According to the State House News, Massachusetts Treasurer and candidate for Governor Tim Cahill told labor leaders today that Charlie Baker and Governor Deval Patrick were, “looking for cheap headlines,” by proposing plans to reform the pension system.
Baker immediately fired back at Cahill this evening, issuing the following statement:
“By defending our broken and out-of-control pension system, Tim Cahill revealed his true stripes as an out-of-touch Beacon Hill insider who places special interests before the interests of taxpayers. Defending a bloated pension system that rewards political insiders sends a clear message to voters that Tim Cahill believes there are two different standards – one for the well-connected, and another for everybody else. My pension reform plan will reform the pension system, end abuse, and make it fair to the taxpayers and to pensioners. Let’s put an outsider in charge of Beacon Hill.”
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Cahill is smart enough to know that the Governor should have had a room full of tax attorneys (one’s versed in defined benefit plans) before he went looking for populist cudos on pension reform. This reform plan will be challenged in federal tax court for discrimination against elected officials earning less than $ 5,000 from less affluent communities with no difference in job classification from their counterparts in wealthier communities paying more than $ 5,000. Federal Tax code only allows participation and pension vesting eligibility based on length of service, age, bargaining rights, and job classification (only if a valid business reason for the classification exists…not just saving money, and certainly not based on one’s gross salary). It’s a no brainer that could render the Mass Pension Defined Benefit Plan from qualified plan status under the Internal Revenue Code. Only someone of Cahill’s caliber (inside understanding of tax and finance)could understand that. I doesn’t mean to me that he’s soft on Pension abusers.