Fairness – you hear that word a lot today. “I will make sure they pay their fair share” is something we hear constantly from politicians about taxes. The first income tax code was established by President Abraham Lincoln to fund the war effort and was repealed in 1872. It was reestablished in 1913 under President Woodrow Wilson. The income tax is called progressive because the rate of taxation increases with the rate of earning. The rates have varied, with President Franklin D. Roosevelt raising it eventually to 90 percent. The motives and subsequent outcomes have been argued since it all began, but “fairness” has been the central point on both sides throughout.
In 1935, the Social Security Act established a system of old-age benefits for workers. The Social Security tax was put in place by the Roosevelt Administration to provide a safety net for folks in retirement whose savings or pensions were inadequate. The Social Security tax and payment system is also progressive, meaning it replaces a larger percentage of lower incomes and a smaller percentage of higher incomes. Payments are based on a person’s highest 35 years of earnings in which Social Security income (SSI) taxes were paid to determine basic benefits at retirement age.
Both income tax and SSI taxes are important issues for cops, firefighters, teachers, and others with government pensions, because as public servants you are not treated fairly-quite the opposite: You are penalized for being a true public servant and a hard worker.
The definition of fairness has been debated since time immemorial. Aristotle chimed in when he was speaking about distributive justice. He said, “What is just is what is proportionate.” What he meant is that things should be divided among people in proportion to their worth or merit. So if we go with Aristotle, we should get back in some equally proportionate measure what we contribute, same as everyone else. The more our contributions to the overall effort, the more our compensation or gains should be. This seems fair.
His name was Rick. In the late ’60s, he was drafted and sent to Vietnam. He served with distinction and returned home in one piece. He always wanted to be a firefighter, and his dream came true when he was hired by the Albuquerque (NM) Fire Department. Rick served again with distinction prior to his retirement in the late ’90s. He had earned his pension: 70 percent of his highest three years’ salary-a pension he had contributed approximately 16 percent of his gross earnings to as his contribution every payday. But, as a firefighter, Rick was exempt from paying Social Security taxes. So on retirement from the fire department, where no SSI taxes were deducted, he would not be eligible at age 62 to collect from Social Security-a fund he had not contributed to. Fair enough, no complaints.
But Rick had worked other jobs where he paid SSI before and during his firefighting career. Rick retired in good shape and soon landed a job with a major southwestern airline working the tarmac and baggage side of the operation. Rick would do another 20-plus years and then retire again. His pension, now 20 years old in salary terms, was very modest, and the government that guaranteed it had already changed the deal by taking away some of his cost-of-living adjustment; but, having paid Social Security now for 20-plus years, he would have that to help ease his financial issues in retirement. When Rick finally retired, he discovered that because of two federal programs-the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO)-his SSI benefits could be reduced by two-thirds of his pension, and his wife as a survivor (should he pass) would suffer the same fate.
In 1983, the government, led by President Ronald Reagan, enacted the WEP and the GPO. The intention was to correct the benefits computation of SSI, which mistakenly identified cops and firefighters as low-wage earners. However, the WEP and the GPO do not fairly correct the issue. They unfairly penalize those who worked two jobs while on the job or a second job after retirement with a government pension.
Basically, if you receive a government pension, you are not eligible for full Social Security, unlike everyone else. You may only receive a portion of your benefit unless you contribute a “significant” amount into SSI for 30 years. It was designed to prevent “double dipping,” but some government pensions, like railroad workers, are exempt. It is a complex system like most government systems; and, despite its best intentions, it is neither fair nor just.
Today, there are three pieces of legislation: H.R. 973 and S. 1651 are identical bills that repeal both the WEP and the GPO. Known as the Social Security Fairness Act, it will reverse this unfair law and allow cops, firefighters, and school teachers full access to any Social Security benefits they fairly earned in employment in which they paid into Social Security like everyone else. Unfortunately, the legislation has been stalled in the Committee on Finance since June 2015. There is also H.R. 711, which reduces the WEP penalty on an individual’s Social Security benefits. H.R. 711 affects those already being penalized by the WEP and those who will eventually be penalized by the WEP. Every firefighter organization should have support of these bills paramount on their agenda. Firefighters all agree that how we treat people defines our culture. We all agree that “We leave no one behind,” and we recognize the truth in “What is just is what is proportionate.” Thank you, Aristotle. All we want is our fair share.
Fire Engineering Archives