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Pittsburgh, Pennsylvania whose pension problem was called a “financial Armageddon” by two city councilors yesterday, joins cities such as San Diego and states such as Illinois and New Jersey that may cut services or raise taxes to meet ballooning retirement costs. Those states and 18 others skipped payments or underfunded their retirement systems from 2007 to 2009, according to an October 2010 report from Loop Capital Markets in Chicago.
Raising taxes is not the answer. It would encourage both white flight and business flight. Higher property taxes would cause more bankruptcies from people already on the edge, barely able to get by right now. Higher taxes certainly would do nothing to attract business.
Gary, Indiana twice received special permission from the state to raise taxes to meet funding requirement. The result is taxes are higher and Gary is still broke. Instead, Indiana, one of 26 states that do not allow municipal bankruptcies, is about to. For details please see Indiana Bill Would Allow Cities to Declare Bankruptcy; Gary, Lake Station, Georgetown Likely Candidates; Hands Tied in Rhode Island
. Click Here for more info.
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More to come! Pick your poison ... a defined benefit pension managed by someone else or a defined contribution 401(k) plan with some personal control over asset allocation!
ReplyDeleteStart hoarding gold and silver coins! And buy guns and ammo for personal protection if you don't already own arms!
Dick Schaefer
HermannHearsay.blogspot.com