Leatherneck Nation

Neckfansince71 wrote: Fri Jul 07, 2017 8:02 am Seal stated this AM that the passage of this budget is really just a stopgap measure and I would totally agree. ST, I think your proposed "weighted" tax would be a very fair way to handle the pension problem and the basic state tax problem in general! I think Cullerton gets it and I think the senate needs to get this discussion started. jc

1. No "double-dipping"...you get one pension. If you have earned your full ~36 years toward your pension, then that money that would normally get taken out towards another pension does not get taken out...maybe it can go to a 401k/403b or something (no employer matching though). You can get your pension and you can get your salary, but you can't be eligible for two pensions. I know there was a bill about this a while back, so idk if it's actually still a problem or not, but I thought I'd put that out there.
2. 100% of taxes collected from withdrawing pensions goes right back into the pension fund until such time as the pension fund is considered "fully funded". I don't know what that threshold actually is...again, no expert here...but I would think that since people taking out their pensions are the ones being taxed, then it should all go back in to help fund the pensions. I realize that the net result is essentially that people are taking less out of their pension fund (if you made $187.5k a year, would normally take $150k a year out of pension, you're actually taking $134.4k out) but I think it's easier for most people to do the math on the tax structure I listed.

ST_Lawson wrote: Fri Jul 07, 2017 9:30 am

Neckfansince71 wrote: Fri Jul 07, 2017 8:02 am Seal stated this AM that the passage of this budget is really just a stopgap measure and I would totally agree. ST, I think your proposed "weighted" tax would be a very fair way to handle the pension problem and the basic state tax problem in general! I think Cullerton gets it and I think the senate needs to get this discussion started. jc

Right, I liken it to putting a tourniquet on someone who is severely bleeding. The budget stops the bleeding, but we still need to work on fixing the issues that were caused by it (severe loss of blood = unpaid bills & debt) as well as the issues that caused it in the first place (whatever caused the injury = pension obligations, over-spending, etc.).

Personally, I've got a list of things I'd like to see happen, but one would be to tax the pensions as money is removed as 71 mentioned. I did some quick "spitballing" with some numbers, and it seems like something along the lines of 2% for each 10k over 30k would be fair.
Essentially, someone taking 30k or less doesn't get taxed on what they take out. They take 50k, then the first 10k past 30k is taxed at 2%, the second 10k is taxed at 4%, net tax of 600 on 50k for an effective tax rate of 1.2%.
Following this pattern:
75k is taxed $2,050 for an effective tax rate of 2.73%
100k is taxed $5,600 for an effective tax rate of 5.6%
150k is taxed $15,600 for an effective tax rate of 10.4%

The more you get out, the more it's taxed (I'm no expert, but I think that's a fairly standard/basic progressive tax structure). Since it's based on how much you made when you were working, if you were making over six figures, then you're more likely to have investments, more home equity, etc. to help make up the difference. If you're receiving 150k, then that means your average salary over the last few years (5...I think?) was $187.5k...my wife and I combined make less than half that and we're able to put a decent amount towards other investments. Also, a couple of things about this:

1. No "double-dipping"...you get one pension. If you have earned your full ~36 years toward your pension, then that money that would normally get taken out towards another pension does not get taken out...maybe it can go to a 401k/403b or something (no employer matching though). You can get your pension and you can get your salary, but you can't be eligible for two pensions. I know there was a bill about this a while back, so idk if it's actually still a problem or not, but I thought I'd put that out there.
2. 100% of taxes collected from withdrawing pensions goes right back into the pension fund until such time as the pension fund is considered "fully funded". I don't know what that threshold actually is...again, no expert here...but I would think that since people taking out their pensions are the ones being taxed, then it should all go back in to help fund the pensions. I realize that the net result is essentially that people are taking less out of their pension fund (if you made $187.5k a year, would normally take $150k a year out of pension, you're actually taking $134.4k out) but I think it's easier for most people to do the math on the tax structure I listed.

Anyway, maybe I'm completely off-base on this, maybe some of this is already being done, but personally, I wouldn't mind this setup for my situation. My wife and I are both employees of Western, so our salaries are public record if anyone is curious.

Thoughts? Think it's a dumb idea?

rocki wrote: Is retirement still allowed at 55 as long as you have 20 or 25 years in? Maybe those requirements need to be extended out a bit. I know having the baby boomers hitting retirement age has really put a dent in things as there are more retirees than those paying into the system now.

Neckfansince71 wrote: Fri Jul 07, 2017 6:37 am I would be more than happy to pay state taxes on my "fat" pension and have said that a number of times to a number of people. jc