Petitions start for initiative to raise taxes on pensions

May 19th, 2009, 7:32 pm · 9 Comments · posted by Martin Wisckol, Politics reporter

Updated to reflect comments from the initiative’s author. New comments are in italics.

If it seems like Californians are making a big anti-tax statement today, it’s not stopping Paul McCauley, who wants a new tax on Californians who make more than $40,000 in pensions. Today, he cleared the first stage of bureaucracy and got the green light to begin collecting 433,971 signatures needed to get the measure on the ballot.

McCauley wrote me that this is, in fact, a way to reduce public pensions without violating existing contracts.

“The measure is not a tax - it is a pension cut, primarily a cut in
the outrageous public employee pensions. The measure is entitled a
pension ‘recovery,’ ” he wrote. “It was the only constitutional means of cutting them and is entirely in the spirit of the taxpayer rebellion underway.”

As you can see from the links below, the measure is called “Tax on pension distributions and health-care benefits” and is generally described as a tax in the text.

Analysis by state officials show the measure could raise $6 billion to $8 billion annually. Click here to see Secretary of State Debra Bowen’s press release on the initiative. Click here to read the complete text of the proposal.

After updating this, I received a second correspondence from McCauley:

“The measure taxes both public and private pension payouts. If I did not include the private pension payouts, the measure would clearly have been unconstitutional.

“The measure’s device is to cap public employee pensions by taxing the excess pension portion of the payouts; And thus ‘recover’ those
excesses.

“As one of your bloggers noted, the measure will also capture the
pension payouts of persons who flee California. Their pensions will be
subject to an excise tax as of the day of flight.

“The excise tax was necessary because Bill Clinton signed legislation
that prohibited Californa (among other states) from taxing the pensions of non-Californians, even though the pensions derived from services performed in California.

“This measure is as right wing a measure as one can get. It’s not a
total solution to the pension problem, but it is a good start, in my
opinion.

“Note that the Legislative Analyst’s Office (LAO) has calculated that the tax I propose could recover between $6-8 billion. The LAO has separately stated that California governmental units presently pay out $13 billion annually. Not all of that $6-8 billion is from public
pensions but I will hazard that 80% of it is.

“So, we’re talking about recovering as much as 50% of the payout and, recovering only from those whose pensions exceed $40,000.

“I think the measure has much merit from the point of view of either a leftwinger (progressive taxation)or a rightwinger (pension recovery).
Personally, I’m part leftwinger, part rightwinger.”

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Scott says:

May 20, 2009 at 7:04 am

So, California legislators approve all kinds of perks and increases to their pension plans over the years and now want to double tax them? As a CALPERS retiree, I will leave the state as soon as this is passed, and I don’t think I am alone. Bad idea. Better idea would be for California to stop padding the retirement plans. A deal is a deal, and anyone who met the requirements of the deals when they retired should not now be penalized by the same group that approved the plans in the first place.

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Drewsky says:

May 20, 2009 at 9:23 am

This guy is a well known nut; virtually everything he proposes is in violation of the U.S. Constitution, U.S. Tax Law and U.S. Public Law codes. I’m surprized the OC Register is even giving him the time of day.

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Mike says:

May 20, 2009 at 10:22 am

It wasn’t all that long ago that the U.S. Supreme
Court ruled California’s source tax unconstitutional. Until then, state retirees living in other states had to pay income tax in their styate of domicile AND CA incom tax on their pensions. This proposal wants to return to that former policy on at least a one-time basis. My wife and I are both state retirees and we’red moving out of state in the next couple of months. It’s issues like this that make California an undesireable place to retire.

Drewsky says:

May 20, 2009 at 11:48 am

Mike,

I don’t have the exact Public Law in front of me that this pertains to, but I believe it’s 104. I share your sentiment regarding the undesirable aspects of this state regarding ballot initiatives. Any goof with $200 and a head full of mush can qualify for the process. However, any backing source with the $ millions it takes to get the signatures is informed enough to know a few laws to begin with. Have a look at the CA Secretary of State website, under Ballot Initiatives. Surf just a little, and get a load of the list of proposals being circulated and introduced right now. There’s a number of them that appear legally sound, but the lion’s share are straight out of Flakeville and will never see the light of day.

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Stan Switek says:

May 20, 2009 at 11:02 am

The average CALPERS pension is $16,000 a year. About 1% of the pensions are over $100,000. Only safety employees can retire at 50. Not all public employees like those morons John & Ken claim.

My job was very difficult to attain. I had to go to college, stay out of trouble, refrain from drug use, stay in excellent physical condition, pay my bills on time and pass a very difficult an highly competitive exam process just to get hired. Then I had to undergo 5 month of very difficult training just to keep my job. Then I had to undergo another year of field training on probation being evaluated daily just to keep my job.

I worked nights, weekends, holidays. While most people were at home enjoying Christmas or Thanksgiving, I was out at some homicide scene or horrific accident involving a dead kid(s). Along with my fellow law enforcement professionals, I have seen & experienced things so horrible most people can’t imagine. I have done everything from pull dead kids out of pools to shoot it out with armed robbers.

I never complained. I showed up for work every day on time and did my job quietly. While you were sleeping, I was out there on patrol. When you called 911 in the middle of the night I was there as quickly as possible. If you hear a siren in the middle of the night, there was a good chance it was me going to an emergency.

I worked my butt off for over 30 years in law enforcement. I went into my career in peak physical condition. I could run 2 miles in just over 12 minutes. I could bench press close to 300 pounds. I could do 20 pull ups. Now, my neck, back, shoulders and knees are shot. I can barely sleep. I can barely get out of bed in the morning. Some days I can barely walk. I can barely raise my arms.

I was fortunate that when I was medically retired against my wishes, my retirement was such that I did not have to uproot my family and move. I earned every penny of my retirement and make no apologies.

ReilleyFam says:

May 20, 2009 at 2:41 pm

Instead of finding solutions to our problems it appears everyone in CA is a now a cannibal going after each other. It seems every sector of society is blaming the other and trying to do everything short of torture and execution.

What did Lincoln say; “a house divided cannot stand.”

Drewsky says:

May 20, 2009 at 4:47 pm

Public Law 104-95, 104th U.S. Congress, Jan 10, 1996:

“No State may impose an income tax on any retirement income of an individual who is not a resident or domiciliary of such State (as determined under the laws of such State) …

It then goes on to list virtually every type of retirement income McCauley lists in his latest litany of who’s to blame for the budget shortfall (including people who don’t even live here). I’d personally enjoy seeing a class action suit for Intentional Infliction of Emotional Distress brought against this man for his reckless and callous behavior toward elderly people. It still might happen; all he needs to do is to freak out the right political group of Seniors. (Let’s say for about $50 Millions, folks ?)

May 21, 2009 at 10:57 am

You can call it anything you want; it’s still an income tax on pensions. Also, it’s openly intended to impair the performance of a contract. Therefore, it’s in violation of the the U.S. Constitution, Article I, Clause 10.

Tom Adams says:

May 26, 2009 at 11:35 am

This is another of Mccauly’s now famous whacked nitiatives with a ZERO chance of passing legal muster——–

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