Dirty Little Secret – Government Retireds Don’t Pay “Fair Share” Either

Several weeks ago, The (Baton Rouge) Advocate ran a huge spread about “tax giveaways” – tax breaks for industrial development, inventory tax credits, enterprise zones, etc. Basically, the series claims it’s “unfair” that selected people and industries get to keep some of their own money that would otherwise be seized by government because of some redeeming condition that would add to the “greater good.”

For example, a new plant could be exempt from paying sales taxes if employs so many people, and it stays in business for a certain length of time. The additional economic activity and resultant tax revenue would offset the exemption, so the theory goes.

See here the series: Giving Away Louisiana

The flaw in the theory is that it assumes ALL income – which is the economic manifestation of labor or creativity – belongs to government, and that government has first claim and should get to decide when/if you get to keep your own money.

However, we didn’t see any mention of one of the most prolific tax breaks in Louisiana: Government Retireds – federal, state and local – pay no state income tax on their retirement income.

In contrast, people who are retired from private industry, and receive pensions from those jobs, are exempt from only the first $6 thousand of that income.

Is there a list of retirement system benefits that may be excluded from Louisiana income tax?

Annual Retirement Income Exclusion (R.S. 47:44.1(A))—Persons 65 years or older may exclude up to $6,000 of annual retirement income from their taxable income. Taxpayers that are married filing jointly and are both age 65 or older can each exclude up to $6,000 of annual retirement income. If only one spouse has retirement income, the exclusion is limited to $6,000.

Federal Retirement Benefits Exclusion (R.S. 47:44.2)—Federal retirement benefits received by federal retirees, both military and nonmilitary, may be excluded from Louisiana taxable income.

State Employees, Teachers, and Other Retirement Benefits Exclusion—Individuals receiving benefits from certain retirement systems listed below are allowed to exclude those benefits from their Louisiana tax-table income. In addition, R.S. 33:7203 and R.S. 40:427.2(E) provide that Municipal and State Police Employees Retirement System deferred retirement option plan funds are exempt from state income tax.

R.S. 11:405 State Employees’ Retirement System
R.S. 11:570 Funded Judicial Retirement Plan
R.S. 11:1378 Non-contributory Judicial Retirement Plan beginning after December 30, 1980
R.S. 11:704 Teachers’ Retirement System
R.S. 11:704 Teachers’ Retirement System of Orleans Parish
R.S. 11:1003 Louisiana School Employees’ Retirement System
R.S. 11:1331 Louisiana State Police Pension and Retirement Fund
R.S. 11:1391 Pension for Confederate Veterans and Widows of Confederate Veterans
R.S. 11:1403 Assessors’ Retirement Fund
R.S. 11:1526 Clerks’ of Court Retirement and Relief Fund
R.S. 11:1583 District Attorneys’ Retirement System
R.S. 11:1735 Municipal Employees’ Retirement System of Louisiana
R.S. 11:1735 City of Baton Rouge Retirement System
R.S. 11:1735 Employees’ Retirement System of East Baton Rouge Parish
R.S. 11:1735 Employees’ Retirement System of City of Shreveport
R.S. 11:1905 Parochial Employees’ Retirement System
R.S. 11:1905 Employees’ Retirement System of Jefferson Parish
R.S. 11:3014 City of Alexandria Employees’ Retirement System
R.S. 11:3051 City of Bogalusa Employees’ Retirement System
R.S. 11:2033 Registrar of Voters Employees’ Retirement System
R.S. 11:2182 Sheriffs’ Pension and Relief Fund
R.S. 11:2228 Municipal Police Employees’ Retirement System
R.S. 11:2228 Policemen’s Pension and Relief Fund of the City of Shreveport
R.S. 11:2263 Firefighters’ Retirement System
R.S. 11:3140 Firefighters’ Pension and Relief Fund for the Consolidated Fire Districts Bastrop
R.S. 11:3161 Firefighters’ Pension and Relief Fund for Baton Rouge
R.S. 11:3171 Firefighters’ Pension and Relief Fund for Bogalusa
R.S. 11:3205 Bossier City Firemen’s Pension and Relief Fund
R.S. 11:3294 Lafayette (City of) Firemen’s Pension and Relief Fund
R.S. 11:3345 Monroe Firemen’s Pension and Relief Fund
R.S. 11:3389 Firefighters’ Pension and Relief Fund of New Orleans
R.S. 11:3513 City of Monroe Police Pension and Relief Fund
R.S. 11:3566 Policemen’s Pension and Relief Fund for Alexandria
R.S. 11:3568 Bossier City Policemen’s Pension and Relief Fund
R.S. 11:3608 Lafayette (City of) Policemen’s Pension and Relief Fund
R.S. 11:3658 Policemen’s Pension and Relief Fund for the Department of the City of New Orleans
R.S. 11:3691 Harbor Police Retirement System (Port of New Orleans)
R.S. 11:3770 Bus Drivers’ Pension and Relief Fund of the City of Monroe
R.S. 11:3800 Electrical Workers’ Pension and Relief Fund of the City of Monroe
R.S. 11:3823 Employees’ Retirement System of the Sewage and Water Board of the City of New Orleans
R.S. 11:3823 New Orleans (City of) Employees’ Retirement System
R.S. 17:1613 Louisiana State University Retirement System
R.S. 47:44.2 Railroad Retirement System Benefits
R.S. 47:44.2 Social Security Retirement Benefits
R.S. 47:52 Disability Pay to World War II Veterans
U.S.C.A. 45:231m Railroad Retirement Supplemental

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19 Responses to “Dirty Little Secret – Government Retireds Don’t Pay “Fair Share” Either”

  1. Webb Says:

    Deadhead on the state payroll, stinking to high heaven.

  2. tom Aswell Says:

    Right, and the next time someone is breaking into your house or your home is on fire, don’t call a “deadhead” cop or fireman; call Walter Abbott.

  3. tom Aswell Says:

    Walter, if you think Wal-Mart, which has revenues that exceed those of 161 countries, deserves tax breaks for building stories in upscale St. Tammany Parish and if you think handing out minimum wage jobs translates to economic benefit for St. Tammany, you are sadly mistaken.

    When a plan gets a $50 million gift from the state of Louisiana for taking over a chicken processing plant and then hires about 60 percent of its employees from Arkansas, where is the benefit to taxpayers?

    When the state hands out billions of dollars per year in tax breaks to industry, the burden for making up that giveaway is shifted to you and me. For the life of me, I don’t understand why you can’t see that.

    The middle class in this country is disappearing and by middle class, I don’t mean the so-called welfare queens. I mean people like you and me and just about everyone we know.

    And here is the most absurd part of your post: “the theory is that it assumes ALL income – which is the economic manifestation of labor or creativity – belongs to government, and that government has first claim and should get to decide when/if you get to keep your own money.”

    Walter, that is pure B.S. and you know it. There is no such assumption. Show me in black and white where it says anywhere that ALL income should belong to the government and show me where it says that government believes it should decide “when/if you get to keep your own money.”

    Here’s an idea for you to gin around: let’s just close down city hall, the court house, the state capitol, fire stations, police stations, schools, sewage treatment plants, rural electric generating stations, water systems, and all other services such as trash and garbage pickup. Let’s just board everything up and let everyone survive by their wits. No “deadheads” to process Medicare or Social Security claims, no military retirements, (but no private sector retirements, either—after all, fair is fair), no courts to settle disputes with your neighbor or to prosecute those who would harm you, no Border Patrol to turn back the hordes of Latinos who want a better life in America (but it probably wouldn’t be better if the conditions I describe exist) and, of course, no military to protect us from the Hitlers of the world.

    That’s call anarchy and while you may deny it until hell freezes over, that’s precisely what you and the tea party are advocating when you single out public employees as your scapegoat for all that’s wrong in society.

    I’m going to propose a little wager for you, Walter:

    I will bet you lunch (and dessert) that the tax breaks for business and industry in this state far exceed the benefits to retired state employees. And that is easy to quantify, so the ball is in your court.

    (And before you say it, I can show you example after example of how these tax breaks (especially the Enterprise Zone program) fail to deliver on those grandiose promises of jobs and economic benefit.

    Do we have a bet? You have my email address so let me hear from you.

  4. Anonymous Says:

    Everything said above is true. The dirty little secret that all market-oriented conservatives have always known is that big businesses are the biggest “welfare queens.” The technical term is “rent-seeking.” All the state is doing is picking winners and losers in the market.

    The other point the series made is the “give-aways” are not just tax-breaks. In some cases – like for our Duck-friends in the delta – there are large subsidies in place. The state is actually paying to make those shows. If you don’t have a problem with that, then you are not a conservative. You are a populist. Big difference.

  5. Webb Says:

    Government employees are wards of the state.

    • Oldman Says:

      There’s no difference between state retirement and social security,the Gov. picks up the difference between what you pay in and what you draw. Most people draw out a lot more than they pay in,so you also are on the Gov. dole,shame on you.

  6. Oldman Says:

    Walter, having a municipal retirement is nice,I worked 20 years for it.I made a lot less than other jobs paid with no social security held out.I can not draw social security from those years. Medicare was the only thing held out.So please don’t talk bad about the state retirement. It helps to make ends meet,without it I would be in trouble.

  7. Oldman Says:

    By the way I am a conservative republican.

  8. Donald Maroon Fouler Says:

    I had no idea that government employees were such delicate special snowflakes concerning an income derived from taxation—the taking of citizen’s money at the point of government’s gun. Pass the popcorn, this is gonna get good.

  9. ShowMeResults Says:

    Nothing wrong with someone drawing a retirement pension, whether it is from government or from the private sector. Nothing wrong with them drawing social security provided they’ve been paying into social security. Here’s a novel idea: If governmental retirees are tax exempt, why should anyone’s retirement money be taxed by Louisiana if they’re 65 or over? Drop the $6,000 exclusion limit. Recoup revenue by cutting the length of Legislative sessions in half, reducing legislator staff and expenses, and closing all those fancy apartments the taxpayers fund for hotshot leges. What a novel idea! Oh yeah, I know, it ain’t gonna happen.

  10. Anonymous Says:

    Walter, government employees are not bad people. Many professionals in government could make a great deal more money in the private sector but instead sought opportunities to serve their communities. Sure, some manipulate the system but government service can be a sacrifice compared to pursuing similar careers in the corporate world. The perks of government employment you so despise are nothing compared to what many corporations offer as incentives.

  11. Anonymous Says:

    Walter, please check out why Ruston Police have all but cut off all communications with the public. I’ve been told we’re in a massive crime wave, especially house breakins, and the PD tells us nothing. That department once prided itself on keeping the public informed–good and bad. They once had a Facebook page, frequent news stories in the papers, even appearances at civic and neighborhood meetings. Now we know nothing.

  12. Anonymous Says:

    Walter, you conveniently overlook another income tax exemption included in your own citation: R.S. 47:44.2 Social Security Retirement Benefits. Because government employees do not receive Social Security benefits, also exempting their retirements puts them on a level field with all other retireds that do not pay state income taxes on their Social Security retirement benefits. Otherwise, as a retired receiving Social Security benefits exempt from state taxes, you should be complaining about your own sucking at the government teat. Another dirty little secret: Walter isn’t paying his “fair share.”

    • Walter Abbott Says:

      Except that pensions from private employers ARE taxable to the State of Louisiana for amounts over $6 thousand/year. NO government pensions – local, state, or federal – are taxable to the State of Louisiana at any amount whatsoever.

      • Anonymous Says:

        Nice way to dodge the issue, Walter. With that mastery of double speak you should run for political office. Social Security benefits are not taxed at the state level. State employees contribute to the various retirement systems in lieu of Social Security, and these benefits are also not taxed at the state level. Like employees of the private sector, if state employees invest in additional retirement vehicles, retirement income from those sources for the state employees is taxed to the same extent. Again, Walter, you cannot dodge that Social Security benefits and state retirement benefits are taxed exactly the same at the state level — those exemptions are spelled out in just one section of the state statute.

        • Walter Abbott Says:

          Full retirement age for Social Security is 66, with reduced benefits available at 62. Meanwhile, government retireds often quit work in their 50s, and begin collecting untaxed benefits at that time.

          Private sector employees have no such benefit, and must continue working and paying state taxes to fund the government retireds.

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