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Gov. Paul LePage is seeking to exempt all public and private retiree pension income from being hit with state personal income tax, according to a spokesperson for his office. While there is no legislation in the works, the Republican governor's office says if the proposal is to move forward, it will happen sometime in January.
The move would lower taxes for 75,000, but will cost the state an estimated $93 million in annual revenue.
Of Maine's current population, 16% are ages 65 and up, compared with the national rate of 13%, the WSJ reported.
Advocates of the exemption claim the state will make up the loss revenue by increased spending in services like health care.
The tax break is one way to not only attract, but also retain, this segment of the population.
"They want to compete with states like Florida that don't have an income tax," Gordon explains."This group will not only volunteer their time, but if they are wealthier, they will contribute to the economy."
Interesting article from Fox News....
Advocates of the exemption claim the state will make up the loss revenue by increased spending in services like health care.
"
Is this a typo? I wonder how will they make up the loss revenue by spending more on healthcare?
To clarify. Many states exempt their state pension employees from their state tax (state tax only..they do not control federal taxes) when the retired employee lives in that state.
Some states tax pensions received by their residents from other states pension plans as income for state tax purposes.
Example: My wife retired with a MA pension, but SC (where we live) taxes her MA pension as income. If we lived in MA, then MA would not tax her MA pension as income.
We gladly take the MA pension (the monthly kiss as some in MA call it), we gladly live here in SC, and we gladly pay SC state income tax on her MA pension.
No regrets on any of it....LOL
Last edited by accufitgolf; 12-07-2011 at 05:34 PM..
Is this a typo? I wonder how will they make up the loss revenue by spending more on healthcare?
I wondered about that sentence too, but I concluded it was just poorly worded and meant that the state will make up the lost revenue because retirees will spend more on healthcare. I can't be positive that was the OP's meaning, but it's the only thing I thought of that made sense.
Several states, including Pennsylvania, give people some sort of state income tax break on pension income. Most states do not tax Social Security retirement benefits at all - even California doesn't. Because of the exemption of Soc. Sec. income from state taxation in all but a half dozen or so states, retirees with low income (i.e., living entirely or mostly on Soc. Sec.) don't have to worry much about state income taxes. The ones subject to it are the better off retirees, and those are precisely the ones Maine is hoping to lure in greater numbers. Low income retirees are net consumers of tax-funded services, from state Medicaid programs to free or subsidized dial-a-ride services and much more, whereas higher income retirees are net contributors to state tax coffers via their greater spending subject to sales taxes, their more expensive homes calling for higher property taxes, and the general ripple effect in the economy of their higher spending.
Several states, including Pennsylvania, give people some sort of state income tax break on pension income. Most states do not tax Social Security retirement benefits at all - even California doesn't. Because of the exemption of Soc. Sec. income from state taxation in all but a half dozen or so states, retirees with low income (i.e., living entirely or mostly on Soc. Sec.) don't have to worry much about state income taxes. The ones subject to it are the better off retirees, and those are precisely the ones Maine is hoping to lure in greater numbers. Low income retirees are net consumers of tax-funded services, from state Medicaid programs to free or subsidized dial-a-ride services and much more, whereas higher income retirees are net contributors to state tax coffers via their greater spending subject to sales taxes, their more expensive homes calling for higher property taxes, and the general ripple effect in the economy of their higher spending.
The governor of Maine does not take stupid pills.
In addition to your many good points they also don't need schools built to service their children or roads to get them to and from work during periods of congestion etc. They are a net positive to the state as opposed to those who use more in services then they contribute. As has been discussed before their are communities that give tax breaks to active 55 community developments for the same reasons. Not all seniors are the same in the government ledger book. Good post
Several states, including Pennsylvania, give people some sort of state income tax break on pension income. Most states do not tax Social Security retirement benefits at all - even California doesn't. Because of the exemption of Soc. Sec. income from state taxation in all but a half dozen or so states, retirees with low income (i.e., living entirely or mostly on Soc. Sec.) don't have to worry much about state income taxes. The ones subject to it are the better off retirees, and those are precisely the ones Maine is hoping to lure in greater numbers. Low income retirees are net consumers of tax-funded services, from state Medicaid programs to free or subsidized dial-a-ride services and much more, whereas higher income retirees are net contributors to state tax coffers via their greater spending subject to sales taxes, their more expensive homes calling for higher property taxes, and the general ripple effect in the economy of their higher spending.
The governor of Maine does not take stupid pills.
Maine is a very sparsely settled state. The vast interior has an extremely low population. The retirees going to Maine are generally those who can afford the costlier homes along the coast. These are where property taxes are highest. The problem in many of these places for retirees is lack of small or midsized cities of any size along the coast, which makes for a lot of driving between towns...not so bad when you're in your 60s but an important factor in aging b/c to get everything you need you generally have to travel between towns, and these are not highways. Many Mainers would never want to see the coast developed like it is in CA, and as tough natives they know how to navigate in all seasons and at all ages. For some retirees coming in, they may reconsider their choice based on the transportation/aging factor. At any rate, as you point out, retirees with disposable income can only be an asset to a state that is relatively sparse and undeveloped. And aside from the transportation issue, it has so much to offer to retirees who want a nontraditional retirement.
I live in Maine, and I am retired on pension. I pay no income taxes on my pension.
My pension income along with my Dw's previous p/t income combined fell below the amount needed to begin paying income taxes.
With the personal exemptions and the standard deductions you need a fair amount of income before you have enough left over to be taxed. Even then you are only taxed on the portion of your income that exceeds that level. If you exceed it by $100 then only that $100 gets taxed.
Last year my Dw was changed from p/t to f/t [which increased her salary] plus she got a big raise, and now gets over-time, she now earns enough income to be taxed.
Soon she will quit working and retire on S.S. When that happens we will be a two pension household, and once again tax-free.
In Maine if you live on a pension, it would need to be a fairly significant level of pension income before you began paying income taxes.
With my pension plus my Dw's part-time salary it was not high enough income to pay any income taxes. When she gets her S.S. pension, our combined pensions will not be enough to pay income taxes.
I am not saying that no pensions get taxed in Maine. I imagine that fairly wealthy folks who live on the coast in $5Million homes likely have massive pensions and I hope they get taxed on it.
I know a great many retirees in our area, I do not know any retiree personally in Maine who pays income taxes on their pension.
I live in Maine, and I am retired on pension. I pay no income taxes on my pension.
I know a great many retirees in our area, I do not know any retiree personally in Maine who pays income taxes on their pension.
Glad you confirmed this, as this is what I read on the Maine page of the "Taxes by State 2011" information website.
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