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Thread: The Wisconsin Lie Exposed – Taxpayers Actually Contribute Nothing To Public Employee

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    Re: The Wisconsin Lie Exposed – Taxpayers Actually Contribute Nothing To Public Emplo

    Mr. Johnston's argument is a stretch for several reasons.

    1. The compensation (deferred or not) is made possible from the state government's income. That income is primarily comprised of tax revenue.
    2. The present value portion of compensation that is "deferred" falls far short of what would be required to provide the defined benefits promised later.
    3. Assumed plan returns on the order of 8.5% annually are wildly inflated and, because there is a chronic gap between historic market returns and the returns required to make the promised defined benefit pension payments possible, that financing gap would need to be closed. Unless workers saw the present value of that gap deducted from their paychecks, taxpayers would, in fact, be expected to pick up the tab.

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    Re: The Wisconsin Lie Exposed – Taxpayers Actually Contribute Nothing To Public Emplo

    Quote Originally Posted by MaggieD View Post
    I would assume that 18% (half of the 36% of payroll taxes) or thereabouts is paid by employers. If you're saying, then, that business pays 12% plus 18%, or 30%, I can see your point. But when people are talking about corporations paying taxes, I think they are generally talking about them paying income tax on their profits -- which is what that 12% represents.
    Which means they are only telling half the story.

    Also, what percentage of that 45% of pesonal income taxes is made up of s-corp filings?

    I think once we shake out the real corporate tax numbers, we'll find out that corporations pay a helluva lot more than our Leftist friends would have us believe.
    Quote Originally Posted by Top Cat View Post
    At least Bill saved his transgressions for grown women. Not suggesting what he did was OK. But he didn't chase 14 year olds.

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    Re: The Wisconsin Lie Exposed – Taxpayers Actually Contribute Nothing To Public Emplo

    Quote Originally Posted by donsutherland1 View Post
    Mr. Johnston's argument is a stretch for several reasons.

    1. The compensation (deferred or not) is made possible from the state government's income. That income is primarily comprised of tax revenue.
    and that tax revenue is then used to pay the state's obligations
    when i pay my bills with my income i do not insist that i am paying with my employer's resources
    and it is disingenuous to then pretend that taxes paid are being mis-allocated because they pay contracted obligations to the state employees

    2. The present value portion of compensation that is "deferred" falls far short of what would be required to provide the defined benefits promised later.
    not saying that is not the case but neither do i see anything which shows this to be a factual argument. how about ponying up a cite to establish the basis for your presentation

    3. Assumed plan returns on the order of 8.5% annually are wildly inflated and, because there is a chronic gap between historic market returns and the returns required to make the promised defined benefit pension payments possible, that financing gap would need to be closed. Unless workers saw the present value of that gap deducted from their paychecks, taxpayers would, in fact, be expected to pick up the tab.
    and this is where the union needs to get real. if the underlying assumptions are now found to be invalid then the projected outcomes - the benefits due and expected by the state employees - cannot be realized. a fiscal shortfall is sure to result. but this is why the state and the union need to negotiate a solution. and whichever one is found more compelling and credible is the one the impasse panel would certify should the parties not be able to reach agreement at the negotiation table
    we are negotiating about dividing a pizza and in the meantime israel is eating it
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    Re: The Wisconsin Lie Exposed – Taxpayers Actually Contribute Nothing To Public Emplo

    Quote Originally Posted by Nevergolfpar View Post
    What country do you live in? You do realize that America does have the highest corporate tax rates in the WORLD!!!!!!!!!!!!!! So if someone wants to give a tax break to our employers err corporations than so the hell what? If this 'tax break' costs the teachers in Wisconsin a reduction from $100,000 to $78,000 to $50,000 (including deferred compensation) then I am all for it and the private sector jobs that follow. You go on ahead and remain simplistic in your view on how the real world works, while I and those you think like me, are busy creating jobs and making money.
    Reality seems to be getting in the way of your ideology:

    The Gap Between Statutory and Real Corporate Tax Rates

    Ostensibly, the U.S. federal tax code requires corporations to pay 35 percent of their profits in income taxes.

    But of the 275 Fortune 500 companies that made a profit each year from 2001 to 2003 and for which adequate information to draw conclusions is publicly available, only a small proportion paid federal income taxes anywhere near that statutory 35 percent tax rate. The vast majority paid considerably less.

    In fact, in 2002 and 2003, the average effective tax rate for all of these 275 companies was less than half the statutory 35 percent rate. Over the 2001-2003 period, effective tax rates ranged from a low of -59.6 percent for Pepco Holdings to a high of 34.5 percent for CVS.

    Over the three-year period, the average effective rate for all 275 companies dropped by a fifth, from 21.4 percent in 2001 to 17.2 percent in 2002-2003.

    The statistics are startling:

    •Eighty-two of the 275 companies, almost a third of the total, paid zero or less in federal income taxes in at least one year from 2001 to 2003. In the years they paid no income tax, these companies earned $102 billion in pretax U.S. profits. But instead of paying $35.6 billion in income taxes as the statutory 35 percent corporate tax rate seems to require, these companies generated so many excess tax breaks that they received outright tax rebate checks from the U.S. Treasury, totaling $12.6 billion. These companies' "negative tax rates" meant that they made more after taxes than before taxes in those no-tax years.
    •Twenty-eight corporations enjoyed negative federal income tax rates over the entire 2001-2003 period. These companies, whose pretax U.S. profits totaled $44.9 billion over the three years, included, among others: Pepco Holdings (-59.6 percent tax rate), Prudential Financial (-46.2 percent), ITT Industries (-22.3 percent), Boeing (-18.8 percent), Unisys (-16.0 percent), Fluor (-9.2 percent) and CSX (-7.5 percent), the company previously headed by current Secretary of the Treasury John Snow.
    •In 2003 alone, 46 companies paid zero or less in federal income taxes. These 46 companies told their shareholders they earned U.S. pretax profits in 2003 of $42.6 billion, yet they received tax rebates totaling $5.4 billion. Almost as many companies, 42, paid no tax in 2002, reporting $43.5 billion in pretax profits, yet receiving $4.9 billion in tax rebates. From 2001 to 2003, the number of no-tax companies jumped from 33 to 46, an increase of 40 percent.
    •In 2001, the Treasury paid corporations $40 billion in tax refunds, a third more than the 1998-2000 average.
    •Then in 2002 and 2003, after the law was changed to expand tax subsidies and make it easier for corporations to carry back excess tax breaks to earlier years, corporate tax refunds skyrocketed to an average of $63 billion a year - more than double the 1998-2000 average.
    Corporations are now paying the lowest levels of taxes in the post-World War II era. In fiscal 2002 and 2003, federal corporate incomes taxes dropped to their lowest sustained level as a share of the economy since World War II. Only a single year during the early Reagan administration was lower.
    In 1986, President Ronald Reagan fully abandoned his earlier policy of showering tax breaks on corporations. The Tax Reform Act of 1986 closed tens of billions of dollars in corporate loopholes, so that by 1988, the overall effective corporate tax rate for large corporations was up to 26.5 percent. That improvement occurred even though the statutory corporate tax rate was cut from 46 percent to 34 percent as part of the 1986 reforms.

    In the 1990s, however, many corporations began to find ways around the 1986 reforms, abetted by tax-shelter schemes devised by major accounting firms.

    Effective corporate tax rates then plummeted, thanks to Bush administration-backed tax breaks passed in 2002 and 2003, continued corporate offshore tax-sheltering, and the refusal of the Congress and White House to crack down on even the most abusive inherited corporate tax-sheltering activities.

    Corporate taxes paid for more than a quarter of federal outlays in the 1950s and a fifth in the 1960s. They began to decline during the Nixon administration, yet even by the second half of the 1990s, corporate taxes still covered 11 percent of the cost of federal programs. But in fiscal years 2002 and 2003, corporate taxes paid for a mere 6 percent of federal expenses.

    Billions and billions
    Over the 2001-2003 period, the 275 Fortune 500 companies that were profitable each year and for which adequate information is publicly available earned almost $1.1 trillion in pretax profits in the United States. Had all of those profits been reported to the Internal Revenue Service (IRS) and taxed at the statutory 35 percent corporate tax rate, then the 275 companies would have paid $370 billion in income taxes over the three years. But instead, the companies reported only about half of their profits - $557 billion - to the IRS. Instead of a 35 percent tax rate, the companies as a group paid a three-year effective tax rate of only 18.4 percent.

    In 2002 and 2003, the 275 companies sheltered more than half of their profits from tax. They told their shareholders they earned $739 billion in those two years, but they paid taxes on less than half of that, only $363 billion.

    Loopholes and other tax subsidies cut taxes for the 275 companies by $43.4 billion in 2001, $60.8 billion in 2002 and $71.0 billion in 2003, for a total of $175.2 billion in tax breaks over the three years.

    Half of the total tax-break dollars over the three years - $87.1 billion - went to just 25 companies, each with more than a billion-and-a-half dollars in tax breaks.

    General Electric topped the list of corporate tax break recipients, with $9.5 billion in tax breaks over the three years.

    Industrial divide
    Effective tax rates varied widely by industry. Over the 2001-2003 period, industry effective tax rates for the 275 corporations ranged from a low of 1.6 percent to a high of 27.7 percent.

    In 2003, the range of industry tax rates was even greater, ranging from a low of -30.0 percent (a negative rate) up to a high of 27.9 percent.

    •Aerospace and defense companies enjoyed the lowest effective tax rate over the three years, paying only 1.6 percent of their profits in federal income taxes. This industry's taxes declined sharply over the three years, falling to -30.0 percent of profits in 2003.
    •Other very low-tax industries, paying less than half the statutory 35 percent tax rate over the entire 2001-2003 period, included: transportation (4.3 percent), industrial and farm equipment (6.2 percent), telecommunications (7.5 percent), electronics and electrical equipment (10.8 percent), petroleum and pipelines (13.3 percent), miscellaneous services (14.4 percent), gas and electric utilities (14.4 percent), computers, office equipment, software and data (16.0 percent), and metals & metal products (17.4 percent).
    •Not a single industry paid an effective tax rate of more than 29 percent, either for the entire three-year period or in any given year.
    Within industries, effective tax rates also varied widely. For example, over the three-year period, average tax rates on oil companies ranged from 3.0 percent for Devon Energy up to 31.4 percent on Marathon Oil. Among aerospace and defense companies, three-year effective tax rates ranged from a low of -18.8 percent for Boeing up to a high of 25.0 percent for General Dynamics.
    __________________________________________________ _
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    Re: The Wisconsin Lie Exposed – Taxpayers Actually Contribute Nothing To Public Emplo

    Quote Originally Posted by justabubba View Post
    and that tax revenue is then used to pay the state's obligations
    when i pay my bills with my income i do not insist that i am paying with my employer's resources
    and it is disingenuous to then pretend that taxes paid are being mis-allocated because they pay contracted obligations to the state employees


    not saying that is not the case but neither do i see anything which shows this to be a factual argument. how about ponying up a cite to establish the basis for your presentation


    and this is where the union needs to get real. if the underlying assumptions are now found to be invalid then the projected outcomes - the benefits due and expected by the state employees - cannot be realized. a fiscal shortfall is sure to result. but this is why the state and the union need to negotiate a solution. and whichever one is found more compelling and credible is the one the impasse panel would certify should the parties not be able to reach agreement at the negotiation table
    Forcing public employees to join a union, then using those unions dues, which are automatically deducted from the employees's paychecks, to fund political campaigns is a misallocation of funds. It's nothing less than money laundering.
    Quote Originally Posted by Top Cat View Post
    At least Bill saved his transgressions for grown women. Not suggesting what he did was OK. But he didn't chase 14 year olds.

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    Re: The Wisconsin Lie Exposed – Taxpayers Actually Contribute Nothing To Public Emplo

    Quote Originally Posted by apdst View Post
    Forcing public employees to join a union, then using those unions dues, which are automatically deducted from the employees's paychecks, to fund political campaigns is a misallocation of funds. It's nothing less than money laundering.
    under federal law a union CANNOT use union dues to make political contributions

    the union can establish a pac for the union members to voluntarily contribute for the benefit of political funding in the union's interests

    so, it is again very evident that you don't know what you are posting about

    personally, i believe that there should be no political contributions allowed other than from registered voters - subject to individual caps - and then they can only contribute to political candidates who - if they prevail in primaries - could have their names placed on the ballot the registered voter would have before them
    all political contributions should be required to be posted to an established publicly accessible website and any contributions not listed would be found to be illegal bribes, for which the giver and the receiver would both be subject to judicial punishment

    this would exclude any union contributions, any corporate contributions, any foreign interest contributions, any lobbyist contributions. additionally, those of means would be unable to fund candidates in districts other than those in which they are registered to vote

    no longer would we have the best government money can buy

    government would again be truly representative of the people
    we are negotiating about dividing a pizza and in the meantime israel is eating it
    once you're over the hill you begin to pick up speed

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    Re: The Wisconsin Lie Exposed – Taxpayers Actually Contribute Nothing To Public Emplo

    Quote Originally Posted by justabubba View Post
    and that tax revenue is then used to pay the state's obligations
    when i pay my bills with my income i do not insist that i am paying with my employer's resources
    and it is disingenuous to then pretend that taxes paid are being mis-allocated because they pay contracted obligations to the state employees
    I made no argument about "misallocation." My point is that taxpayers finance the salaries and benefits of state employees. Nothing more. Furthermore, a level of government is necessary, so I have no objections to such financing in general.

    not saying that is not the case but neither do i see anything which shows this to be a factual argument. how about ponying up a cite to establish the basis for your presentation...
    The pension plan promised an 8.5% annual return (widely reported) to meet its promised payments. That is a promise that is not sustainable given the nation's and state's long-term economic growth. Hence, in actuarial terms, the pension plan is grossly underfunded (returns have been much less than the rosy 8.5% figure). That means plan assets are insufficient to meet the plan obligations. Either the benefits are reduced, the plan receives additional sustained funding to compensate for the difference between the required 8.5% return (to meet pension obligations) and actual market returns, or some combination. Almost certainly, given the magnitude of the long-term gap, benefit changes and some additional taxpayer financing would be required. So, Mr. Johnston's assertion is not accurate.

    and this is where the union needs to get real. if the underlying assumptions are now found to be invalid then the projected outcomes - the benefits due and expected by the state employees - cannot be realized. a fiscal shortfall is sure to result. but this is why the state and the union need to negotiate a solution. and whichever one is found more compelling and credible is the one the impasse panel would certify should the parties not be able to reach agreement at the negotiation table
    A new approach is required. I favor a negotiated solution.

    As I've noted in another thread a few days ago, I believe rather than declaring that public workers cannot bargain collectively, the state should legislatively draw a line on its maximum fiscal parameters e.g., to use part of the governor's proposed terms, it would not offer compensation increases beyond the rate of inflation except if a legislative supermajority agreed (highly unlikely), etc. Then, in theory, unions could ask for more. But in practice, the state would achieve the savings required to address its long-term fiscal imbalances. Given recent statements by the public workers unions, that kind of arrangement might be feasible, as the unions would retain symbolic bargaining rights. Unfortunately, that's not the route that has been taken and whatever the outcome of the impasse, a period of healing might be required before optimal solutions can be negotiated and agreed.
    Last edited by donsutherland1; 03-01-11 at 11:57 AM.

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    Re: The Wisconsin Lie Exposed – Taxpayers Actually Contribute Nothing To Public Emplo

    Quote Originally Posted by MaggieD View Post
    Characterizing the pension plan as deferred compensation is disingenuous. It is a pension plan. And whatever this Pullet Surprise writer calls it, it is still greater and sweeter than virtually any pension plan on the planet. Ridiculous.
    As asked before for yourself - ANYONE for that matter - to show proof that a pension plan offerred by a private company, say GM or MicroSoft, is any different than a pension plan offerred by any state to their state employees. Better yet, provide a spreadsheet, a graph...ANYTHING to support your position on this matter and if what you say supports your claim, I'm on that bandwagon!!! But making such a claim without proving it is you just repeating talking points.

    Now, to the other point - the one unspoken - public employees are employees just as anyone else. State government need people to do certain jobs, i.e., pave or repair roads, manage state facilities such as state parks or public health departments, and to patrol our highways (state police). Many are dedicated individuals some of whom I know personally who have worked 25-30+ years in public service ensuring that state residence have continued access to certain facilities and services the residences have come to expect and take for granted. One example that often gets overlooked are rest stops on interstate highways. Do you think some private company maintain such facilities? Granted, not all are kept in prestine condition, but I've travelled alot of miles by car over the years and most of these facilities are in pretty decent condition. But that's just an example of one of the many jobs public employees perform that is taken for granted by the public.

    So, when I hear folk talking about state tax dollars, I have to remind folks of the kind of jobs these "tax dollars" are paying for - jobs that many of us take for granted and just assume the work will get done on its own. But it takes someone having the willingness to travel sometimes great distances to get to these far off locations just to ensure sanitation standards are maintained, or that trash is removed, roads are maintained, parks are clean and in good repair, landscapes present a good appearance, and so many other things that the public takes for granted.

    Again, just one example of the kind of work state employees do....that your tax dollars help pay for. Think before you speak, people.

    My suggestion to those who are complaining about their tax dollars going to waste, why don't you start a contract company to compete for the services some of these state jobs perform. Let me know if you win the low-ball bid.

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    Re: The Wisconsin Lie Exposed – Taxpayers Actually Contribute Nothing To Public Emplo

    Quote Originally Posted by apdst View Post
    Forcing public employees to join a union, then using those unions dues, which are automatically deducted from the employees's paychecks, to fund political campaigns is a misallocation of funds. It's nothing less than money laundering.
    I hope you're referring to a specific state's actions here because I've been a state employee for 8 yrs and I'm not a union member and no one is forcing me to become one.

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    Re: The Wisconsin Lie Exposed – Taxpayers Actually Contribute Nothing To Public Emplo

    Quote Originally Posted by Objective Voice View Post
    As asked before for yourself - ANYONE for that matter - to show proof that a pension plan offerred by a private company, say GM or MicroSoft, is any different than a pension plan offerred by any state to their state employees.
    My critique does not concern whether pensions are a form of deferred compensation. It only notes that the article's claim that taxpayers do not finance pensions is not correct. With companies such as GM or Microsoft, customers provide revenue through voluntary transactions. That revenue ultimately funds compensation, among the companies' other expenses. With government, tax revenue (not voluntary) provides most of the financing of the compensation for public sector workers. Hence, taxpayers ultimately finance the salaries and benefits of state employees.

    Government is necessary. Hence, unless government devised a different revenue model, taxpayers will continue to finance most of government's operations and I have no objections to such financing, including funding that is allocated to public sector compensation. Such compensation is essential if government is to carry out its programs and services. Moreover, compensation structures need to consider the government's fiscal constraints and what is required to attract and retain high-performing employees (low productivity/low efficiency would also entail costs that could well offset "savings" from undercompensation).

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