Michigan’s Supreme Court is to hear arguments today on whether Gov. Rick Snyder’s new tax on public and private pension income violates the state constitution.
The stakes are high for Snyder and the GOP-controlled Legislature, which could see a massive hole knocked in not just the 2012 budget but all future state budgets. It’s also a big case for pensioners — especially those who get public pensions — who collectively stand to pay hundreds of millions of dollars in additional income taxes if the law stands up.
Justices nominated by the Republican Party have a 4-3 majority on the court. They stress they interpret laws based on their plain language.
In this case, there is sharp disagreement over the plain meaning of a few lines in the Michigan Constitution of 1963, which say the “accrued financial benefits” of each public pension plan and retirement system “shall not be diminished or impaired.”
To opponents of Snyder’s plan, that means public pensions already earned can’t be taxed, since taxes diminish their value. If Snyder wants to tax public pensions, they say, he can do it only for new employees, or, in the case of existing employees, for pension benefits they’ve not yet earned.