Guest Column / An unfair burden for state's private-sector workers
Last month, many working people in Connecticut began paying more in state income taxes. When they got their first paychecks after Aug. 1, they saw the effect of both the increase in the tax rate and the double whammy -- our governor's decision to make it retroactive to Jan. 1, 2011.
Paychecks were reduced for single people earning $50,000 or more a year ($100,000 for couples). The cut reflects both the higher tax rate and the fact they owed back taxes -- even though they did not know about it or plan for it. The higher taxes have to be made up for January through July.
Sound fair? I think not.
To understand the result of this new, retroactive tax, I asked some workers in my own office how the increase will affect them. Many said they were concerned that they had not planned for the extra expense, and they'll have to cut back on spending to make ends meet.
That means fewer restaurant meals and spending less on clothing and other goods. That, in turn, cuts the income of waiters and waitresses who depend on tips and reduces the sales of restaurants and retail stores. And that will reduce the state's sales-tax revenues, while costs continue to rise. It looks to me like this will hurt the middle class the most.
What makes matter worse, the governor told us he would do all this in return for $1.6 billion in labor-cost reductions. His deal with state labor unions is unfair to people who work in the private sector.
The agreement guarantees no layoffs for four years. If the country experiences any further economic slowdown or recession, our governor has now guaranteed state workers full employment. That severely limits the state's ability to lower its labor costs in response to any future economic change.
Is your job guaranteed for the next four years? If the economy slows down again -- and clearly, things are not looking very good right now -- could you lose your job if your company needs to cut costs? Why is there such an unfair disparity between government workers and private-sector employees? Will we once again have to bear the burden of Connecticut's high government costs with further tax increases?
Adding insult to every private-sector worker, the new labor agreement continues the horrible practice of allowing government employees to use overtime in their last three years of employment to boost their pension payments.
What's more, the governor acknowledged this to be a real financial burden for the state but decided not to address the issue until 2022. That is more than a decade from now. So for the next 11 years, the state's pension liabilities will continue to increase as workers enhance their retirement packages with overtime. And who will pay for the increased liability? You and me.
It is frustrating that our political leaders refuse to address the tough issues we face in the coming years and instead use tax increases to help make up for the bad decisions.
One last point: President Obama in his new jobs package raises taxes for people making $200,000 or more. Feel any better yet?
Bart Shuldman lives in Westport.