Taxes Galore

iVillage Member
Registered: 02-19-2008
Taxes Galore
23
Mon, 03-30-2009 - 2:54pm

Blue states tend to be leaders in taxation. New York seems to be trying to be the bluest state of all.

This made me wonder, is it better to have the currency collapse or to be taxed to the poorhouse?

Our government at all levels seems unable to control spending.

http://wcbstv.com/local/ny.state.budget.2.971103.html

Taxes Galore: NY's Staggering New Budget Unveiled

Proposed $131.8B Tax-And-Spend Plan Has Critics Howling

New Yorkers, both rich and not so rich, will soon be digging deeper into their pockets to close the huge state budget gap. The new spending plan expected to be adopted this week is jam-packed with higher taxes and fees.

The hits for New Yorkers just keep on coming. After being socked with a whopping subway and bus fare hike, New York families making at least $300,000 are now being walloped with a 7.85 percent tax rate and those over $500,000, an 8.97 percent rate. But it's not only the rich who are being soaked by the budget unveiled by Governor David Paterson and legislative leaders.

"We made the tough choices necessary to address that challenge through shared sacrifice and responsible budgeting," Gov. David Paterson said in a written statement issued with legislative leaders. "The agreement we are announcing today closes the largest deficit in state history, stabilizes our finances and institutes critical reforms that will help eliminate waste and inefficiency in our government."

There are lots of new taxes and fees that will be annoying to everyone, an equal-opportunity spreading of the pain. Among those are vehicle registration fees, a cigar tax, a beer and wine tax, a utility assessment, an auto insurance surcharge, driver's license fees, a rental car tax and a registration fee for tobacco sellers.

"These numbers are absolutely staggering, and the height of irresponsibility on the part of the Democrat leadership in this state," said Senate Minority Leader Dean Skelos (R-L.I.). "The public should be outraged."

Even bottled water drinkers aren't immune to the fees. They'll be paying a nickel more per bottle because the drink has now been added to the 5 cent bottle deposit law.

"You know it's a really difficult situation. There are no clear solutions. It just seems to tax too much," said Upper West Side resident Jamie Kalfus.

"We have produced a budget that provides a solid foundation to move forward and address challenges ahead," Paterson said. "We have accomplished this with a budget that holds government accountable to the people of New York, and protects those who cannot protect themselves."

The details of the new budget include:

--Essentially flat state school aid. Aid to public schools would increase about $1.1 billion, according to Assembly Speaker Sheldon Silver, and eliminate the $700 million cut Paterson had proposed in December. But that results in almost no increase for schools that have gotten bumps of billions of dollars from lawmakers pressured by school districts back home. School aid will total more than $21 billion, one of the highest per capita levels in the nation. But school advocates expected $1.5 billion more this year, even after Paterson's cut was restored, under a promise by the state following a court decision it lost for not providing a sound basic education for years.

"There are going to be layoffs of teachers and other educators," said Billy Easton, executive director of the Alliance for Quality Education, a union-allied advocate for public schools. "There are going to be cutbacks of programs and kids in districts that are already underfunded, the problem is going to continue ... and that's a travesty of justice."

The last time school districts received far less state aid than expected local property taxes were subsequently increased by an average of 10 percent.

--About $3 billion of taxes and fees, from motor vehicle registration charges to public college tuition and other costs that would affect everyday life for most residents.

--No more tax rebate checks to residents, although the STAR exemption program and NYC STAR credit will continue to provide $3.3 billion in property tax relief.

--A bigger bottle bill. A nickel deposit would be required of bottled water, to go along with carbonated drinks. The state will get about $115 million of the unclaimed deposits, with bottlers keeping the rest under a last-minute deal worked out with lobbyists for the Coca-Cola Co.

--Taxing little cigars often called cigarillos at the same 46 percent rate applied to cigarettes, instead of the 37 percent rate now.

Meanwhile, Paterson had proposed more than $1 billion in cuts from health care in his mid-December budget to the Legislature. He sought to force more funding to be moved from traditional and expensive hospital care to more efficient community-based and preventive programs. The Legislature restored about 69 percent of funding to hospitals, 73 percent to pharmacies, 60 percent to home care programs and 43 percent to nursing homes.

The Legislature also restored:

--$340 million of critical funding to New York City, Silver said.

--Funding for teacher training centers and adult literacy and bilingual education programs.

--$125 million more to the State University of New York, for a total of $2.5 billion in funding; and $86 million more to the City University of New York, for a new total of $1.4 billion.

--$49 million in cuts to community colleges.

--Almost $50 million to the Tuition Assistance Program, which provides financial aid to college students.

The Legislature also created a $50 billion program to provide low-interest loans to residents attending college and rejected a proposal for a gas tax.

iVillage Member
Registered: 01-04-2009
In reply to: postreply
Wed, 04-01-2009 - 12:14am
Yes, some civil servants have gamed the system in such a way to get more retirement benefits than you think they are worthy to receive.

 

iVillage Member
Registered: 08-30-2002
In reply to: postreply
Wed, 04-01-2009 - 3:56pm

My sis got her doctorate in special education, doing continuing ed courses during summers and on her breaks, over the course of many years. She deserves every penny she gets for retirement. She went through years of low pay, part time employment, transfers from one school to another. She still doesen't work in an incredibly high paying area, lots of migrant farm laborers and esl students. She puts out an incredible amount of money,



iVillage Member
Registered: 05-23-2008
In reply to: postreply
Wed, 04-01-2009 - 5:24pm

We've had eight years of Republican leadership in which Bush cut taxes.

iVillage Member
Registered: 05-23-2008
In reply to: postreply
Wed, 04-01-2009 - 5:31pm
No, lavish retirement benefits and retirement to civil service workers shouldn't get them.
iVillage Member
Registered: 05-23-2008
In reply to: postreply
Wed, 04-01-2009 - 5:36pm
We are talking about lavish benefits.
iVillage Member
Registered: 02-19-2008
In reply to: postreply
Wed, 04-01-2009 - 7:34pm

If Ford decides to give generous retirement benefits, and they don't ask for a bailout, I've got no problem with it.

My concern is when taxpayers are forced to pay for generous pensions for those civil servants who game the system.

Using the last 5 years to determine retirement income is an opportunity for abuse. Better income be adjusted for inflation over the working history of an employee, and a reasonable percentage of that average be paid as pension.




Edited 4/1/2009 7:47 pm ET by postreply
iVillage Member
Registered: 02-19-2008
In reply to: postreply
Wed, 04-01-2009 - 7:36pm
I have yet to meet a civil servant who gets fantastic benefits, and a great pension, who admits to doing anything but stellar work and who claims to deserve every penny the taxpayers lavish upon them.
iVillage Member
Registered: 02-19-2008
In reply to: postreply
Wed, 04-01-2009 - 7:46pm

Folks with billions of dollars can live anywhere, and avoid taxes legally. This is true for almost anyone very wealthy. Look at Soros, a liberal who doesn't live in the U.S. a billionaire who pays virtually nothing in taxes yet runs moveon.org and the DNC.

Many liberals love to tax, but hate to pay taxes, look at all the recent appointees with tax problems.

Have a look at the problem (again) - http://www.forbes.com/forbes/2009/0216/078.html

Don't let anyone tell you the American dream has faded. the truth is the U.S. is still minting lots of millionaires. Glenn Goss is one of them.

Goss retired four years ago, at 42, from a $90,000 job as a police commander in Delray Beach, Fla. He immediately began drawing a $65,000 annual pension that is guaranteed for life, is indexed to keep up with inflation and comes with full health benefits.

Goss promptly took a new job as police chief in nearby Highland Beach. One big lure: the benefits.

Given that the average man his age will live to 78, Goss is already worth nearly $2 million, based on the present value of his vested retirement benefits. Looked at another way, he is a $2 million liability to Florida taxpayers.

"When I got the job at 21, I knew it was a dangerous profession but that I'd be rewarded on the back end," says Goss. Even so, he adds, "The benefits back then weren't anywhere near what they've become today."

The problem with this picture is not Glenn Goss. By all accounts he was a good cop. The problem is that there are millions of Glenn Gosses from Highland Beach to Honolulu. So many that they pose a vast, debilitating burden to state and local finances.

They're creating a nasty social problem as well. America, in case you hadn't noticed, is dividing into two nations. The 22.5-million-strong public sector (that includes retirees) is growing ever larger, and enjoying ever greater wages and benefits often guaranteed by state constitutions.

In private-sector America your job, assuming you still have one, hangs on the fate of the economy. If your employer ever offered a pension for life, like young officer Goss is receiving, odds are it has stopped doing so, or soon will. Those retirement accounts you scrimped and saved to assemble? Unless they are invested in Treasurys, they aren't doing too well. In private-sector America the math leads to the grim prospect of working longer and living poorer.

In public-sector America things just get better and better. The common presumption is that public servants forgo high wages in exchange for safe jobs and benefits. The reality is they get all three. State and local government workers get paid an average of $25.30 an hour, which is 33% higher than the private sector's $19, according to Bureau of Labor Statistics data. Throw in pensions and other benefits and the gap widens to 42%.

For New York City's 281,000 employees, average compensation has risen 63% since 2000 to $107,000 a year. New Jersey teaching veterans receive $80,000 to $100,000 for ten months' work. In California prison guards can sock away $300,000 a year with overtime pay.

Four in five public-sector workers have lifetime pensions, versus only one in five in the private sector. The difference shifts huge risks from government to private-sector workers.

NYC socked away $20,000 per employee last year for pension benefits. Since 2000 its pension funding bill has risen ninefold, from $615 million to $5.6 billion in 2008. That's more than the city spends on transport, health care, parks, libraries, museums and City University of New York combined, says the Citizens Budget Commission.

These benefits are so sacrosanct, and such a source of union power, that labor bosses have turned them into the third rail for NYC politicians--touching them is suicide. That goes for the benefits not only of existing workers but of future ones as well.

"We have far less to spend on core services, such as public safety, education, parks and senior centers," Mayor Michael Bloomberg wrote in December of the city's pension costs. "That defies common sense, and it's hurting our city."

Despite its huge contributions, New York City's five pension plans had only 74% of what actuaries said a year ago they need to pay future benefits. The recent financial meltdown lopped another 30% off the funds' value. If markets fail to roar back, taxpayers will have to save the day. After all, public pension benefits are enshrined in law. Don't you wish your 401(k) was?

Around the nation states, cities and their workers typically kick in a set amount to fund defined benefit pensions. The remainder, it is assumed, will come from investment returns of 8% to 8.5% annually. Often, however, the kitty comes up short.

The recent market meltdown erased $1 trillion from municipal pension funds, Boston College's Center for Retirement Research figures. That has left the average public plan 35% underfunded. With benefits inexorably rising, the shortfall will balloon to 41% by 2013 if stocks and bonds stay at current levels, representing an unfunded liability of roughly $1.7 trillion, according to the Boston College center.

That's a lot less than Social Security's $11 trillion unfunded liability. But the feds have lots of wiggle room to lessen their burden by, say, raising the age at which you become eligible to draw benefits. Most public employees' benefits, by contrast, are set in stone.

"The tax hikes you face will have a much more tangible impact on your financial life than anything a Social Security fix will entail," says Alicia Munnell, who runs Boston College's retirement center.

Cops and firemen initially were granted early retirement because their work was physically demanding and they tended to die young. These days they live as long as everyone else, but early retirement lives on for an ever expanding pool of public workers. So do liberal disability rules. Nevada law 617.457 decrees that heart disease among uniformed safety workers is job-related. The medical reality, says the American Heart Association, is that a fireman gets heart disease from diet, lack of exercise or genes, not from dashing into burning buildings. Still, veteran Las Vegas firemen hobbled by heart disease can collect an inflation-protected $40,000 a year for life on top of their pension. That applies even if they're healthy enough to work in another occupation.

Michael Hirth, a 55-year-old fireman in Hallendale Beach, Fla., has a nifty deal known as a Deferred Retirement Option Program. It enables public employees to "retire" and stay in their old jobs. Hirth is receiving both a pension and a salary for the same job. He's even allowed to direct income from the pension into a fund that guarantees an 8% return as long as he works. (The only way ordinary folk get guaranteed returns is with something backed by the U.S. Treasury. Treasurys pay 0% to 3%.) If the fund fails to achieve that hurdle, taxpayers will just have to kick in the difference.

Steven Beatty is the kind of social studies teacher you hope your kid gets. The Bridgewater, N.J. high school instructor has a solid command of history, took grad school courses on his own time and clearly loves teaching. But Beatty isn't in it just for the students. At 38 he earns $80,000 a year, nearly double New Jersey's average, and pays only 5.3% of that toward his pension. He can retire at 60 with full benefits and, should he so desire, continue teaching part-time.

Such pampering helps explain New Jersey's infamy as the most taxed state in the nation. Taxes are almost certain to go even higher, thanks to a bipartisan tradition of caving in to public employees' pension demands and then not funding them. Republican Governor Christine Todd Whitman played the game in the 1990s by using rosy investment-return projections to justify skipping two years of pension contributions. Her successor, Democrat James McGreevey, kept the practice going.

A few weeks ago Governor Jon Corzine, another Democrat, proposed that the state slash pension contributions to less than half of what actuaries say it needs because, well, times are tough. He didn't mention that the move will dump the cost on voters well after he runs for reelection this year. New Jersey is $52 billion, or 45%, short of what it should have on hand to cover pensions already earned. That doesn't include the retiree health care coverage the state is on the hook for.

All this would be infuriating enough if public employees were merely retiring with pensions that paid out a reasonable percentage of their working wages. Instead, they have found legions of ways to boost payments well beyond those levels. In New York, Philadelphia and several other cities police officers rack up huge amounts of overtime in their last two or three years on the job to goose the base pay used to calculate lifetime pension benefits.

Florida goes a step further. In Palm Beach and two other nearby counties, cops count work as security guards for Wal-Mart and other moonlighting toward public pension benefits. The private employers contribute the same portion of gross pay to pension benefits as do local governments. Taxpayers, of course, are the ones at risk if those contributions don't yield the expected investment returns, or unions and pols jack up benefits even further.

Florida's state pension plan was fully funded a year ago. Now it's at least $28 billion, or 22%, in the hole. "Taxpayers are on the hook," says Susan Mangiero, who maintains Pensionriskmatters.com, a blog highlighting pension plan issues.

Until a few years ago Illinois permitted police to receive "sergeant for a day" promotions in which they were bumped up a pay grade the day before they retired and their pension calculated on the basis of that final salary. With pensions seriously underfunded in 2003, recently arrested and impeached Governor Rod Blagojevich rolled the dice and issued "pension obligation bonds." The idea was that Illinois would issue debt at a cost of 5.1% and then earn 8.5% or so investing the proceeds. The plan turned into a disaster when the market tanked last year. Now short roughly $60 billion, Illinois has barely half of what it needs to cover future pension obligations.

Illinois' cavalier practices in investing the contributions entrusted to it by public employees and taxpayers doesn't help. Like many other states, maximizing bang for the buck is only one factor in making investment decisions. Do-gooder causes matter, too. In Illinois public funds are required to give a certain percentage of assets to "emerging" (meaning minority) money managers. In many other states "economically targeted investments," like low-income housing and job creation, take precedence.

When misguided policies lead to extreme underfunding, public employees are often left feeling as victimized as taxpayers. Chicago police Sergeant Michael Murphy, 41, is a third-generation cop whose grandfather was killed in the line of duty. Murphy works on an antiterrorism task force and narrowly missed being shot himself 16 years ago. He plans to retire at 55 and draw 75% of his salary. If he makes lieutenant it would top $70,000 a year.

The fly in this ointment is that the Policemen's Annuity & Benefit Fund of Chicago is only 35% funded. This despite the fact that Murphy and other Chicago cops contribute 9% of salaries and the city matches that nearly two-to-one. The city is pressuring police union boss Mark Donahue to swallow pension cuts. Murphy is outraged.

"I made a pact with the city when I was 23," he says. "I put my life on the line. You keep your promise to me when I retire."

Don't shed too many tears for public employees, says Gary Clift, a 52-year-old Californian who speaks with an insider's authority. Clift spent 26 years working for the state's Department of Corrections & Rehabilitation, retiring in 2006. He's now collecting 78% of the $112,000 salary he earned before stepping down and full health care coverage for life. Clift is thinking about using some of the public's largesse to write a book about the outrageous ways public employees milk California.

Clift holds special vitriol for a state program that lets employees retire and return to work part-time as "consultants." Some of the "retired annuitants," known as retired irritants to full-timers, deliberately get themselves laid off to collect unemployment pay without having to even show up, Clift says.

Near the end of his career Clift spent two years in the Department of Corrections' Sacramento headquarters analyzing legislation. The office's mandate was to provide the governor with insights into how proposed laws would affect the giant prison system. Not surprisingly, Clift says his colleagues took another agenda more to heart: doing their union's bidding and heading off anything that hinted at job cuts or lower salaries. Clift says he was the only manager at his former prison that he is aware of who didn't put in for disability on retiring.

The prevailing attitude, according to Clift: "It's just taxpayers' money, so nobody cares."

There is, of course, a simple solution to the public pension boondoggle: Let government workers make do with the same 401(k)-style pensions as the rest of us. California Governor Arnold Schwarzenegger proposed as much in 2006. Public-employee unions ran radio ads featuring widows of gunned-down cops opposed to the plan. The Terminator didn't stand a chance.

iVillage Member
Registered: 08-30-2002
In reply to: postreply
Wed, 04-01-2009 - 8:21pm

I'm not sure if you include my sis in that catagory. Since she has to pay over $600 a month to buy into healthcare for herself, post retirement, I'm not sure how she is being lavished by us taxpayers. I



iVillage Member
Registered: 02-19-2008
In reply to: postreply
Wed, 04-01-2009 - 9:43pm

Our country pays a very high premium over the private sector for every public sector employee on average. Public sector benefits and retirement benefits can cost millions per former civil servant. Multiply by millions of retired civil servants and we have a nasty problem of middle class entitlement which is running out of control.

As I previously mentioned, only Kentucky seems to be doing much about it.

Civil servants are not better than other workers. When they are paid more, get significantly more in benefits and retirement, government should take notice and cut back on these expenses.