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Started By
Message
Time to end state tax free treatment of government employee retirements
Posted on 11/29/16 at 9:27 am
Posted on 11/29/16 at 9:27 am
There is nothing fair about taxing the rest of us while state and federal government employees get tax free retirement income.
The original rationale for this was that state employees do not pay into the social security system and social security income is not taxed. That rationale fails on two points--social security income is capped and many state retirees do get social security from other jobs they had so they are double dipping. (The federal employees get tax free treatment because the federal law states that a state cannot tax federal employees if they exempt state employees.)
A question in the Advocate addressed this issue today:
Nothing fair about it but you will never hear the government loving JBE raise this tax. He will simply raise more taxes on the rest of us.
The original rationale for this was that state employees do not pay into the social security system and social security income is not taxed. That rationale fails on two points--social security income is capped and many state retirees do get social security from other jobs they had so they are double dipping. (The federal employees get tax free treatment because the federal law states that a state cannot tax federal employees if they exempt state employees.)
A question in the Advocate addressed this issue today:
quote:
Are state workers and retirees exempt from paying state income tax? How much does that cost the state every year in lost revenue?
Byron Henderson, public information director for the state Department of Revenue, says state employee wages are subject to state income tax; however, "Individuals receiving benefits from certain retirement systems are allowed to exclude those benefits from their Louisiana taxable income under the State Employees, Teachers and Other Retirees Benefits Exclusion.
"For the fiscal year ended June 30, 2016, the estimated revenue loss from the State Employees, Teachers and Other Retirement Benefits Exclusion was $91,959,000."
There are some 46 retirement programs exempted from state income tax, including retirement systems for state and municipal workers, teachers and school employees, assessors, clerks of court, district attorneys, sheriffs, etc.
That list also includes a somewhat peculiar entity called the Pension for Confederate Veterans and Widows of Confederate Veterans, which Henderson says was merged by a 1991 state law (R.S. 29:461) with a system of assistance for aged, needy persons.
To see the full list of exempt retirement systems, log onto revenue.louisiana.gov/faq/details/1216.
Nothing fair about it but you will never hear the government loving JBE raise this tax. He will simply raise more taxes on the rest of us.
12
Posted on 11/29/16 at 9:28 am to I B Freeman
WTF I have never heard of this
Posted on 11/29/16 at 9:36 am to I B Freeman
In Georgia, state employee pensions are taxed and we pay into SS.
Posted on 11/29/16 at 10:40 am to I B Freeman
My mother gets my father's state employee "pension" (he passed away a few years ago) and it is untaxed... but he wasn't given the option to put into the system. I do believe that they have changed that now, but when he was working it wasn't an option. Yes, she gets that money without having to pay state taxes; however, the ROI on that is abysmal. He would have done far far far better had he been allowed to put that money into an independent investment even with capital gains taxes.
(Not to mention that when mom dies that money is gone forever... the state gets to keep anything extra... that money doesn't get left to the family.) So, it isn't all rainbows and moonbeams with the state retirement.
ETA: He wasn't allowed to collect on SS benefits either... though he paid into it every time he did independent work. Thank you Uncle Sam.
(Not to mention that when mom dies that money is gone forever... the state gets to keep anything extra... that money doesn't get left to the family.) So, it isn't all rainbows and moonbeams with the state retirement.
ETA: He wasn't allowed to collect on SS benefits either... though he paid into it every time he did independent work. Thank you Uncle Sam.
This post was edited on 11/29/16 at 10:42 am
Posted on 11/29/16 at 10:59 am to I B Freeman
My retirement is the #1 reason I stay in teaching. Don't get me wrong, I like working with the kids and helping them. However, I have gotten several offers in the past where I would make much more money. The stability of the job, time off, and retirement are what keep me here.
Also in La, state employees cannot double dip. If you take state retirement, you cannot go into another career field after 20 years, and then draw SS even though you must pay into it.
ETA: La does not have a revenue problem. It has a spending problem. The argument that we 'lost" money on the retirement tax is voided until our state starts spending money in a responsible way.
Also in La, state employees cannot double dip. If you take state retirement, you cannot go into another career field after 20 years, and then draw SS even though you must pay into it.
ETA: La does not have a revenue problem. It has a spending problem. The argument that we 'lost" money on the retirement tax is voided until our state starts spending money in a responsible way.
This post was edited on 11/29/16 at 11:01 am
Posted on 11/29/16 at 11:14 am to I B Freeman
1. Are members of LASERS able to draw Social Security benefits?
For their State service, LASERS members do not pay the Social Security tax and are not eligible to draw benefits. The LASERS retirement system is mandatory for most state employees. State employees who retire with a LASERS pension and who earned a Social Security benefit from private employment will likely see a substantial reduction in their Social Security benefits due to the Windfall Elimination Provision federal offset. Also, a LASERS retiree whose spouse earned a Social Security benefit may completely lose that spousal benefit due to the federal Government Pension Offset.
For more information, view the LASERS video, Social Security Offsets (WEP and GPO).
(return to top)
For their State service, LASERS members do not pay the Social Security tax and are not eligible to draw benefits. The LASERS retirement system is mandatory for most state employees. State employees who retire with a LASERS pension and who earned a Social Security benefit from private employment will likely see a substantial reduction in their Social Security benefits due to the Windfall Elimination Provision federal offset. Also, a LASERS retiree whose spouse earned a Social Security benefit may completely lose that spousal benefit due to the federal Government Pension Offset.
For more information, view the LASERS video, Social Security Offsets (WEP and GPO).
(return to top)
Posted on 11/29/16 at 12:46 pm to I B Freeman
Govt pensions are not taxed in LA because social security is not taxed in LA either. Most govt pensions are in place of social security because the employee didn't pay into social security.
If you are concerned about equality between government and non-government employees, you could place a cap on the tax-free treatment of these benefits, equal to the max amount of social security benefits paid during a year. The max is around 32K a year currently, and could be subject to annual adjustment. This is not hard to do.
But let me pour some gas on the fire.
Old people sit around and complain about lazy no good mooching millennials. Yet, these same old people get tax free treatment of their pension payments, get appraisal freezes on their personal residences, etc.
I would get rid of all of the retirement exemptions. Pay tax on all retirement benefits.
Look into the benefit offsets.
If you are concerned about equality between government and non-government employees, you could place a cap on the tax-free treatment of these benefits, equal to the max amount of social security benefits paid during a year. The max is around 32K a year currently, and could be subject to annual adjustment. This is not hard to do.
But let me pour some gas on the fire.
Old people sit around and complain about lazy no good mooching millennials. Yet, these same old people get tax free treatment of their pension payments, get appraisal freezes on their personal residences, etc.
I would get rid of all of the retirement exemptions. Pay tax on all retirement benefits.
quote:
That rationale fails on two points--social security income is capped and many state retirees do get social security from other jobs they had so they are double dipping.
Look into the benefit offsets.
Posted on 11/29/16 at 12:54 pm to I B Freeman
Ok. So now we need to pay them more. Public employment typically pays less, but it defers some compensation until retirement. If public employees are to be treated like everyone else, they need to be paid more, like everyone else. So now, big boy, pay more taxes to give the public employees a raise to the average salaries of their private sector counterparts.
Or is this just a proposal to screw them over?
Or is this just a proposal to screw them over?
Posted on 11/29/16 at 1:08 pm to I B Freeman
quote:
There is nothing fair
are you 4 years old?
life is not fair.
the retiree state tax is intended to encourage people to retire to certain states.
the unequal treatment is designed to give people an extra reason to retire to states that perhaps no one would think of as a destination for health care excellence, something old people want and need.
Kentucky has it. I know a woman who retired to kentucky to save the state tax on California incomes.
Posted on 11/29/16 at 2:59 pm to I B Freeman
So, people's income, that comes from state taxes, should be susceptible to a state tax?
First, these people signed up for this years ago. It would be wrong to change the rules for them at the end.
Second, if they went up on taxes, they would just go up on the income through COLAs.
It never ceases to amaze me that people think that if they weren't taxed so much, they would make more money. Here's a clue: You take a compensation package and make it work for your budget. It doesn't matter how much you gross or are taxed, what mattes is the net.
If I was interviewing for a job and they offered me one position at $140,000 per year tax free, and another one at $200,000 per year but I'd have to pay out $60,000 and net $140,000, I'd say it was a wash. I would necessarily pick the tax free compensation.
But what I certainly wouldn't do is pick the taxed income and expect my taxes to magically disappear.
First, these people signed up for this years ago. It would be wrong to change the rules for them at the end.
Second, if they went up on taxes, they would just go up on the income through COLAs.
It never ceases to amaze me that people think that if they weren't taxed so much, they would make more money. Here's a clue: You take a compensation package and make it work for your budget. It doesn't matter how much you gross or are taxed, what mattes is the net.
If I was interviewing for a job and they offered me one position at $140,000 per year tax free, and another one at $200,000 per year but I'd have to pay out $60,000 and net $140,000, I'd say it was a wash. I would necessarily pick the tax free compensation.
But what I certainly wouldn't do is pick the taxed income and expect my taxes to magically disappear.
Posted on 11/29/16 at 3:14 pm to I B Freeman
Federal retirement is taxed in all but about 8 states. It is subject to federal tax.
Posted on 11/29/16 at 3:59 pm to I B Freeman
quote:
federal government employees get tax free retirement income
Nope.
Posted on 11/29/16 at 6:00 pm to I B Freeman
Any government worker should not be entitled to any benefit that private workers do not get.
This is not debatable and should be outlawed.
This is not debatable and should be outlawed.
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