Home » Distributive Justice » Un-Taxing the Rich is the Root Cause of the Public Pension Crisis

Un-Taxing the Rich is the Root Cause of the Public Pension Crisis

by Brian T. Lynch, MSW

What follows is a letter I wrote to New Jersey’s principal newspaper, which is constantly trying to convince us that the huge pension deficits created by bad public policy decisions (or perhaps by intentional public union busting strategies) can’t be fixed without dismantling the whole system and starting over. All options to do this create great sacrifices by hard working servants of the people who were promised pensions in exchange for lower lifetime wages than the private sector would be paid for comparable work.

What makes this relevant beyond New Jersey’s boarders is that public employee pension systems are under similar financial assaults in nearly every state. It is a pattern so powerful that it has to be part of a bigger plan.

Dear editor:

“Taxing the rich won’t solve pension problems” claims the Star-Ledger in its editorial. Their point is that the “millionaire’s tax” vetoed by Gov. Christie wouldn’t plug the current pension gap.

This is true, but the larger point is that the “un-taxing” of the rich and the wealthiest companies in New Jersey is the real reason we have a crisis. Stack up all the tax money not collected due to corporate tax breaks and tax cuts given away since the Whitman administration until now and it would tower over the cash it would have taken to pay pension obligations from the beginning.

Money is fungible. Whenever tax revenue is deleted from the budget, someone’s ox has to be gored. For decades that ox belonged to State employees. Their pensions is part their wage package and the reason their overall compensation is roughly parallel with the private sector. Not funding it was a deliberate choice.

Another fact hidden in plain view is that revenue deleted from the budget doesn’t have a line item to remind us of what’s missing. We end up blindly subsidizing profitable corporations instead of properly compensating ordinary folks who work for us.

It’s disingenuous for politicians (or the Star-Ledger) to speak of pension reform without also discussing the massive tax breaks that created this crisis. If tax cuts for businesses and people who don’t need it were rescinded, there would be plenty of revenue to fund the pensions.

BLOG NOTE: If this is happening in your state, of if you are from New Jersey and want to do something about the pension mess, feel free to use this as a template for your own letter to the editor or to your representatives in government.
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1 Comment

  1. Reblogged this on NobodyisFlyingthePlane and commented:
    Mr. Lynch gets to the heart of the matter when he says,

    “We end up blindly subsidizing profitable corporations instead of properly compensating ordinary folks who work for us.

    It’s disingenuous for politicians (or the Star-Ledger) to speak of pension reform without also discussing the massive tax breaks that created this crisis. If tax cuts for businesses and people who don’t need it were rescinded, there would be plenty of revenue to fund the pensions.”

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