Maine’s state and local tax burden rates ninth in the nation, according to the Tax Foundation. A large source – or potential source – of tax burden, Gov. LePage seems to say, is a $4.4 billion unfunded liability in the state pension system.
Gov. LePage is asking my fellow public school teachers and me to sacrifice some pay and retirement so the state can become financially healthier. I get that.
According to the Maine Education Association, the $4.4 billion pension liability figure reflects the bottomed-out stock market of 2008-’09 and not its 56.7 percent rebound, so the liability the Governor describes is exaggerated.
Still, this liability – whatever the figure is – needs to be paid.
I’d be willing to sacrifice for this situation even though Maine ranks 43rd in the nation for teacher pay, and even though I work for a school district that’s financially challenged.
I’d be willing, except that the Governor isn’t asking for equitable sacrifice.
Gov. LePage wants to put more money in the hands of the wealthy to create jobs. I understand the theory, but the Maine Center for Economic Policy has calculated some inequitable tax breaks that just aren’t justified by any theory. Here are two:
$83 — Average proposed income tax break for Maine families earning between $28,139 and $48,050 in FY 2013.
$874 — Average proposed income tax break for Maine families earning more than $119,763 in FY 2013.
Families making $28,139 – roughly a quarter of $119,763 – will save by percentage of income almost two and a half times less on taxes than those with a $119,763 income, and 10 times less in straight dollar amount. (The disparity by percentage of income is greater when you compare $119,763 with $48,050 – it’s about four times less).
The difference in relief probably reflects, to some extent, the difference in tax rates. However, it’s hard to argue that someone making $119,763 needs $800 more than someone earning $28,139. It seems likely that the person with the lesser income would spend much or all of it in their home state – and shouldn’t growing Maine’s economy be the goal of such tax relief? Surely we can create more economic benefit by lowering taxes more equitably.
Unfortunately, inequity in Gov. LePage’s plans goes beyond taxes. Some state employees would be exempt from fair contributions to our shared budget. According to a recent Bangor Daily News article, there’s a “confidential employee” pension plan whose members, if they were asked to contribute at the same Governor-suggested rate as other state employees, would save the state $3 million.
In light of what Gov. LePage proposes to do with taxes and select state workers, his plan to freeze retired teachers’ pensions (which average $19,300) and then severely limit their growth is reprehensible. Ask me when I’m of working age to help address the state’s financial woes. Prepare me in advance for a smaller retirement, if that’s vital to fixing the state’s problems. But don’t kick me down when I’m already retired and on a fixed income.
Maine’s public pays teachers and other state workers, but that doesn’t simply make us hired hands whose salaries, benefits, and retirement should be singled out to fix state budget problems. We’re your neighbors and friends whose paychecks support local businesses. Share with us the burden necessary to improve Maine’s economy; ask all working Mainers to contribute fairly to a better future – that’s the right thing to do.
John Logan
Farmington
Excellent letter John,
It seems many legislators on both sides of the aisle agree with your points and both the pension fix and the proposed tax breaks may undergo some much needed revision in the transformation of the proposed budget into the adopted budget.
I am interested to hear the thoughts of our recently elected representatives and senators. Locally we have Mr. Black, Mr. Harvell and Mr. Saviello. Recently a discussion forum was held for teachers and retirees (which I did not attend). I am curious to hear what they have to say on this matter beyond reporting the present circumstances.
Gentlemen, do you support the governor’s proposal? Please share your opinions and describe what you will support as well as any alternative ideas you might have. This topic touches hundreds if not thousands of your constituents and is clearly a time when thoughtful leadership is needed. Thank you for your time.
Very well said.
best idea ever!!!!
not yours, mine, here it is.
first we replace 80% of all secondary education teachers with a computer monitors and classroom monitors (classroom monitors are actual people for about 12 bucks an hour no benefits).
All the lesson plans are already done from online instructors who have recorded their teaching on this thing they call the internet.
Replace the teachers now, the education system is ineffective, kids learn differently.
here it is:
http://www.khanacademy.org/
This will save us millions locally and billions nationwide and put us back on top in the world.
Thank you John Logan. This is the real conversation we need to be having. It is obvious that without significant sacrifices across the board, there is no way government spending will be controlled either in Maine or in Washington. This will only be tolerable if this pain is fairly shared by all of us. I also would like to know how our local representatives feel about a proposed tax break that seems to benefit wealthy Mainers far more than those who are clearly living from paycheck to paycheck.
Our elected officials certainly have no obligation to answer this question here (or anywhere else), but I think hearing their views would be appreciated by many of us as our state tries to deal with these difficult economic times.
But – Hutch! You will be putting your wife out of a job! That is, the wife who you said, teaches (see earlier opinion article).
CD, only proves i am not a hypocrite like liberals are.
Great idea, Hutch. This will make even more people in Maine unemployed by outsourcing labor. And since it eliminates teacher-student interactions that are vital in fostering critical thinking and social skills, it will make Maine’s youths virtually unemployable, too, even in tourism.
John Logan, et al., as a tax payer I agree. Let’s shoulder the burden of teacher retirement together! As a matter of fact, I believe in the face of the growing state deficit, tax cuts for any are unconscionable.
Hey Gnatty,
Feel free to shoulder my portion of the burden; I’m tired of lugging it, I put in my 40 hours a week to pay for health inxurance for my family and contribute to my retirement plan. I am tired of paying for health insurance and health care for teachers and state workers. They get to retire after 25 years. To get my full social security payout I must work until I am 72- another 40 years! I agree that as their “employers” we are responsible for a portion of their insurance and retirement just as my employer gives me. It would be nice if they contributed some too. Let them know how it feels when the raise for the year is 2 percent and health insurance went up 3 percent ; and you’re gosh darn grateful that you have both.
I understand as a substitute teacher, having to pay into the system. No choice.. have to! No social security packages for teachers!
Now you have paperworkers and other workers that contribute to their own retirement (no penalities) AND can get social security. How is this fair? Increase their taxes.
How can we expect teachers to put effort into teaching our youth (our future) when they are treated like this?
How big of Mr. Logan to offer more of my private sector income to the cause. According to him,if “we” all just pay more, (taxes) the economy will recover and “we” will all be better off. Plus, we get the tingly satisfaction of knowing we “did the right thing”, by sharing the burden. Logan asks us to “contribute fairly”. Really? I am not contributing fairly now? I am cheating somehow? The fact that all his salary is being paid for by private sector taxes already ,makes his argument seem a bit strange. Thank you for kindly making the huge sacrifice of trying to give away more of MY money Mr. Logan, and this is difficult to write but, I think I will pass. Maybe next time.
Let’s put tax cuts in terms everyone can understand.
Suppose that every day, ten men go out for dinner. The bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:
* The first four men (the poorest) would pay nothing.
* The fifth would pay $1.
* The sixth would pay $3.
* The seventh $7.
* The eighth $12.
* The ninth $18.
* The tenth man (the richest) would pay $59.
So, that’s what they decided to do. The ten men ate dinner in the restaurant every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve.
“Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily meal by $20.”
So, now dinner for the ten only cost $80. The group still wanted to pay their bill the way we pay our taxes.
So, the first four men were unaffected. They would still eat for free. But what about the other six, the paying customers? How could they divvy up the $20 windfall so that everyone would get his ‘fair share’?
The six men realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being ‘PAID’ to eat their meal.
So, the restaurant owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.
And so:
* The fifth man, like the first four, now paid nothing (100% savings).
* The sixth now paid $2 instead of $3 (33% savings).
* The seventh now paid $5 instead of $7 (28% savings).
* The eighth now paid $9 instead of $12 (25% savings).
* The ninth now paid $14 instead of $18 (22% savings).
* The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before. And the first four continued to eat for free. But once outside the restaurant, the men began to compare their savings.
“I only got a dollar out of the $20,” declared the sixth man. He pointed to the tenth man “but he got $10!”
“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar, too. It’s unfair that he got ten times more than me!”
“That’s true!!” shouted the seventh man. “Why should he get $10 back when I got only $2? The wealthy get all the breaks!”
“Wait a minute,” yelled the first four men in unison. “We didn’t get anything at all. The system exploits the poor!”
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn’t show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for
even half of the bill!
And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up at the table anymore. There are lots of good restaurants in Europe and the Caribbean.
David R. Kamerschen, Ph.D.
Distinguished Professor of Economics
536 Brooks Hall
University of Georgia
Why don’t you teachers practice what you’re preaching and take A’s from your best students and give them to your worst students the ones that didn’t study for the test. They must gain from the ones that did study right.
Excellent response David, that puts it in a way everyone can understand.
Thank you, Dillon! Informative, understandable, grimmly amusing, and good sense.
Dillon:
Your example has several flaws.
The first four hadn’t eaten that day and the 10th guy had 4 meals.
The top marginal rate hasn’t risen significantly on the federal level since the Reagan administration.
The 10th guy probably has another $150 in his wallet that he’s not telling anyone about.
If that 10th man wants to go to somewhere in Europe or the Cayman’s to eat, let him. He may find the bill to be higher. Don’t let him come back.
It is very telling that ths example does not mention the tip.
Dillon:
According to the website “Snopes”, the tax cuts story is erroneously attributed to Dr. Kamerschen.
See http://www.snopes.com/business/taxes/howtaxes.asp
However, it is an interesting analogy and I wonder why the original author doesn’t credit him/herself.
Why/How do people get the idea that poor people are lazy? What about the working poor? What about graduating from college and moving back in with your parents because you cannot find a job? What about finally taking a job at WalMart because you *need* a job, but knowing that doing so will damage your resume? What about continuing the job search and discovering that the starting pay for your profession of choice in your area is comparable to what your making at WalMart. Okay. Now do all of that with a young family. And, hey, you won the lottery and one of your kids has a severe learning disability requiring intense care and a daycare will simply not do. Oh, and the budget for the local CDS is cut to smithereens so you have to fight every step of the way for needed services (and you’re told that’s “just the way it is”).
Okay. You might feel disappointed and exhausted. Now imagine the finger-pointing and ridicule you have to endure by “successful,” “smarter,” “more industrious” people who accuse you of being lazy and are kind enough to point out that it is your own fault that you are poor. You had kids before you were financially ready. You didn’t marry money. You didn’t go to school long enough. You didn’t try hard enough to find a job. You weren’t willing to make the sacrifices necessary to be successful.
Thanks.
Hey Dillon,
a tragic story its to bad it doesn’t relate to this situation. Let me try my hand at story telling. Once upon a time there was a beautiful kingdom. Times in the kingdom were hard because of a world recession brought on by excesses in speculative greed by the money changers of the land. In one province of the kingdom a new chief steward was selected and declared he would restore the prosperity of the land. He claimed that he would correct the past wrongs where the funds held in trust for the servants of the realm had been misused by former stewards. Instead he decided to make those servants themselves pay a special tax to the kingdom. The servants would even have accepted this if the special tax had been used to restore the funds held in trust but instead the new steward decided to give the gold generated by this special tax to the only the richest of the kingdom. Sadly some friends and neighbors of the servant angry over the world recession and seeking someone to blame chose to be deceived by the new steward.
Fortunately the majority of the kingdom saw through the deception and insisted that if the servants must pay an extra tax to restore the funds then the steward would not be able to use those funds to pay for special favors to the richest of the realm.
Now back to your story. If you had said that the restaurant owner (Governor) decided to give a $20 discount to the 10th man (reduction of only the top income tax rate, and $1,000,000 increase in the estate tax exemption) while at the same time collecting an extra $10 from the 7th and 8th guys (increase in retirement contributions for state employees and teachers) then your story would apply. Then if you said that when the 7th and 8th (teachers and state employees) guys objected to the special tax the 6th and 9th guys (private sector employees) said “hey quit complaining we’re tired of paying for your dinner” and the 10th guy laughed all the way home you would have a story that matched our current situation.
tiredshoulders,
I work around 70 hours per week, and I have not gotten a pay raise for 3 years and will not get one for a while. My health insurance also goes up, as do my contributions for my mandatory retirement insurance, and I pay into social security and medicare as well. I won’t be able to retire until I’m 75 if I’m allowed to work that long. And guess what, I work for the state (I am not a teacher, though), meaning I make about 20% less than people in the private industry who have what I would consider a cushy benefit-package on top of the extra pay, and they even work less. Now, I could find a different job somewhere else, but I like it in Maine, and I would like to raise my family here. To accomplish that, I am willing to share the burden and return the money that we the taxpayers – because I also pay taxes – borrowed from the teachers’ retirement fund.
That’s because Mr. PHDs has have never had a job. So great, just like the president.
It is very funny that Hutch is using the Khan Institute as an example of how to cut the teaching force down to a bunch of hourly paid babysitters. If he would watch that TED Talk again he might see that what Salman Khan is actually doing is celebrating teaching and learning and supporting it through a revolutionary method of teaching. His videos are being used in the classroom as assigned homework so that in the class the teacher can go around and help each student one-on-one.
He talks about the school district in Los Alamos that is using his videos to flip the classroom. The students use the tutorials to study at night and then in the class they are doing problem sets. It allows for every student to be self-paced and his data shows that slow learners eventually become fast learners when given the opportunity to practice. But it is essential that the teachers are there to guide the students. Khan talks about the tight design loop that helps the institute adjust by taking feedback from the teachers.
This institute is not some way to get around paying for educators. Hutch, if you want to do that, just shift the money from education to the prison budget. You have to pay either way.