those earnings.

http://www.michigancapitolconfidential.com/20000

[nascarnation]

My wife worked under both systems.

She got a significant reduction in her Soc Sec because she gets a small state pension payment, due to the so-called “Windfall Elimination Provision” that was passed to hit the bigtime “double dippers”.

[RWGinger]

we continue to punish the ones who abide by laws and let the millions who fraud our systems get away with it.

[jch10]

Did you mean that state employees/teachers, usually don’t contribute to State Retirement Plans? If you did, you’d be correct. In my state, Florida, we do contribute to SS.

[RWGinger]

AS was explained to me there are 15 states that only allow contributions to a state pensions fund , with no contributions to SS
apparently Fla is not one
Tex, calif colo and 12 more do not require teachers to contribute to SS
and they do not collect from SS, only from the state pension fund

[jch10]

BUT usually in most states teachers don’t contribute to SS.
Their state pension usually is in lieu of......

And, I was pointing out that Florida collects for SS from state employees but DOES NOT collect for the State Retirement Fund.