Unions have used unsustainable pension benefits as a weapon against corporations and governments for decades. In most cases, both sides spent much of that time unconcerned about the damage their game would do to their successors and, primarily, to the people paying the bills -- shareholders and taxpayers.
Most corporations and many governments have figured this out. Kentucky's politicians remain largely oblivious.
This, from WSJ.com, may help:
"Normally, companies can deduct the cost of deferred comp only when they actually pay it, often many years after the obligation is incurred. But Intel's contribution to the pension plan was deductible immediately. Its tax saving: $65 million in the first year. In other words, taxpayers helped finance Intel's executive compensation."
Taxpayer-financed executive pay will be red meat for the anti-corporate types. If it wakes them up to Kentucky legislators' pension scam, perhaps we will be on the way to really repairing our own unsustainable public employee benefits system.
2 comments:
So what is the problem here? Intel uses its cash - $65 million - to pay an expense to the corporation, its pension obligation. Because this is a legitimate expense to the shareholders, it gets to deduct it from its gross revenues, thereby reducing its net income. Why is this labeled as being funded at taxpayers' expense? What am I missing here?
You aren't missing anything. The reporter of the article I quoted is editorializing. The point is that those on the left who won't flinch if they think only the taxpayer is getting screwed might be spurred to action if they think some corporation is getting a special benefit. Just trying to engage the other side in an issue we should all be able to agree needs attention.
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