Raise Taxes Quoth the Raver

The penultimate comment to this blog as of now reads:

I was searching for a link to my original article when I came across this. Sorry I missed it the first time.

I guess the author thinks it’s an “old bromide” to point out that the state has a legal obligation to pay employees what they agreed to pay them for work the employees have already done.

And it turns out I was right: the benefits are quite modest by any reasonable standard:

http://www.njspotlight.com/stories/14/12/18/new-study-contradicts-christie-s-claim-that-pension-payouts-are-excessive/

What’s really getting old is ignoring the realities of labor markets. If you want to attract a certain caliber of people to work in public service, you need to pay them. Conflating union dues and pension payments does nothing to address this.

BTW: if you didn’t like this post, wait until you see my next piece at NJ Spotlight…

Mark Weber

Mr. Weber’s njspotlight piece is out this morning and he is right.

I don’t like it for, among other reasons:

  1. The reference to a silly NJPP study that sought to propagandize public pension benefits in New Jersey as stingy
  2. Recommending tax increases on people who can easily avoid all taxes to New Jersey if pushed
  3. Ignoring any reference to cutting wasteful spending

Mr. Weber cites what the anticipated extra tax money can pay for:

  • ongoing public health and safety needs
  • helping our neediest citizens
  • funding pension obligations
  • funding state mandates
  • upgrading roads and railways

but ignores the political paybacks that tax money is now being spent on at all levels of government:

Before taxes what should be raised in New Jersey is awareness of the real situation in the state, especially of those who harangue for higher taxes.

42 responses to this post.

  1. Considering Mr. Weber’s background as a music teacher and NJEA member what other solution might we expect from him? Raise taxes? Our real estate taxes, sales tax, business tax, etc are one of the highest in the country. Of course, no mention of freezing salaries, having publics pay more into health care and pensions only tax, tax, tax and tax some more. Hey Mr. Weber, it’s not a revenue problem, its a spending problem and a corrupt one at that! Interesting to note the NJ Watchdog article of the same date about the 100K pension retirement club that has doubled.

    Reply

    • You are right and here is the njwatchdog piece:
      http://watchdog.org/200210/nj-100k-pensions-double/

      Reply

    • Posted by Tough Love on February 17, 2015 at 10:52 am

      It’s also interesting how this “Doctoral Student” in Education Theory, Organization, and Policy feels it ethical to selectively mislead and leave out material facts …..

      In just ONE small paragraph, HIS ONE, he shows his true colors by distortion & omission:

      “New Jersey Policy Perspective recently released a study that shows our pensions are stingy compared with the rest of the nation. These modest benefits, however, are a legal obligation the state has to employees who have already done the work for which pension payments are compensation. ”

      (1) Why didn’t he say that by “rest of the nation” the study he quoted ONLY including PUBLIC, and not PRIVATE Sector pensions, which would change the conclusion 180 degrees? With Taxpayers typically responsible for 80-90% of total Public Sector pension costs, and 85% of all workers being PRIVATE Sector Taxpayers, shouldn’t the pensions THEY gets be the appropriate point of comparison?

      (2) Why didn’t he make it clear that that study used NJ’s REVISED pension structure that (with the exception of the COLA suspension) only applies to NEW workers, meaning any savings (beyond that associated with the COLA suspension) are 20-30 years in the future?

      (3) Why didn’t he define “modest”? NJ Public Sector pensions are certainly NOT “modest” compared to what the typical Private Sector gets. In fact most would consider them grossly excessive,TYPICALLY being 3x-4x (4x-5x for safety workers) times greater in value at retirement than those of comparable Private Sector workers retiring at the SAME age, with the SAME pay, and the SAME years of service.

      (4) Why does he repeatedly harp on paying for pensions associated with “employees who have already done the work”, while in the beginning of his new article where he says… “Our state simply doesn’t have enough money to meet its obligations” …. never once does he raise as a reasonable alternative to the tax hikes that he callas for, to materially reduce the pension accrual rate for FUTURE service of all CURRENT Public Sector workers ?

      Reply

  2. Where was the NJEA and their ilk when the Pension Benefit Guaranty Corp was created to literally pay private sector RETIREES (i.e., those who have already earned their pensions) pennies on the dollar when their employers go bankrupt???

    The only distinction, so far as I can see, and which Mr Bury only tangentially refers to, is that the public sector employer is backed by the taxpayer via, at least in some cases, entities which can not go bankrupt or default.

    Right or wrong is irrelevant for publix just as it is for the private sector pensioner. There comes a time when promises simply can not and will not be kept. However, in my opinion, leaving NJ before Christie’s Marxocrat successor is elected is the only sane option for those still unlucky enough to live in that state.

    Reply

    • Posted by fouls123 on February 17, 2015 at 3:47 pm

      Really? There comes a time when promises siply cannot be kept? There’s a nice philosophy to teach our children and a nice dishonestwords to live by. Are you kidding with that one? so I tell my bank I can’t afford to pay my mortgage because there comes a time when promises simply can’t be met. . Listen to yourself. so the state should reneg on all contracts this year then, not just pensions. all obligations are the same. Public employees are not slaves any more than any person or company who does business with the state. a contract is a contract, a deal is a deal. Get over it.

      Reply

      • Posted by Tough Love on February 17, 2015 at 3:55 pm

        When you negotiated that mortgage were both sides in that negotiation looking out for their best interests ? I suspect so.

        When our self-serving, vote-selling, contribution-soliciting, taxpayer-betraying, Public-Sector-Union- BOUGHT-OFF-elected-Officials (with campaign contributions and election support) favorably voted for Public Sector pensions ROUTINELY 3x-4x greater than what comparably situated Private Sector workers get, WHO was looking out for the Taxpayers” interests ? Clearly nobody.

        Promises so obtained should NOT be honored.

        Reply

        • Posted by fouls123 on February 20, 2015 at 11:24 pm

          What a crock.. I worked as an executive in a nj prison for 32 very stressful years to get a pension of 38,000 on a final salary of 82000. I went to work every day unarmed in face to face contact with prisoners serving time for murder, rape etc. and you begrudge me a pension of less than 40,000 to live on/ You and people like you are ill informed, spouting lies about hard working middle class folks. I don’t see you attacking corporate and Wall street pensioners who get millions. And we pay the same taxes you do. 90% of state pensioners are really undervalued. If things are so great for state employees why not become one and find out there isn’t any gravy train there, buddy.

          Reply

          • Posted by Tough Love on February 21, 2015 at 1:28 am

            Your figures questionable … unless you retired LONG ago (with much lower than current pays scales and current pension formulas) in which case you receive many years of COLAs making that starting $38K MUCH greater today….

            (2) $82K is a low final salary for a NJ correction officer with 32 years of service (never got a promotion ?)

            (2) ($38,000/$82,000)/32 = 1.45% as the implied per-year-of-service pension factor. Perhaps that was used MANY years ago, but certainly NOT today.
            ———————————————————–

            And ….

            (1) you didn’t mention the age at which you retired. Private Sector workers typically retire at age 65. For EACH year of age that you retired BEFORE age 65, your pension SHOULD HAVE (abut assuredly wasn’t) reduced by about 6% … just like Social Security does for early retirees.

            (2) I’ll bet your getting free or heavily subsidized retiree healthcare (for you and your spouse)…. costing taxpayer $20K annually. NOBODY in the Private Sector gets such employer-sponsored benefits any longer, so why should Taxpayers pay for yours?

      • You are unfamiliar with bankruptcy laws, I take it.

        Reply

        • Posted by Tough Love on February 17, 2015 at 9:47 pm

          That State of NJ can’t file for bankruptcy, buy it sure can become “insolvent” and not be able to pay it’s bills …. including pensions and retiree healthcare costs.

          The MATH always governs in the end-game, and this is a MATH problem.

          Reply

          • My reference to bankruptcy was to point out that a bankruptcy judge throws out ALL Unperformed contracts without regard to principles of “fairness”. The rationale is to give the debtor a “fresh start”.

            There comes a time when a debtor is in so far over his, her or its head that nothing but a fresh start will do. NJ and many other states are in that position. The fact that NJ can not literally declare bankruptcy does not mean it can not repudiate its obligations subject to judicial review and/or modify its constitution by the consent of the governed.

          • Posted by fouls123 on February 20, 2015 at 11:28 pm

            If they would reverse Whitman’s tax cuts that went heavily to the 1% there would be enough to deal with all the issues. That tax cut was the biggest flim flam and resulted in a transer of tax burden on property taxes. and we all know how that has worked out.

          • Posted by Tough Love on February 21, 2015 at 1:54 am

            Fouls123,

            REGARDLESS of the decision to reduce taxes, there is ZERO justification for the outsized pensions & benefits promised all Public Sector workers….. What makes “Public” Sector workers so special, on the Taxpayers dime?

            AND….. if we had surplus revenue from tax receipts available, there are hundreds of better uses for that money than unnecessarily overcompensating our Public Sector workers by paying them MORE than what they would earn in a comparable Private Sector job..

    • Posted by Anonymous on February 17, 2015 at 7:14 pm

      The NJEA is a union for education employees (public sector) and the PBGC is a federal agency that handles private sector pensions, where is the connection?

      Reply

      • The connection is that the PBGC exists BECAUSE pension promises to private sector workers/retirees are ROUTINELY broken, and the PBGC offers 20 cents on the dollar to those folks. This is what will happen to the public sector too,mad it must.

        Reply

        • Posted by Tough Love on February 17, 2015 at 9:57 pm

          Quoting …. “and the PBGC offers 20 cents on the dollar to those folks.”

          Where did you pick up that nonsense? Did you even bother to see if that is remotely correct ?

          The maximum the PBGC payout in 2015 is $,5011.36 monthly ($60,132..36 annually) if taken as a straight life annuity and the participant is age 65 at the time of Plan termination. That maximum varies with the participant’s age at termination and the payout option. Details can be found here:

          http://www.pbgc.gov/wr/benefits/guaranteed-benefits/maximum-guarantee.html

          And the PBGC pays out 100% (not 20% as you stated) of your pension UP TO that limit (with some exceptions for Plan increases in the 5 years preceding Plan termination).

          Reply

          • I suppose it’s all relative.

            Pension benefit accruals stop when the pension goes to the PBGC. As a result, you won’t receive the pension you might have expected, if it had continued to accrue benefits until you retired from the company.

            As you say, there is a maximum amount of pension covered by the insurance. A pension up to $54,000 a year for a 65-year-old worker is fully covered. The coverage maximum drops to $42,660 for a 62-year-old and to only $24,300 for a 55-year-old.

            My point is that altering the terms of public sector pension “contracts” is no less fair than what happens in the private sector.

          • Posted by Tough Love on February 18, 2015 at 12:36 am

            We definitely agree on your LAST sentence ….. especially for the future service of all CURRENT workers.

  3. I should have added that even a public entity can default on obligations if it can pass the “rational basis” (as opposed to the “strict scrutiny”) standard of constitutional jurisprudence. The time for such analysis draws closer and faster than many realize for NJ.

    Reply

    • Proposals to add a contract protection to NJ pension promises is covered by this Rutgers paper,which explores court precedent, recent litigation, and references the applicability of the level of scrutiny the NJ or federal Sup Ct would apply:

      http://lawjournal.rutgers.edu/sites/lawjournal.rutgers.edu/files/issues/04.Elias_.Vol_.44.1.pdf

      It’s a good starting point to understand the mess public sector employees are really in and why their reliance on govt to “do the right thing” is misguided. My advice is they set up IRAs as soon as possible.

      Reply

      • See footnote 51 for the appropriate test applied to “impairment of contracts” under judicial review. Btw, reference was also made in the article to a 2008 blog entry by John Bury.

        Reply

      • Again, another public taker, a Rutgers law professor, writing a ridiculous one-sided article. What would one expect him to say considering he is on the receiving or should I say declining end of the public gray train. The first few paragraphs brought tears to my eyes. You hit the nail on the head “reliance on government to do the right thing” another laugh. That’s the problem, too much reliance on government for what shoud be the resposibility of individuals. Retiring at age 55? that’s the new 38 with life spans going longer and better medical care since the 50s and 60s. Contracts were made to be broken if these overly generously promises are indeed a contract at all and I’m sure there are many blood sucking attorneys who would be happy to prove the case–for a nice fee of course.

        Reply

        • Posted by fouls123 on February 20, 2015 at 11:46 pm

          What is with the insulting use of the title public taker? If not for public workers such as teachers, firemen, policemen, prison workers, public agencies that protect children, the DMV, courts, psychiatric hospitals etc you life as you know it would be chaos. You need to learn a little respect for your fellow citizens instead of spouting insults. I always say there are about the same amount of good people and not so good in every walk of life. Ignorance isn’t bliss. As is said, walk a mile in my shoes. I don’t know what kind of profession you have. I don’t know you and you don’t know me. therefore I have no reason to insult you and you have no reason to insult me. In whatever employment you have, obviuosly people make use of its products or services for a price. If you receive money for my use of your product or service, does that make you a private taker?

          Reply

          • Posted by Tough Love on February 21, 2015 at 1:43 am

            FYI, the term “Public Takers” was a response by pension reform advocates to being call “haters” by Public Sector workers.

            I for one respect all hard-working, honest Public Sector workers, but I see absolutely no reason that a Public Sector worker should be compensated more than what that job (or if no comparable job exists in the Private Sector, then one with similar risks, educational & experience requirements, and skills) would pay in the Private Sector.

            “Compensation” primarily consists of cash pay, pension accruals, and retiree healthcare benefits. While “cash pay” is (on average for all occupations) relatively close in the Public & Private Sectors, Public Sector pensions are ROUTINELY 3x-4x (4x-5x for safety workers in NJ) greater in value at retirement than those of Private Sector workers retiring at the SAME age with the SAME pay, and the SAME years of service. And Rarely do Private Sector workers get ANY employer-sponsored retiree healthcare benefit any longer, while taxpayer-funded “Cadillac” Plans are still common for Public Sector workers.

          • I meant the term “public taker” in regard to the articles posted by public workers who are writing articles in favor of continuing the unsustainable, overly generous pensions and benefits promised to them which can never be met. Public workers are “taking” more than they produce. Yes, there are some very hard working dedicated public workers but they are few and far between. It doesn’t justify the overly generous salaries, benefits and early retirements. However, there are many hard working private workers who are expected to foot the bill for publics to retire at 55 while the rest of us will have to work until we’re 75 to provide for our own retirements. Get off your high horse and if you want cadilac health plans and retirement at 55, pay for it yourself. I have no problem at all with anyone, public or private, paying their own way. The private sector has adjusted to the “new normal” and the public takers continue along with minimal if any adjustments as though the money will fall from the sky.

      • Posted by fouls123 on February 17, 2015 at 3:51 pm

        Retirees cannot set up IRAS.

        Reply

        • Posted by dentss dunnigan on February 17, 2015 at 5:53 pm

          In order to set up or contribute to any IRA, Roth or traditional, you must have earned income. A retiree who does not have earned income is still free to convert assets in a pre-tax retirement plan like a traditional IRA, 401k or 403b to a Roth IRA, though it might not be the best move tax-wise. You should consult with a financial advisor to determine if such a move is right for you and your estate plan.

          – See more at: http://wiki.fool.com/Can_a_Retiree_Set_Up_a_Roth_IRA%3F#sthash.nlbXaJyL.dpuf

          Reply

          • Yeah, for the intellectually challenged, implicit in my comment was the idea that they should set up IRAs while still working. For those who will get pennies on the dollar like private sector retirees screwed out of their pensions, they will have to do the same as their private sector counterparts – go back to work.

          • Posted by fouls123 on February 20, 2015 at 11:49 pm

            Yeah? what if you are 92? Should you just Die?

  4. To piggy back on John’s orginal post “our perverted sysstem of government” , this quote from Ayn Rand:

    Money is the barometer of society’s virtue. When you see that trading is done not by consent but by compulsion, when you see that in order to produce you need to obtain permission from those who produce nothing, when you see that money is flowing to those who deal not in goods but in favors, when you see men get rich more easily from graft than by work, and your laws no longer protect you against them but protect them against you, when you see corruption being rewarded and honesty becoming a self-sacrifce—then you will know that your society is doomed.

    Reply

    • Posted by Anonymous on February 17, 2015 at 3:02 pm

      Please explain, what does this dribble have to do with public employees who perform public jobs?

      Reply

      • Posted by fouls123 on February 17, 2015 at 3:54 pm

        I think he is saying society is doomed. and if peoplle start believing that promises no longer need to be kept as the poster above has suggested maybe society is doomed.

        Reply

        • Posted by Anonymous on February 17, 2015 at 4:09 pm

          Maybe in MJ’ s bubble ” society is doomed” but the restofus ain’t buying a dead woman’s unrealized concept. Rest in peace AR.

          Reply

        • Read up on the PBGC and you will see promises to pay retirement benefits are ROUTINELY broken when they can’t be kept. As for promises made by politicians – why should pension promises be any different?

          Reply

          • Posted by fouls123 on February 20, 2015 at 11:58 pm

            So you are okay with all promises to all pensioners being broken/ How about stopping all promises from being broken to all workers instead of advocating for more people being ripped off? i don’t care if they are private or public pensions, I am against any such deals being broken for anyone. If you accept such broken deals by government, it will eventually come back to bite you as well. People have to stick together instead of fighting over the crumbs left to them by the rich and powerful. A broken promise to you is a broken promise to me and vice versa. This is how we get pitted against each other instead of supporting each other.

          • Posted by Tough Love on February 21, 2015 at 1:48 am

            Fouls123,

            If the Public Sector Unions/workers weren’t so insatiably greedy (and so successful in the goal of obtaining outsized pensions & benefits by buying the favorable votes of our elected officials with campaign contributions and election support) there would have been a LOT more crumbs to go around. They CREATED this mess and are going to be part of the solution…. like it or not.

      • It applies to the corrupt system of government hence all of the financial and social problems including public pensions. Did you read the first sentence of the post

        Reply

  5. Posted by skip3house on February 17, 2015 at 4:12 pm

    Getting bored with all these repeats of troubles.
    Just stop school property tax, stop Abbott’s, add to NJ Income Tax, higher gas tax and see what then needs more doing.
    Could use an automated, (computer/PC signature gathering) I & R system now…..

    Reply

  6. As a retiree who receives $23,343,00 a year and lives with a titanium plate
    which supports 3 ceramic discs in place, from C-2 to C-4, as well as partially
    paralyzed as a result of a steel pipe slammed against the back of my neck
    I don’t believe I’m breaking the bank.
    I served well until this incident with over 15 years on the job and be assured
    all the money in the World is not worth ones health.

    Reply

  7. Posted by twentysixpointtwo on February 18, 2015 at 1:03 am

    Look, over there! a squirrel!- thereby successfully pitting the taxpayers against the public employees to divert attention away from “political paybacks” and “forms of theft endemic to a perverted governance unresponsive to the needs of the governed.” Sorry forum posters, you are disappointing in continuing to fall for the diversion tactics instead of calling for reform where it is sorely needed. Interesting that we never apply the rules of math to any of our tax-payer funded social give-away programs known for abuse and fraud, yet we demand our public employees’ earned and contracted pensions be held to those rules while the state squanders funds and refuses to make the ARC.

    Reply

    • Posted by Tough Love on February 18, 2015 at 1:26 am

      Hogwash, The crooked politicians, lawyers, insurance brokers, etc. in NJ steal 1/1000 of 1% of just the UNJUST share of NJ’s pensions granted ALL Public Sector workers via their Unions’ BUYING the favorable votes of our elected officials with campaign contributions and election support.

      We’re talking about $50+ Billion that should never have been promised …. not the peanuts these crooks steal.

      You guys ,,, the Public Sector WORKERS everywhere …. are the financial beneficiaries of the biggest theft in history.
      ————————————–

      Diversion my ars. You’re the one trying to divert attention from NJ’s greatest need …. to hard freeze or VERY materially reduce the grossly excessive pensions promised all CURRENT Public Sector workers …. AND, to end all Public Sector taxpayer-funded retiree healthcare that VERY few Private Sector workers get from their employers today.

      You’re not “special” on OUR dime.

      Reply

  8. Posted by Tough Love on February 18, 2015 at 3:32 pm

    This Pay-to-Play racket in Texas looks NJ’s dealmakers look tame:

    http://money.cnn.com/interactive/pf/debt-collector/texas-politics/

    Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: