Public pensions should be subject to state income tax
In the Oct. 22 News, there was an article indicating some of the highest school-employee pensions in New York State. The pensions are what they are, what they were bargained for, and were under the old Tier 1 program, which has been discontinued.
What is an outrage is the amount of New York State income tax the recipients pay. Should two of the retirees with $300,000-plus pensions be married, the following example could be a reality.
Gross New York pensions for husband and wife: $600,000 (two at $300,000 each).
Social Security benefits: $60,000 (two at $30,000 each).
403B distributions: $40,000 (two at $20,000 each).
Total New York income: $700,000.
Total New York income subject to state income tax: none of it!
Working couple toiling for barely minimum wage: $50,000 (two at $25,000).
Total New York income subject to state income tax: $50,000 – all of it!
It is bad enough that the taxpayers are funding these pensions, but the recipients avoid New York State income tax as well.
There is no rationale for private sector pensions to be taxed and public pensions to be excluded. Where is the outrage?
Robert B. Carroll, CPA