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Unions and Polls


An interesting piece coming out of the NYTimes today regarding public sentiment on the activity in Wisconsin.

Majority in Poll Back Employees In Public Unions

As labor battles erupt in state capitals around the nation, a majority of Americans say they oppose efforts to weaken the collective bargaining rights of public employee unions and are also against cutting the pay or benefits of public workers to reduce state budget deficits, according to the latest New York Times/CBS News poll.

Labor unions are not exactly popular, though: A third of those surveyed viewed them favorably, a quarter viewed them unfavorably, and the rest said they were either undecided or had not heard enough about them. But the nationwide poll found that embattled public employee unions have the support of most Americans — and most independents — as they fight the efforts of newly elected Republican governors in Wisconsin and Ohio to weaken their bargaining powers, and the attempts of governors from both parties to cut their pay or benefits.

Americans oppose weakening the bargaining rights of public employee unions by a margin of nearly two to one: 60 percent to 33 percent. While a slim majority of Republicans favored taking away some bargaining rights, they were outnumbered by large majorities of Democrats and independents who said they opposed weakening them.

Those surveyed said they opposed, 56 percent to 37 percent, cutting the pay or benefits of public employees to reduce deficits, breaking down along similar party lines. A majority of respondents who have no union members living in their households opposed both cuts in pay or benefits and taking away the collective bargaining rights of public employees.

Governors in both parties have been making the case that public workers are either overpaid or have overly generous health and pension benefits. But 61 percent of those polled — including just over half of Republicans — said they thought the salaries and benefits of most public employees were either “about right” or “too low” for the work they do.

When it came to one of the most debated, and expensive, benefits that many government workers enjoy but private sector workers do not — the ability to retire early, and begin collecting pension checks — Americans were closely divided. Forty-nine percent said police officers and firefighters should be able to retire and begin receiving pension checks even if they are in their 40s or 50s; 44 percent said they should have to be older. There was a similar divide on whether teachers should be able to retire and draw pensions before they are 65.

The nationwide telephone poll was conducted Feb. 24-27 with 984 adults and has a margin of sampling error of plus or minus three percentage points for all adults. Of those surveyed, 20 percent said there was a union member in their household, and 25 percent said there was a public employee in their household.

Tax increases were not as unpopular among those surveyed as they are among many governors, who have vowed to avoid them. Asked how they would choose to reduce their state’s deficits, those polled preferred tax increases over benefit cuts for state workers by nearly two to one. Given a list of options to reduce the deficit, 40 percent said they would increase taxes, 22 percent chose decreasing the benefits of public employees, 20 percent said they would cut financing for roads and 3 percent said they would cut financing for education.

The most contentious issue to emerge in the recent labor battles has been the question of collective bargaining rights. A proposal by Gov. Scott Walker of Wisconsin to weaken them sent Democratic state lawmakers out of state to prevent a vote, flooded the Capitol in Madison with thousands of protesters and sparked a national discussion about unions.

The poll found that an overwhelming 71 percent of Democrats opposed weakening collective bargaining rights. But there was also strong opposition from independents: 62 percent of them said they opposed taking bargaining rights away from public employee unions.

Phil Merritt, 67, a retired property manager from Crossville, Tenn., who identifies himself as an independent, explained in a follow-up interview why he opposed weakening bargaining rights for public workers. “I just feel they do a job that needs to be done, and in our country today if you work hard, then you should be able to have a home, be able to save for retirement and you should be able to send your kids to college,” he said. “Most public employees have to struggle to do those things, and generally both spouses must work.”

The one group that favors weakening those rights, by a slim majority, was Republicans. Warren Lemma, 56, an electrical contractor from Longview, Tex., said states did not have the money to pay for many benefits that state workers enjoy.

“Retirement benefits should not be taken away from those about to retire, but the system should be changed for the people starting to teach just now,” said Mr. Lemma, a Republican. “And the only way the system will change is to do something about unions and their control, and the only way to do that is to take away collective bargaining.”

The poll found that 45 percent of those surveyed said they believed that governors and state lawmakers who are trying to reduce the pay or benefits of public workers were doing so to reduce budget deficits, while 41 percent said they thought they were doing so to weaken unions’ power.

Although cutting the pay or benefits of public workers was opposed by people in all income groups, it had the most support from people earning over $100,000 a year. In that income group, 45 percent said they favored cutting pay or benefits, while 49 percent opposed it. In every other income group, a majority opposed cutting pay or benefits: Among those making between $15,000 and $30,000, for instance, 35 percent said they favored cutting pay or benefits, while 60 percent opposed it.

Labor unions, including private sector labor unions, are seen as less influential now than they were three decades ago. The poll found that 37 percent of those surveyed believe that labor unions have “too much influence” on American life and politics, while 48 percent said they had the “right amount” or “too little” influence. In a 1981 poll, by contrast — soon after President Ronald Reagan fired striking air traffic controllers — 60 percent of those surveyed said unions had “too much influence.” Of course, union membership has declined since then.

 

 

Wake Up, New York

A recent Op-Ed in the New York Post by John Faso, discusses the shrinking population in New York State and its implications for the future.

Faso surmises that New Yorkers are fleeing the state — most famously Rush Limbaugh —  because of high taxes and dismal job prospects. Our state is nearly bankrupt and has been increasingly burdensome and hostile to businesses in recent years. The population decline means a loss of two more seats in the House of Representatives. More importantly, this means that New York is no longer as powerful as it has been in terms of policy.

Faso reminds us about the challenges we as New Yorkers face and what we can do to surmount them.

NYC Pensions: Too Much

Catching up on some old reading this weekend, I wanted to share Bloomberg’s wry observation of the current state of the NYC pension fund.

“It’s overstating it a little bit to say the only one who’s done that well is Bernie Madoff, but 8% for a long period of time is not something that very many pension funds have ever achieved.”

Gotta say, I love how Bloomberg (correctly) compares the pension fund to fraud. It’s just like Social Security, the biggest Ponzi scheme of all.

Because some content on Crains NY is subscriber only, I’m reproducing the article below. It’s a good read.

NYC pensions promise too much, mayor says

Mayor Michael Bloomberg says the defined benefits in the city’s pension plans are too expensive and will drive more municipal projects into the private sector.

(Bloomberg)-New York Mayor Michael Bloomberg said city pension funds have set unrealistically high assumed rates of return on investments, at 8%, which may require spending more than has been budgeted for retirement benefits.

“It’s much too high an assumption for us; I think it should be lowered,” Mr. Bloomberg said Monday at a news briefing. “That’s going to require the city to put in more money. It’s very difficult to see where we could get the money to do that.”

The city, which must balance its budget or face a state takeover of operations, has to close a $3.3 billion budget gap projected for fiscal year 2012, which starts July 1. The deficit is forecast to grow to $4.8 billion in 2014, a period in which officials expect pension costs to increase to $8 billion in 2014 from $7.6 billion now. Last month, the state pension fund cut assumed returns to 7.5% from 8%.

The real problem, the mayor said, is the pension system itself, which provides defined benefits that can’t be reduced under guarantees the Legislature has placed in the state constitution. While it permits new, less-expensive benefit tiers for future employees, savings wouldn’t be realized for 10 or 15 years, Mr. Bloomberg said.

“We’ve been trying to get the governor and the Legislature to vote a fifth tier,” Mr. Bloomberg said. “They won’t do it unless the unions ask them to.”

“The taxpayers don’t want to pay for it and the economies of the world don’t really support those kinds of plans anymore,” the mayor said.

Without a change, Mr. Bloomberg said, the municipal work force will shrink, because the city won’t be able to afford a payroll of the current size and cover retirement benefits at the same level as today. The city employed 302,436 in May, according to a mayoral spokesman.

“We’re going to try to farm things out to the private sector more because the municipal workers just cost too much,” the mayor said. “The bottom line is, you can see in this country, the public is frustrated, they don’t want to spend any more money.”

Representatives of city Comptroller John Liu, who acts as the steward of city pension funds, didn’t immediately comment on the mayor’s remarks.

The state’s $124.8 billion pension fund, the nation’s third-largest, reduced the assumed rate of return on its investments as it recovers from market losses, Comptroller Thomas DiNapoli said. Mr. DiNapoli, the sole trustee of the plan, said state and local government employers’ payments to the fund will increase to about 16.3% of payroll in February 2012, from 11.9% due in February 2011. The fund covers 1 million current and retired government workers.

New York City’s five pension funds provide retirement benefits for its police, firefighters, school employees and civil-service workers with more than $103.8 billion in assets under management as of March 31. On Sept. 28, its largest plan, the New York City Employees’ Retirement System, which covers more than 180,000 active and about 130,000 retired workers, reported a 14% return in fiscal year 2010, which ended June 30.

“Some years you make money, some years you don’t,” Mr. Bloomberg said. “It’s overstating it a little bit to say the only one who’s done that well is Bernie Madoff, but 8% for a long period of time is not something that very many pension funds have ever achieved.”

NY Income Drops

Reuters reports a drop in the personal income of NY residents for the first time in 70 years:

The recession put a 3.1 percent dent in the personal incomes of New York state residents, who endured their first full-year decline in more than 70 years, according to a report released Tuesday. Paychecks or net earnings tumbled 5.4 percent, while dividends, interest and rent slid 8.4 percent, to a grand total of nearly $908 billion, the state comptroller’s report said. Not only did New Yorkers’ personal incomes fall “almost twice” as much as they did in the nation as a whole, but they have yet to recover to pre-recession levels, Comptroller Thomas DiNapoli said.

The situation is likely to worsen if higher taxes prevail in the next year. NY must cut spending  and reconcile the public-private earnings divide if it wishes  to see real economic recovery.

http://www.cnbc.com/id/39531849

Limbaugh Was Right

Seems that El Rushbo was correct when he chose to vote with his feet last year and leave New York City.

Back in early 2009, Limbaugh warned that impending tax hikes on New York City residents would crush a top income earner like himself, and cited these taxes as the reason why he was leaving NYC for good. Now there’s even more proof that’s true. According to a recent study by the Tax Foundation, if Obama’s tax plan is adopted by Congress, “state, local and federal levies would result in a top 50.8 percent rate on high-income New York City residents”.

That’s half of your money– not yours anymore.

The rest of the article is a worthwhile read regarding the impact of Obama’s plan on taxes, deductions, and exemptions in different tax brackets. As a practicing NYC CPA, whose clientele is composed of many of these highest income earners, the news is grim indeed.

http://www.bloomberg.com/news/2010-09-22/new-york-hawaii-top-earners-face-highest-tax-under-obama-plan-study-says.html

NY Senate Race & Rasmussen

Rasmussen polling has Democrat Kirsten Gillibrand in a double-digit lead going into the homestretch before NY’s upcoming primary to select a Republican challenger. Yesterday, Rasmussen released the results of its latest poll, giving her 51% over her opponents.

However, there are a few interesting things to note, reminding us how inaccurate polling really can be:

*Still, “over 15% of voters are either undecided or prefer another candidate in both match-ups”, a big vote swing. Likewise, “the margin of sampling error is +/-4.5 percentage points”.

*”More than 40% of voters in New York do not know enough about any of the three GOP candidates to venture even a soft opinion”. That’s nearly half.

*”Gillibrand is viewed Very Favorably by 25% and Very Unfavorably by 22%”. Both extremes  have close numbers.

* New Yorkers overwhelmingly cite “the economy” as their top concern (52%), with domestic issues far behind in second place at 13%. The Democrats’ current policies are worsening our economic recovery.

September 14th is Primary Day to chose the challenger who will face win against Gillibrand in November.

The Tax Man Wants A Slice of the…Bagel?

Bagel lovers, beware! In order to provide more tax revenue for the cash-strapped state, NY plays Goliath to the Brueggers bagel company.

Picking out some obscure tidbit in the state sales tax law, NYS has successfully forced this company to cough up additional tax revenue…on sliced bagels and items eaten in-house.  A nice chunk of dough for the tax man, indeed.

Interestingly enough, the rule isn’t explicitly stated in the tax code. Some sliced items (bagels) are taxable, but others, such as sliced bread, are not. These differences are inconsistent at best. Worse, they’ve only targeted Brueggers– presumably because it owns 33 franchises.

Seems as if the State Department of Taxation doesn’t even know its own code; the WSJ reports that NYS “will provide additional guidance via our Web site and publications in the near future.“. Guess they can continue to make up the rules as they go along and as needed. In New York, what else is new?

http://online.wsj.com/article/SB10001424052748704340504575448033463314628.html?mod=WSJ_NY_LEFTTopStories

NY State–We Punish You for Withholding the Correct Amount of Tax

Everyone knows about withholding—it’s the money taken out of our paycheck. It is an attempt bythe government, on a pay-as-you-go basis, to collect from you over the course of the year, the amount of tax you would owe for that year.

The various taxing authorities provide specific rules to employers as to how to withhold on regularpaychecks. There are special rules or withholding on bonuses, and other forms of pay (stock option exercises, taxable fringe benefits, etc.) that are over and above regular pay. Commonly, withholding on bonuses are at a fixed statutory rate, normally near the maximum tax bracket of the jurisdiction.

But during the Cuomo years, NY State decided that they could ease their annual budget problems by requiring withholding on bonuses and special payments at a rate approximately 1/2% higher thanthat maximum tax bracket. For those  with  large  bonusesthis could commonly lead to large refunds at tax  filing  time,  but in  general  amounts tended to be small and no major aberration results.

For those employers paying very large bonuses and/or special payments, it is not uncommon foremployers to reduce the withholding so that withholding actually approximates the employees realtax obligation. After all, the objective of withholding  is to have your liability paid on an ongoingbasis.

But apparently NY State has lost sight of this. It is spending our tax dollars to send examiners into the field in order to go after those who are trying to withhold  the  correct amount of tax.

In a case with which I am familiar, the State Department of Taxation is attempting to fine an employee for not withholding taxes at levels that would have caused the taxpayer to have a $300,000  overpayment. This is not pay-as-you-go, this is extortion pure and simple.

Whose money is it anyway?