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> Teachers have walked out today in protest of a bill that did not affect any current state employees. That bill is essentially a reduction in compensation for

> Teachers have walked out today in protest of a bill that did not affect any current state employees. That bill is essentially a reduction in compensation for future employees, isn't it? You might not agree with their priorities, but there's nothing irrational about teachers objecting to that. > The NEA/KEA especially has vehemently disagreed with any proposed reform. Did any of the proposals include just raising taxes to fix the pension fund? Mathematically, it's not like there is really a wide array of options if you're going to honor the constitutional "inviolability" of that contract (which I'm sure the teachers want KY to do) and actually keep the pension going.

oflannabhra 9y ago
KY annually generates $2,600 of revenue Per capita through taxes. There is an estimated $15,000 liability Per capita over the next 30 years. That is if nothing gets worse. Some oversimplified calculation: $15,000 over 30 years would be $500/year, equivalent to a 20% tax increase. Increased taxation cannot resolve the crisis alone. But, the larger point is that there has not yet been any reform of the current situation
- zeypher 9y ago
  Kentucky's state income tax rate is between 2-6%. If it would only take 20% increase in state tax receipts to make their pension system solvent, that's just a little over 1% increase in effective tax rate, which would still leave KY in the lower half of states by tax burden. If you make the tax rate change a bit more progressive, say 2% at the top, it could be zero change in income tax burden at median income and below. Kentucky also gives favorable tax treatment to retirement and pension income, so if you wanted to reduce a percived moral hazard of who pays and who benefits, KY could simultaneously reduce the preference given to lower the required rate changes further. Increased taxes can solve the situation fairly trivially, and still leave KY in the middle of the pack for total tax burden.
- justin66 9y ago
  > Increased taxation cannot resolve the crisis alone. None of the numbers you mentioned support that conclusion at all.
ng12 9y ago
> You might not agree with their priorities, but there's nothing irrational about teachers objecting to that. I mean if your lifeboat is sinking why would you insist on cramming more people on? Axing pension benefits for future employees is much preferable to what would happen to current ones if the state goes bankrupt.
- justin66 9y ago
  > Axing pension benefits for future employees is much preferable to what would happen to current ones if the state goes bankrupt. I assume the teachers understood that those are not the only two options.

oflannabhra 9y ago

KY annually generates $2,600 of revenue Per capita through taxes. There is an estimated $15,000 liability Per capita over the next 30 years. That is if nothing gets worse. Some oversimplified calculation: $15,000 over 30 years would be $500/year, equivalent to a 20% tax increase. Increased taxation cannot resolve the crisis alone. But, the larger point is that there has not yet been any reform of the current situation

zeypher 9y ago
Kentucky's state income tax rate is between 2-6%. If it would only take 20% increase in state tax receipts to make their pension system solvent, that's just a little over 1% increase in effective tax rate, which would still leave KY in the lower half of states by tax burden. If you make the tax rate change a bit more progressive, say 2% at the top, it could be zero change in income tax burden at median income and below. Kentucky also gives favorable tax treatment to retirement and pension income, so if you wanted to reduce a percived moral hazard of who pays and who benefits, KY could simultaneously reduce the preference given to lower the required rate changes further. Increased taxes can solve the situation fairly trivially, and still leave KY in the middle of the pack for total tax burden.
justin66 9y ago
> Increased taxation cannot resolve the crisis alone. None of the numbers you mentioned support that conclusion at all.

ng12 9y ago

> You might not agree with their priorities, but there's nothing irrational about teachers objecting to that. I mean if your lifeboat is sinking why would you insist on cramming more people on? Axing pension benefits for future employees is much preferable to what would happen to current ones if the state goes bankrupt.

justin66 9y ago
> Axing pension benefits for future employees is much preferable to what would happen to current ones if the state goes bankrupt. I assume the teachers understood that those are not the only two options.