http://blogs.forbes.com/rickungar/2011/02/25/the-wisconsin-lie-exposed-taxpayers-actually-contribute-nothing-to-public-employee-pensions/
The Wisconsin Lie Exposed – Taxpayers Actually Contribute Nothing To Public Employee Pensions
Feb. 25 2011
By RICK UNGAR
Pulitzer Prize winning tax reporter, David Cay Johnston, has written a brilliant piece for tax.com exposing the truth about who really pays for the pension and benefits for public employees in Wisconsin. Gov. Scott Walker says he wants state workers covered by collective bargaining agreements to "contribute more" to their pension and health insurance plans. Accepting Gov. Walker' s assertions as fact, and failing to check, creates the impression that somehow the workers are getting something extra, a gift from taxpayers. They are not. Out of every dollar that funds Wisconsin' s pension and health insurance plans for state workers, 100 cents comes from the state workers.
Via tax.com
How can this be possible?
Simple. The pension plan is the direct result of deferred compensation- money that employees would have been paid as cash salary but choose, instead, to have placed in the state operated pension fund where the money can be professionally invested (at a lower cost of management) for the future.
Many of us are familiar with the concept of deferred compensation from reading about the latest multi-million dollar deal with some professional athlete. As a means of allowing their ball club to have enough money to operate, lowering their own tax obligations and for other benefits, ball players often defer payment of money they are to be paid to a later date. In the meantime, that money is invested for the ball player's benefit and then paid over at the time and in the manner agreed to in the contract between the parties.
Does anyone believe that, in the case of the ball player, the deferred money belongs to the club owner rather than the ball player? Is the owner simply providing this money to the athlete as some sort of gift? Of course not. The money is salary to be paid to the ball player, deferred for receipt at a later date.
A review of the state's collective bargaining agreements – many of which are available for review at the Wisconsin Office of State Employees web site - bears out that it is no different for state employees. The numbers are just lower. Check out section 13 of the Wisconsin Association of State Prosecutors collective bargaining agreement – "For the duration of this Agreement, the Employer will contribute on behalf of the employee five percent (5%) of the employee's earnings paid by the State. "
Johnston goes on to point out that Governor Walker has gotten away with this false narrative because journalists have failed to look closely at how employee pension plans work and have simply accepted the Governor's word for it. Because of this, those who wish the unions ill have been able to seize on that narrative to score points by running ads and spreading the word that state employees pay next to nothing for their pensions and that it is all a big taxpayer give-away.
If it is true that pension and benefit money is money that already belongs to state workers, you might ask why state employees would not just take the cash as direct compensation and do their own investing for their retirement through their own individual retirement plans.
Again, simple.
Mr. Johnston continues-
Expecting individuals to be experts at investing their retirement money in defined contribution plans — instead of pooling the money so professional investors can manage the money as is done in defined benefit plans — is not sound economics. The concept, at its most basic, is buying wholesale instead of retail. Wholesale is cheaper for the buyers. That is, it saves taxpayers money. The Wisconsin State Investment Board manages about $74.5 billion for an all-in cost of $224 million. That is a cost of about 30-cents per $100, which is good but not great. However it is far less than many defined contribution plans, where costs are often $1 or more per $100."
If the Wisconsin governor and state legislature were to be honest, they would correctly frame this issue. They are not, in fact, asking state employees to make a larger contribution to their pension and benefits programs as that would not be possible- the employees are already paying 100% of the contributions.
What they are actually asking is that the employees take a pay cut.
That may or may not be an appropriate request depending on your point of view – but the argument that the taxpayers are providing state workers with some gift is as false as the argument that state workers are paid better than employees with comparable education and skills in private industry.
Maybe state workers need to take pay cut along with so many of their fellow Americans. But let's, at the least, recognize this sacrifice for what it is rather than pretending they've been getting away with some sweet deal that now must be brought to an end.
UPDATE: Since this post was published earlier today, many commenters have made the point that, while it is true that it is state employees' own money that funds the pension plan, when the pension plan comes up short it is up to the taxpayer to make up the difference.
There is some truth in this – but not as much as many seem to think. Because the pension plan is a defined benefit plan – requiring the state to pay the agreed benefit for however long the employee may live in retirement- if the employee lives longer than the actuarial plan anticipated, the taxpayer is on the hook for the pay-outs during the longer life.
But is this the fault of the state employees? The pension agreements are the result of collective bargaining. That means that the state has every opportunity to properly calculate the anticipated lifespan and then add on some margin for error. What's more, the losses taken by the pension funds over the past few years can hardly be blamed on the employees.
Take a look at what Sue Urahn, an expert on the subject at the Pew Center on the States, has to say about this when describing the $1 trillion gap that existed between the $2.35 trillion states had set aside to pay for employees' retirement benefits and the $3.35 trillion price tag of those promises.at the end of 2008-
To a significant degree, the $1 trillion reflects states' own policy choices and lack of discipline:
•• failing to make annual payments for pension systems at the levels recommended by their own actuaries;
•• expanding benefits and offering cost-of-living increases without fully considering their long-term price tag or determining how to pay for them; and
•• providing retiree health care without adequately funding it
Via Pew Center on the States
That is the point. While the governor of Wisconsin is busy trying to shift the blame to the workers in an effort to put an end to collective bargaining, the reality is that it was the state who punted on this – not the employees.
Further, by the state employee unions agreeing to the deal proposed by Walker on their benefits (as they have despite Walker's refusal to accept it) they are taking on much - and possibly all – of the obligation out of their own pockets.
As a result, the taxpayers do not contribute to the public employee pension programs so much as serve as insurers. If their elected officials have been sloppy , the taxpayers must stand behind it. But if the market continues to perform as it has been performing this past year, don't be surprised if the funding crisis begins to recede. If it does, what will you say then?
Your whole premise is flawed.
Regardless, it would be fair to say that taxpayers actually pay 100% of not only state employee's pensions, but salaries as well.
Quote from: TeeDub on February 28, 2011, 08:53:18 AM
Your whole premise is flawed.
Regardless, it would be fair to say that taxpayers actually pay 100% of not only state employee's pensions, but salaries as well.
As I read the article, I realized the piece was not written by RM.
Something you evidently didn't pick up on.
Quote from: Hoss on February 28, 2011, 08:55:29 AM
As I read the article, I realized the piece was not written by RM.
Something you evidently didn't pick up on.
I think RM would have said "here's some article I found... but I don't agree with any of it"
When I give a Hallmark card... It usually expresses what I'm feeling better than I'd be able to put into words.
I guess the link at the top to Forbes.com and the prominent "by Rick Ungar" wasn't clear enough.
I didn't write this article. Sorry for any confusion.
Quote from: BKDotCom on February 28, 2011, 09:05:45 AM
I think RM would have said "here's some article I found... but I don't agree with any of it"
When I give a Hallmark card... It usually expresses what I'm feeling better than I'd be able to put into words.
Glad you're a clairvoyant. Wish I had those abilities. I could leave my current job and join the circus and make tons of money speculating...
Um. I didn't think you wrote it.
Apparently I should have said "The article's" in place of "Your." I made the mistake of assuming that since you posted it, you also agreed with it. Worse yet, I never assumed that by using the "Your" it imply that you were trying to take ownership of the article, but rather rally around the premise of the article.
I saw this Friday, the same link to this article hit FaceBook at the exact same time from every union teacher we know (my wife is a teacher, and has many union friends). Her friend Katy said that they got an email from the union to post it on FaceBook and Twitter.
The article was a really bad attempt to confuse people who are bad at finance. "Deferred Compensation" is only real if the participant has the option to take that compensation out of deferred status. Otherwise it is a play on words.
Besides, 100% of their compensation is "contributed to by tax payers," deferred or not. That's almost 100 pennies out of every dollar! :o
This guy is either an idiot, or worse, he's playing to idiots.
Quote from: TeeDub on February 28, 2011, 08:53:18 AM
Your whole premise is flawed.
Why is the premise flawed? It's like a 401k but with no employer match. Or at least that's how I'm reading it.
EDIT: actually, I think I get it . . . you're saying that, because they're government employees, all largesse flows the taxpayer . . . and that the taxpayers should be able to manipulate the entire benefit pool at will, or for political expediency.
Another good argument for public employee unions, IMO.
Whether or not the claims on the pension are fair depends on how the money shows up.
If it is like a 401K, the money should show up on the paycheck as part of the before tax compensation (hopefully considered to be a fair salary). If part of that money is then put in a tax deferred retirement account, then it is like a 401K, sort-of. A defined benefit package can run over the actuarial funded amount. If the retired teacher dies early, is the money available to any heir like a 401K or does the money stay with the pool to pay those that live longer? I don't know in this case. If the retirement fund money is not part of the salary on the pay check, then I would not consider the retirement fund to be merely deferred compensation but rather it is an additional benefit.
It's all words and accounting tricks. Of course all the money comes from the taxpayers, just as my salary comes from my employer.
Quote from: we vs us on February 28, 2011, 10:43:29 AM
Why is the premise flawed? It's like a 401k but with no employer match. Or at least that's how I'm reading it.
EDIT: actually, I think I get it . . . you're saying that, because they're government employees, all largesse flows the taxpayer . . . and that the taxpayers should be able to manipulate the entire benefit pool at will, or for political expediency.
Another good argument for public employee unions, IMO.
Actually under their contract, their wages were never reduced to implement the additional 5% "deferred," nor is the "deferral" voulentary. Their wages were increased to match that amount, so the term "deferred income" has no value, except to idiots.
I don't know either and those are reasonable questions that should be answered before one has strong opinions on the matter.
The most striking part of the article to me was that often the blame is thatthe state didn't fund the pension plan as they should have. The employee union and the state administrator agree that the the employee puts 5% of their salary in an investment account controlled by the state and then the state never puts the money in.
The fault of underfunded pension plans isn't the union's doing, it is the mistakes made by the state financial workers or politicians.
Quote from: Gaspar on February 28, 2011, 01:18:35 PM
Actually under their contract, their wages were never reduced to implement the additional 5% "deferred," nor is the "deferral" voulentary. Their wages were increased to match that amount, so the term "deferred income" has no value, except to idiots desperate union members.
FIFY. I also saw the hammering of this article by teacher-friends of mine on Facebook.
Quote from: Gaspar on February 28, 2011, 01:18:35 PM
Actually under their contract, their wages were never reduced to implement the additional 5% "deferred," nor is the "deferral" voulentary. Their wages were increased to match that amount, so the term "deferred income" has no value, except to idiots.
Why so mean?
The employees negotiate their salary and benefits and one year they didn't take pay raises instead agreeing to set up better pension plans.
By the way, look up deferred income on any search engine. It is a standard, well-recognized accounting practice. I guess that makes all accountants and tax professionals idiots in your eyes.
Oh yeah, you were the financial genius who told us the Dow was going to plummet 2,000 points right before it rose 2,000 points.
Any article posted that uses the word "Union" and leaves out conservative adjectives like "boss" or "goons" will not be taken seriously by the usual TNF suspects.... just sayin' ::)
Quote from: Gaspar on February 28, 2011, 01:18:35 PM
Actually under their contract, their wages were never reduced to implement the additional 5% "deferred," nor is the "deferral" voulentary. Their wages were increased to match that amount, so the term "deferred income" has no value, except to idiots.
Cite?
Quote from: RecycleMichael on February 28, 2011, 01:31:39 PM
Why so mean?
The employees negotiate their salary and benefits and one year they didn't take pay raises instead agreeing to set up better pension plans.
By the way, look up deferred income on any search engine. It is a standard, well-recognized accounting practice. I guess that makes all accountants and tax professionals idiots in your eyes.
Oh yeah, you were the financial genius who told us the Dow was going to plummet 2,000 points right before it rose 2,000 points.
No, it's how the term is used. If your boss came to you and said "We are going to take 5% of your income and defer it for your retirement." You may not be too happy, because that's 5% that you would otherwise take home and feed your family.
Now. . .If your boss came to you and said, "I'm going to take 5% of your income and defer it for your retirement, but but to make up for it, I'm also giving you a 5% raise." Most non-idiots would think "hey the boss is paying 5% into my retirement. Great!" Now, if your boss is the government, again most non-idiots would conclude that the the government is paying the 5%. Since the government has no money, that additional 5% raise/deferral comes from the people.
Beyond that, no matter how you analyse it 100 pennies of every dollar contributed to teacher's pensions come from tax payers. Exactly 0 of 100 pennies of every dollar are contributed from any other source. Therefore 100% of this article is false because it is based on a false premise. That false premise is so painfully obvious that for someone to attempt to defend it, gives me pause to think.
I apologize for using the term idiot, but for the life of me, I can't find a more accurate term.
. . .and yes, again, I frequently humble myself with the stock market.
+1 to gaspar for his argument.
1) 100% comes from the government.
2) deferred compensation is generally a bs tax term. It can mean paying a retired partner, a sabatical, wages in the off season, or paying into retirement. If it isn't money willingly deducted now in exchange for future payments the terms facial meaning is lost.
3) teachers do not fund their own pension. If I made $50k a year and contributed 10% to my pension I don't say I make $45k a year - it is a fundamental difference in how we think. The fx are the same, but the reality is different. The teacher makes $45k and has a negotiated benefit where the state pays $5k to a pension.
How is a mandatory payment by the government directly to a teachers retirement account for the express purpose of funding retirement somehow not the government funding retirement?
That's like saying I don't have paid parking because I negotiated for parking to be included in my employment contract.
Also, is this a defined benefits plan?
Quote from: Gaspar on February 28, 2011, 02:15:27 PM
Beyond that, no matter how you analyse it 100 pennies of every dollar contributed to teacher's pensions come from tax payers.
Are teachers paid dollar for dollar from certain tax buckets? Do they get money from property tax levies only?
Because to be honest, if their pay isn't allocated from one specific source, then it doesn't all necessarily come from taxpayers. It comes from sale of property, or bond sales, or liens on property or whatever.
My point is that saying it "all comes from taxpayers" is a statement designed to convey an ideological message. In point of fact, it "all comes from the government," which has many funding sources. Saying that it all comes from taxpayers implies that the group is stealing directly from you, the beleaguered populace, to support their fancy lives. Which is manifestly not true. Look at the scholarship, the reporting, and the people around you. There is plenty of evidence up and down the ladder showing plainly that public service unions are not living off the fat of the land, and are not sucking the state dry. In cases where their contracts have been out of whack or "gold plated," they've by and large given concessions to allow the things to continue.
Quote from: we vs us on February 28, 2011, 05:36:05 PM
Are teachers paid dollar for dollar from certain tax buckets? Do they get money from property tax levies only?
Because to be honest, if their pay isn't allocated from one specific source, then it doesn't all necessarily come from taxpayers. It comes from sale of property, or bond sales, or liens on property or whatever.
My point is that saying it "all comes from taxpayers" is a statement designed to convey an ideological message. In point of fact, it "all comes from the government," which has many funding sources. Saying that it all comes from taxpayers implies that the group is stealing directly from you, the beleaguered populace, to support their fancy lives. Which is manifestly not true. Look at the scholarship, the reporting, and the people around you. There is plenty of evidence up and down the ladder showing plainly that public service unions are not living off the fat of the land, and are not sucking the state dry. In cases where their contracts have been out of whack or "gold plated," they've by and large given concessions to allow the things to continue.
The language you use always delights me. You betray your own message in most cases based on your lexicon and usage.
First the green:
These funding sources, are they based on the work, transactions, investments or production of the taxpayer?
Now the red:
What if they are stealing indirectly? Is there a difference? Why would I or anyone else consider it stealing?
Now the Orange:
No, they are not "living off the fat of the land," that would imply production. Instead, they are "living off the fat of the people," and the hard work of the individuals they claim to serve. They are parasitic.
As for concessions, in the next 12-24 hours a decision must be made to lay off up to 1,000 state workers in Wisconsin, or to vote on the budget amendments that will force members of the teacher's union to pay a very small percentage (far less then most private sector jobs) into their pensions and healthcare plans. They will also give up the privilege granted them to collectively bargain for benefits (not wages). Very soon, we will have definitive answers on the will and spirit of this labor union.
Quote from: Gaspar on March 01, 2011, 08:53:09 AM
The language you use always delights me. You betray your own message in most cases based on your lexicon and usage.
Wevsus could be a radio talk show host. (Left side, of course)
Quote from: Red Arrow on March 01, 2011, 09:09:34 AM
Wevsus could be a radio talk show host. (Left side, of course)
Well geez I'm flattered. Sadly, Air America isn't returning my calls these days.
Because they're out of business. *rimshot*
Gassy: If your thinking all springs from the assumption that government is a version of original sin, then of course these public employees will be twice or three-times damned. But let's be clear: that's where it comes from . . . a hostility not just to our system but to any system. The union critique is just a branch on that tree.
And in case you haven't been watching the hollowing out of our manufacturing sector over the last several decades, we're no longer really a nation of producers, anyway. We're a nation of RNs, of waiters and waitresses, of data entry clerks, and janitors. Is it any wonder that one of the last most powerful union shops is based on service sector jobs? It's the only kind of job we as a nation
do anymore.
And the majority of people seem to agree that the public pensions need to be reduced and collective bargaining needs to go.
I just don't see why police and fire get a pass.
Quote from: TeeDub on March 01, 2011, 10:16:50 AM
I just don't see why police and fire get a pass.
Bad for politics.
Quote from: we vs us on March 01, 2011, 10:01:11 AM
Well geez I'm flattered.
It was more a comment on your style than a compliment. Don't break your arm patting yourself on the back. :)
Quote from: Red Arrow on March 01, 2011, 10:38:38 AM
It was more a comment on your style than a compliment. Don't break your arm patting yourself on the back. :)
Oh don't worry, I won't.
Quote from: Gaspar on March 01, 2011, 08:53:09 AM
These funding sources, are they based on the work, transactions, investments or production of the taxpayer?
Fees charged for services rendered can't fairly be called taxes in the general sense. There are, however, some (or even many) fees that ought to be called taxes. Nonetheless, in general, it is possible for government to have revenue other than taxes. Pre-semiprivatization, the Post Office would have been a good example of a revenue source. Fees for copies of maps or for deed recording or court filing fees also ought not be considered taxes. Nor should your utility bills, even when the service is provisioned by a government agency, as it is in many areas.
You seem to be arguing that all government revenue is morally suspect, even when it is charging a fee for services rendered just as a private company would.
Quote from: nathanm on March 01, 2011, 04:12:00 PM
the Post Office would have been a good example of a revenue source.
You seem to be arguing that all government revenue is morally suspect, even when it is charging a fee for services rendered just as a private company would.
Wonder how much the Post Office made last year?
Oh, yeah! Negative $8.5 Billion.
Ok, you've got me. The huge amounts of "Government Revenue" generated by making copies, or filing papers related to private transactions should more than cover any outlay.
Get real.
Nate is arguing for the sake of arguing again.
Let me try to help nathan...these guys can't be that dense.
There are other government revenues besides tax dollars.
Here is my example. The city of Tulsa has a split system of residential trash pickup. North of I-244 and west of Yale avenue has one level of trash service and it is picked up weekly by city of Tulsa crews that are members of the AFSCME Union. They work hard and recent surveys show 95% of their customers are satisfied with their service.
The remainder of the city is picked up by a consortium of dozens of private haulers, none of whom are unionized. Recent surveys show 93% of their customers are satified with their service.
The northwest quadrant of the city has union workers who have pensions due upon retirement. Their salaries have been paid by ratepayers, not taxpayers, and only by the collected rates of their customers. If you lived in an apartment, you paid nothing toward their salary or their retirement. If you lived in the biggest two/thirds of the city, your rates went to a private company who may have used pensioned employees or more likely temps.
Both of these examples contribute government revenue.
Show me where your definition of taxpayer money pays the union workers (who, by the way pick up almost the same amount of trash per household for three dollars less per month).
Quote from: RecycleMichael on March 01, 2011, 05:28:12 PM
The northwest quadrant of the city has union workers who have pensions due upon retirement. Their salaries have been paid by ratepayers, not taxpayers, and only by the collected rates of their customers. If you lived in an apartment, you paid nothing toward their salary or their retirement. If you lived in the biggest two/thirds of the city, your rates went to a private company who may have used pensioned employees or more likely temps.
So, it's the ratepayers, and not the taxpayers, who are these union workers' employers? Why is this such a big deal to you?
I guess I was wrong about the dense comment...
People who live in houses in one part of the city pay into a government fund. Not people who live in apartments or another part of the city nor businesses.
The money goes to a government. They hire union workers. None of this comes from taxpayers (OR YOU).
Explain what part you don't understand.
Quote from: RecycleMichael on March 01, 2011, 06:44:06 PM
I guess I was wrong about the dense comment...
People who live in houses in one part of the city pay into a government fund. Not people who live in apartments or another part of the city nor businesses.
The money goes to a government. They hire union workers. None of this comes from taxpayers (OR YOU).
Explain what part you don't understand.
Who freakin cares? Someone, either a taxpayer or a ratepayer, is paying union labor to haul trash. Do you think you are scoring points for unions by suggesting that someone other than a taxpayer (who chances are are also ratepayers) pays these guys? Talk about weapons grade hairsplitting.
I will try to type slower for you.
If your taxes don't pay his salary or pension, are you his employer?
If your house doesn't pay a rate that goes to pay him, are you his employer?
If none of your money is directly involved, are you still his employer?
If you are not, why do you care about his pay or pension?
Quote from: RecycleMichael on March 01, 2011, 05:28:12 PM
If you lived in an apartment, you paid nothing toward their salary or their retirement.
Who picks up apartment trash? A private hauler?
Quote from: Red Arrow on March 01, 2011, 08:11:43 PM
Who picks up apartment trash? A private hauler?
Did when I was living at one. I remember WM doing our complex. Like everything else in apartment living, it was likely built in to the monthly rent.
This is a really silly argument, and it changes nothing.
If the state has services that run billions of dollars in deficit, and has a handful of services that generate a revenue, it does not change the fact that the state runs a deficit.
If you want to individualize it on a micro level, that's fine. The tax payer is still responsible for coughing up the money to pay for the deficit.
This is a "definition of 'is'" argument.
Back to the subject. The tax payers pay for the salaries, benefits and union dues of the workers in question (Wisconsin Teachers).
What if there is no deficit?
The trash fund actually has a surplus.
The Tulsa City Council has tried to spend this money on non-trash expenses like giving the police department more money. There argument was that they should be allowed tospend it because they were the stewards of all city money.
It isn't a silly argument. You make statements that are in conflict with the facts then when others show real world examples, you just dismiss it.
Taxpayers don't completely pay for all government salaries and benefits. You were incorrect in believing so.
Just to throw a third interpretation into the mix. It sounds like I can stop being a taxpayer by moving into an area that has city trash service operating with a budget surplus.
;D
Unfortunately, you still have to pay taxes for most government services. Services like having a fight between the Mayor and city councilors.
Quote from: RecycleMichael on March 02, 2011, 08:01:02 AM
Unfortunately, you still have to pay taxes for most government services. Services like having a fight between the Mayor and city councilors.
Darn! I thought I found a loophole.
Quote from: RecycleMichael on March 02, 2011, 08:01:02 AM
Services like having a fight between the Mayor and city councilors.
You glory hounds are spoiling everything. We suburbanites used to be able to make the news with our goofy governments but now the City of Tulsa is grabbing all the headlines.
;D
Quote from: RecycleMichael on March 01, 2011, 06:44:06 PM
People who live in houses in one part of the city pay into a government fund. Not people who live in apartments or another part of the city nor businesses.
Just out of curiosity, if I lived in the ratepayer area you outlined earlier (North of I-244, West of Yale) would I have the option of not paying the rate and refusing to be serviced by City of Tulsa trash service?
No. The City ordinance requires any occupied dwelling to have trash service. If you are a singly family residence, the city provides you with service. If you are a duplex (or more), you have options.
The city requires you to have sewer service as well. I have my own septic system, if I didn't, I would use the city.
Quote from: RecycleMichael on March 02, 2011, 08:47:07 AM
No. The City ordinance requires any occupied dwelling to have trash service. If you are a singly family residence, the city provides you with service. If you are a duplex (or more), you have options.
Last time I checked, a fee, mandated by a government..... was called a tax.
Or is that not the way things work anymore?
Quote from: TeeDub on March 02, 2011, 08:58:53 AM
Last time I checked, a fee, mandated by a government..... was called a tax.
Or is that not the way things work anymore?
OK, so how about your insurance on your vehicle? Is that a tax? It IS, after all, mandated by the gubmint.
It could be considered that (at least the liability portion,) as could car tags.
We call them different things just to eliminate the stigma of "taxes" but really that is what they are.
These are the two definitions I recall on the difference between taxes and fees.
One, If the charge is based on a dollar amount (like sales tax, property tax, income tax) it is a tax. If the amount is based on anything else, (per person, per household, per pound) it is a fee.
Two, if the charge benefits all, (like roads, schools, etc.) directly or indirectly, then it is a tax. If it applies only to the direct person (like a fishing license, driver's license, etc.) then it is a fee.
Quote from: RecycleMichael on March 02, 2011, 07:27:40 AM
What if there is no deficit?
The trash fund actually has a surplus.
The Tulsa City Council has tried to spend this money on non-trash expenses like giving the police department more money. There argument was that they should be allowed tospend it because they were the stewards of all city money.
It isn't a silly argument. You make statements that are in conflict with the facts then when others show real world examples, you just dismiss it.
Taxpayers don't completely pay for all government salaries and benefits. You were incorrect in believing so.
Ok, so now I'm really confused.
Lets go back to the subject matter. . .Would it be OK for the State of Wisconsin to take a government service that is running a surplus and use that money to pay for teacher's benefits, or should that money go towards servicing their debt?
Should all debt come from tax payers, or should revenue generating services pay on debt?
At the end of the day when you analyse budgeted spending vs deficit spending, how do you account for the surplus of one department over the lack in another?
Is the tax payer not ultimately responsible for the difference?
If the city runs a surplus (that's what it needs to be called under a budget, not revenue) on trash pickup, is it not the city's duty to relieve the burden on tax payers with that surplus?
I guess the point is, when operating under a tax-payer funded budget, the generation of surpluses (or revenue) belongs to the tax payers, not to the department, authority, or public entity. Departments that continuously generate these surpluses need to see a reduction in their next year's budget.
Departments don't get to go out and buy new trucks or staplers because they ran a surplus. I would encourage that they are rewarded for running surpluses, but that money does not belong to them. It belongs to the tax payers just as the debt belongs to the tax payers.
You are not paying attention.
The taxpayers did not create the surplus, nor the deficit in this case. They don't get to decide to spend the money elsewhere if they did not pay into the fund.
If the taxpayers did cause a budget surplus or a budget deficit, it does belong back to the taxpayers. What is not defined is to how it is distributed or collected.
Do the taxpayers get a rebate or a lower bill in a surplus, do the tax rates go up in a deficit? The answer is yes, but it is not that simple.
Currently, in my example of trash rates, the trash authority has decided to give back the surplus by subsidizing trash rates. That is why the trash bills have only increased once in ten years (and once they actually went down slightly), while water and sewer rates seem to rise every year. Slowly giving the money back by freezing rates when costs went up was chosen. An other method might be to make new upgrades (like buying new carts that could help keeps rates lower in the future).
You seem to be under the assumption that because you are a taxpayer you get to demand that no money should ever be given to the workers especially to their pensions. In reality, once of the reasons there is a surplus is that the workers have done a good job in keeping expenses down.
Quote from: RecycleMichael on March 02, 2011, 11:21:20 AM
You are not paying attention.
The taxpayers did not create the surplus, nor the deficit in this case. They don't get to decide to spend the money elsewhere if they did not pay into the fund.
If the taxpayers did cause a budget surplus or a budget deficit, it does belong back to the taxpayers. What is not defined is to how it is distributed or collected.
Do the taxpayers get a rebate or a lower bill in a surplus, do the tax rates go up in a deficit? The answer is yes, but it is not that simple.
Currently, in my example of trash rates, the trash authority has decided to give back the surplus by subsidizing trash rates. That is why the trash bills have only increased once in ten years (and once they actually went down slightly), while water and sewer rates seem to rise every year. Slowly giving the money back by freezing rates when costs went up was chosen. An other method might be to make new upgrades (like buying new carts that could help keeps rates lower in the future).
You seem to be under the assumption that because you are a taxpayer you get to demand that no money should ever be given to the workers especially to their pensions. In reality, once of the reasons there is a surplus is that the workers have done a good job in keeping expenses down.
You have just said nothing that I can disagree with with the exception of causality. It makes no difference who you wish to attribute the cause of a surplus on (green).
As you have stated (in red), The money does ultimately belong to the taxpayer. Simple or complex, the budget represents a layout of services funded by the taxpayer. Any surplus is treated as such, and applied to future budgets or through other measures (such as subsidies or additional services) returned to the taxpayer.
The money came from the taxpayer originally to fund the budget and any deficit or surplus falls back on the taxpayer. That is the simple truth.
Back to the subject again, and cutting off the winding thread this discussion has taken. . .in the case of the Wisconson teachers, the money does come out of the pocket of the taxpayer.
It seems we agree on the ownership of the funds, it is simply the way we like to express it that differs, and that is based on our political differences.
RM,
I appreciate the difference between services the government can provide for a fee and tax funded services. Fee based is better for the reasons you illustrated (we can see which ways work better, what people want to pay for, and allow market forces to work).
However, the wisconsin schools are not fee based. The workers are not in a competitive marketplace where nonunion labor competes. And we have no metric to show that the union labor is of any benefit (actually, in general, lower paid non union private school teachers have higher performing students. Causation is not correlation).
Public schools have an oligopoly and the teachers union services 90+% of students with public, non fee, revenue. Their pension is entrely funded by state/local/federal money.
Whether or not that means collective bargaining of rights should go is the issue.
Quote from: TeeDub on March 02, 2011, 09:23:58 AM
We call them different things just to eliminate the stigma of "taxes" but really that is what they are.
Exactly. I called it weapons grade hairsplitting earlier. Here is the Black's Law Dictionary (9th ed. 2009) definition of "tax":
Quotetax, n. (14c) A charge, usu. monetary, imposed by the government on persons, entities, transactions, or property to yield public revenue. • Most broadly, the term embraces all governmental impositions on the person, property, privileges, occupations, and enjoyment of the people, and includes duties, imposts, and excises. Although a tax is often thought of as being pecuniary in nature, it is not necessarily payable in money. [Cases: Internal Revenue 3001; Taxation 2001.] — tax, vb.
"Taxes are the enforced proportional contributions from persons and property, levied by the state by virtue of its sovereignty for the support of government and for all public needs. This definition of taxes, often referred to as 'Cooley's definition,' has been quoted and indorsed, or approved, expressly or otherwise, by many different courts. While this definition of taxes characterizes them as 'contributions,' other definitions refer to them as 'imposts,' 'duty or impost,' 'charges,' 'burdens,' or 'exactions'; but these variations in phraseology are of no practical importance." 1 Thomas M. Cooley, The Law of Taxation § 1, at 61–63 (Clark A. Nichols ed., 4th ed. 1924).
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Emphasis added].