Whitmer, Schuette both back elimination of pension tax

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LANSING, Mich. (AP) - Democrat Gretchen Whitmer on Wednesday stepped up her call to end Michigan's "retirement tax," alleging in a new TV ad that her opponent, Republican Bill Schuette, supported a GOP-enacted overhaul that included a business tax cut and the elimination or reduction of exemptions from the taxation of pension income.

Schuette, who is pushing to reduce the state income tax from 4.25 percent to 3.9 percent, said he also favors rescinding the "pension tax" and never supported it.

Until Republican Gov. Rick Snyder took office in 2011, Michigan fully or partially exempted retirement income from taxation. But as part of a law that slashed business taxes, he and the GOP-controlled Legislature effectively raised individual taxes by removing or scaling back various exemptions, including for retirees. They argued that retirees needed to pay their share rather than push the burden onto younger residents.

In the 30-second ad funded by a group affiliated with the Democratic Governors Association, Whitmer says retired Lansing firefighter Dave Weisenberg and his wife pay an additional $2,800-plus in taxes a year because of the change in how retirement income is taxed, while "big corporations pay less. Bill Schuette called that tax plan quote 'great news for Michigan taxpayers.'" She notes that she voted against the legislation when she was a state senator.

Schuette's campaign said the statement cited by Whitmer, which he made at a Republican luncheon in 2011 according to a report in the Manistee News Advocate from that year, was clearly a reference to how Snyder successfully reduced business taxes by scrapping the Michigan Business Tax in favor of a simpler corporate income tax.

"The ad is totally false," spokesman John Sellek said. "Bill Schuette and every family in Michigan celebrated when Gov. Snyder killed Gretchen Whitmer's MBT, the worst business tax in Michigan history. But Bill Schuette has never favored the pension tax and in fact wants to eliminate it."

DGA spokesman David Turner said it is "disingenuous" for Schuette to have praised Republicans' budget and tax plans and now say he was only partly in support.

Asked how she would account for an estimated $250 million to $300 million in lost revenue if the retirement tax were repealed, Whitmer spokesman Zack Pohl said state tax revenues are expected to come in higher than had been expected.

Schuette's income tax cut would equal $1 billion, not including the pension tax reversal. He did not specify Wednesday how his budget would offset the loss of a tenth of the general fund.

"We need to cut taxes. Otherwise we won't be able to compete with other states across this country," Schuette told reporters after announcing endorsements from two statewide business groups in Lansing. He said Whitmer's proposal to fix the roads with an infrastructure bank would lead to tax hikes.

Outside Schuette's "paycheck coalition" event at the Michigan Restaurant Association, protesting Democrats questioned why organizations such as the Business Leaders for Michigan - the state's CEO roundtable - would back Schuette, who they say has blocked progress for LGBT people.

"You can't be pro-discrimination and pro-business," said Ryan Sebolt, an Ingham County commissioner.

The attorney general has said that he had a legal duty to defend the state's gay marriage ban in court and to declare that Michigan law does not prohibit discrimination on the basis of sexual orientation and gender identity. He also has said he supports changing the civil rights law to include LGBT protections, as long as there are religious liberty exemptions, which gay rights advocates say would allow discrimination to continue.

"Michigan needs to be a state that is welcoming to everybody," Schuette said.

The Grand Rapids Area Chamber of Commerce faced a backlash last week when its endorsement of Schuette led several members to leave the group due to concerns about his LGBT rights record.

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Follow David Eggert on Twitter at https://twitter.com/DavidEggert00 . His work can be found at https://apnews.com/search/David%20Eggert

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