I was disturbed by your editorial position as it relates to the taxing of retiree pensions. While I appreciate the state’s need for more revenue, I disagree with going after more pension-retirement income.
Your position also is designed to target taxing the more affluent retirees and I would make the case that it is this group who the state should be trying to recruit. With the aging of America, the state should be promoting itself to attract affluent retirees with their large stable retirement incomes. These folks will spend more money. consume more goods and create more tax revenue than the state will ever collect by taxing more of their retirement income.
State competition for their consumption dollars is very high and it’s shortsighted and naive not to recognize that the service-sector economy in the Bluegrass State needs the long-term positive impact that their retirement incomes will provide.
Just Google “retire Tennessee” or pick another state and see how much marketing is going into attracting and retaining this population and their stable retirement incomes.
Kentucky should endeavor to keep this money in the state and also strive to attract more of it — just like it does when it offers tax incentives to revenue-producing businesses. Taxes are one of the main considerations this segment of the population looks at when analyzing if they will be able to maintain their lifestyle in retirement.
Over the next 10 to 20 years, a large portion of the country’s population will be retiring and while not everyone will find it financially easy to retire, those retirees who have stable pension incomes will be considered by many to be a state’s most valuable economic asset. Your editorial comment that they should “pay a reasonable share in taxes” demonstrates a lack of understanding of retirees, who can be more mobile than what any corporation might be.
Current and future retirees already realize that Kentucky faces significant financial challenges. I encourage the state legislature to consider the positive long-term impact this more affluent population can have on our state’s economy. The baby boomers had a material impact on how our country’s economy evolved over the last 40 years and most experts continue to expect their consumption of products and spending on services during retirement to be a significant part of our nation’s economic growth.
Reducing the retirement income exemption will create financial uncertainty for retirees today and families considering a Kentucky retirement in the future. I hope the legislature looks at how other states are trying to attract these families and considers the long-term negative consequences of making the type of change suggested in the editorial.
The long-term consequences of sending the wrong message to retirees today may lead to greater negative impacts on Kentucky’s budgets 10 years from now.
Robert A. Mucc is the chief investment official for a Madison, Wis., insurance company. A native of Paris, Ky., he plans to retire in Kentucky.
At issue: Feb. 27 Herald-Leader editorial, “Sunset tax breaks to get money’s worth”