Pension spiking is the process whereby public sector employees grant themselves large raises or otherwise artificially inflate their compensation in the years immediately preceding retirement in order to receive larger pensions than they otherwise would be entitled to receive. This inflates the pension payments to the retirees and, upon retirement of the "spikee", transfers the burden of making payments from the employee's employer to a public pension fund. This practice is considered a significant contributor to the high cost of public sector pensions.Bob Brinker agreed with the caller that pensions in CA are a problem that need to be fixed.
Brinker said it was legalized fraud.
"The loser in the pension spiking is...I am tempted to use the word fraud, but it is legal.... legalized fraud.... the losers in that are the tax payers...."The caller pointed out the income tax rate in California is 9.3% of anything over $47,000. Brinker agreed with the caller that CA tax payers are very generous.
The caller probably missed my article here titled "2009 California Tax Rates" where I compare 2008 to 2009 and show the 9.55% rate for income of $46,439 and up.
Not only is the rate for California's top bracket going up 2.7% from 9.3% to 9.55% but California is lowering the income level at which this takes effect by 1.31% from $47,055 to "only" $46,439Brinker said:
"I know you have a very high sales tax (9.75% in Los Angeles and many other counties).Bob agreed with the caller that there is a problem in California where tax payers are "held up" by "pension spiking."
I guess in California.....kinda reminds of me of that old Johnny Cash song.... How high are the taxes Mama? Nine and a Half and rising!"
"It is a problem. Oh that pension fund spiking in the last few years of employment and the tax payers get HELD UP!"
It is positive feedback. Put more and more people on the government payroll, pay them well and of course they will vote for bigger government which will put even more on the government payroll. Add in "pension spiking" and you can see we have a problem.
By Noodles Aug. 30, 2009
Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 131% (over a double!) vs. the S&P500 DOWN 1.7% vs. NASDAQ down 7.9% (All through 9/5