Wednesday, August 31, 2011
Tuesday, August 23, 2011
Sunday, August 21, 2011
Thursday, August 18, 2011
Michigan has not adopted a new tax. Pension distributions were subject to tax previously, but there was a fairly high exemption. What Michigan has done is significantly lower the exemption.
One justification that has been made for this step is that the exemption of distributions was inconsistent with the overall structure of retirement plans. IRAs and 401(k) plans are built up with untaxed money. The contributions are not taxed at the time they are made. Rather, the funds grow (if the participant is fortunate) and then are taxed only when they are distributed. That is what happens at the Federal level. All such distributions are taxed as ordinary income. At the state level, where other income is taxed at a flat 4.35% after the application of the personal exemption, the distributions from those accounts were not taxed under previous law until they exceeded $45,120 per person, or $90,240 per couple.
The newly-adopted plan has several exceptions and limitations:
- It does not apply at all to those who will be 67 or older by the end of 2011. For them, the current exemptions will remain in effect.
- The exemption is reduced to $20,000 per person, $40,000 per couple. For those earning more than $75,000/$150,000, that exemption is phased out.
- For those who are 60 to 66 by the end of 2011, those figures apply beginning in 2012.
- For all others, that exemption will apply only after age 67. Any distributions between ages 60 and 67 will not have any exemption other than the small state personal exemption. (The thinking apparently is that most people will not be living on retirement income until age 67.)
- After age 67, the taxpayer may elect to have the tax apply to his social security benefits instead of pension distributions.
- Significantly, social security benefits (unless the election is made) and military pensions will remain entirely exempt.
There have been legislative proposals to add police and firefighter pensions to the exempt list.
More: The state's information site.
Monday, August 15, 2011
Warren Buffett's Very Strange Tax Argument, in which Tim Worstall notes that Buffett's comments ignore the effect of corporate income taxes, which are paid before dividends are paid to shareholders.
The Real Reason Warren Buffett's Taxes Are Low in which Peter Reilly makes a very simple point: Berkshire Hathaway, Buffett's company, simply does not pay dividends at all. The company's famous investment strategy is to buy and hold - seemingly forever.
Saturday, August 13, 2011
A pair of related stories on NPR on the question of whether the Americans with Disabilities Act requires that Medicaid pay for care at home for those who do not require care in a nursing home environment. The case of Olmstead v. L.C., decided by the U.S. Supreme Court in 1999, is cited in support of that position.
Care At Home: A New Civil Right (Dec 2010)
At 88, A Chance To Be Independent Again (Aug 2011)
Several law review articles on this topic by Michael Perlin, who has a penchant for titles based on Dylan lyrics:
Their Promises of Paradise: Will Olmstead v. L.C. Resuscitate the Constitutional Least Restrictive Alternative Principle in Mental Disability Law?
37 Hous. L. Rev. 999 (2000)
I Ain't Gonna Work on Maggie's Farm No More: Institutional Segregation, Community Treatment, the ADA, and the Promise of Olmstead v. L.C.
17 T. M. Cooley L. Rev. 53 (2000)
What's Good is Bad, What's Bad is Good, You'll Find Out When You Reach the Top, You're on the Bottom: Are the Americans with Disabilities Act (and Olmstead v. L.C.) Anything More Than 'Idiot Wind'
University of Michigan Journal of Law Reform, Vol. 35, Pp. 235-261, 2001-2002
Friday, August 12, 2011
Saturday, August 6, 2011
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