Pension Woes Could Lead To Tax Spike

[Valin]

Via Meadia:

 

10/20/12

 

Regular Via Meadia readers are well versed in the ups and downs of the public pension crisis unfolding across the country. Having promised future retirees generous plans, state pension funds are proving to be woefully underfunded, having made overoptimistic assumptions of future growth before the financial crisis hit.

 

Most people immediately jump to discussing what kinds of benefit cuts would be necessary to make the funds solvent again. But two researchers at the Washington Post are looking at the issue from a different angle: If the government were to pay off all its pension obligations over the next thirty years, how much would taxes increase?

 

Not surprisingly, a lot. On average, annual taxes would need to rise $1,385 per household to cover the cost of pensions without serious cuts to services. For New York residents it’s particularly bad—the authors estimate that taxes would need to rise a staggering $2,250 per year to make up the shortfall.

 

(Snip)