Democrats Call Pension Bill An Illegal Income Tax



Democrats are fighting a hopeless but valiant effort to block increases in government employees’ pension costs.

Today in the House, Democratic Leader Ron Saunders labeled the move to hike employees’ contribution to their pensions “an income tax” that is prohibited under Florida’s Constitution.

Saunders won’t stop the Republican leadership.

It is an interesting argument.  This one that might end up in court.

Here is the news release outlining Saunders’ charges:


Thu, April 7, 2011 2:46:02 PM


April 7, 2011

CONTACT: Mark Hollis
(850) 488-9622

Saunders: Pension Bill Imposes An Income Tax

TALLAHASSEE, Fla. During debate today on House Bill 1405, House Democratic Leader Ron Saunders (D-Key West) alerted state representatives that the public employee pension bill is an income tax, which is prohibited by Florida’s constitution.


Leader Saunders made the following remarks, including raising a “point of order under House Rule 5.4 (c):


“Members, on behalf of the teachers, firefighters, police officers and other public employees who are members of the state retirement system, I want to quote from a song by the Queen of Soul, Aretha Franklin, who said, `You better think – think about what you’re trying to do to me.’


“So what does this bill do to our public servants?  It imposes an income tax on them for the first time in our state’s history! “But you may say, Rep. Saunders, we have been told that this is not an income tax.  A simple way to determine whether the “contribution in this bill is an income tax is to look at the definition of income tax.


“An income tax is defined as `A mandatory payment imposed on residents of a prorated portion of their income as a contribution towards the cost of government services.’ “So is the “contribution in this bill an income tax? First, Is the contribution a “mandatory payment?  Yes – it is required to be paid as a condition of employment. Second, is the “contribution imposed as “a prorated portion of their income? Yes – the contribution is based solely on a percentage of income. Third, is the “contribution directed “towards the cost of government services? Yes, pension benefits have been considered a cost that our state government has paid.


“Let me close with two things. First, as Aretha said, `Think.’ Think before you vote for a bill that for the rest of your political career will be considered by many to be a state income tax. Second – Mr. Speaker, I raise a point of order on this bill.




House Rule 5.4 (c) states in part:

“Bills that propose to amend existing provisions of law shall contain the full text of the section, subsection, or paragraph to be amended. Joint resolutions that propose to amend the Florida Constitution shall contain the full text of the section to be amended. As to those portions of general bills and joint resolutions that propose to amend existing provisions of the Florida Statutes or the Florida Constitution, words to be added shall be inserted in the text underlined and words to be deleted shall be lined through with hyphens.


HB 1405 currently under consideration by the Florida House of Representatives is presented as a general bill that proposes to amend existing provisions of  Florida Statutes, including imposing a mandatory contribution from members of the Florida Retirement System based on a percentage of their income.


Article VII. Section 5 (a) of the Florida Constitution states:


“(a) NATURAL PERSONS.   No tax upon estates or inheritances or upon the income of natural persons who are residents or citizens of the state shall be levied  by the state, or under its authority, in excess of the aggregate of amounts which may be allowed to be credited upon or deducted from any similar tax levied by the United States or any state.


Although the mandatory contribution from members of the Florida Retirement System set forth in HB 1405 is based on a percentage of their income, it is referred to as a contribution to their retirement fund rather than as an income tax.


The prohibition on a personal income tax contained in Article VII of the Florida Constitution does not provide for any exceptions to the prohibition based

on the terminology used or the fund to which the revenues generated are directed.  HB 1405 is styled as a general bill which proposes to amend the Florida

Statutes. However it should be presented as a joint resolution since it proposes to amend the Florida Constitution. HB 1405 therefore violates House Rule 5.4(c).


11 Responses to “Democrats Call Pension Bill An Illegal Income Tax”

  1. Richard J. Kaplan says:

    Whether you agree with the pension bill or not isn’t the point of this comment. I just have a problem with it is being argued that it is an unconstitutional income tax. There are probably better grounds to argue against it, but this isn’t one of them.

    First it should be noted that Lauderhill has had employees contribute to their pensions from before I came into the city. So any change will not effect Lauderhill.

    In fact, many cities do it this way, just like the State is now proposing. Only the State of Florida didn’t, and I was surprised to find recently that they didn’t.

    If it was an unconstitutional income tax, then it would also apply to the cities that presently do it. Many in democratic cities.

    The requirement that employees contribute to their pension, which the employer also adds to, is exactly the same process you would see in virtually any company pension plan (SEP IRA, SIMPLE IRA) 401k, 401a, etc.), and I believe almost every State in the US.

    I have been told that the State of Florida is the last place that employees don’t contribute. However, I haven’t had that verified.

    Nobody, even from States that also have the same constitutional provision prohibiting an Income Tax as Florida, has ever argued that it is an income tax. At best, its a savings plan, because you get this money back, with profits, after you retire.

  2. ExCompassionate Conservative says:

    As much as I think the GOP has gone off of the deep edge lately, this Dem is too wacky for me with his logic. I have no issue with reconfiguring pension and health care costs to reflect the realty of the costs and how most of us run our lives.

    The Mayor of my town Parkland, Michael Udine has written for local publications about how the3 city has an employee funded and Parkland funded 401K plan which does not hold taxpayers hostage to out of control pension costs.

    As a taxpayer I have no idea why we need to fund health care costs for out of office elected officials and certain other Gov employees when they leave. Disabality is another issue.

    Paying incredible salaries and also payng for leased cars is another thing I despise. The Sun Sentinel has an article today about how much the lease on the BMW cost Miami taxpayers for the exec thrown out recently.

    If the Sun Sentinel had any balls , they would be covering the car costs day in and day out to rile up voters to see just how much we are being screwed paying for the cars of people making a boatload.

    To sum up. I have no problem with a 401 K plan for Gov employees, with matching funds which over time gets the state taxpayers out of the pension business. I have no problem with Gov employees having to be like the rest of us and pay partially into their health care as well.

  3. Broward Politico says:

    Rep Saunders is dead on. This will go all the way to the Florida Supreme Court and will get thrown out as an income tax and an ex post facto law. You can’t tell the state employees here’s the rules and then change them in mid-stream. Sorry but this is bad for those that pass it, like Sen Jeremy Ring going along with the Repubs, and the courts will end up throwing it out.

  4. Don says:

    A TAX THE DEMOCRATS don’t LIKE????!!! AMAZING!!!!!

  5. Dummy! says:

    “An income tax is defined as `A mandatory payment imposed on residents of a prorated portion of their income as a contribution towards the cost of government services”…this would apply to any and all local government taxes. Be careful Ron, you may get what you asked for…

  6. Resident says:

    The problem is that it is not “towards the cost of government services.” It is specifically towards the cost of a government benefit to the contributor. When they leave, they can even get a lump sum check, or stay invested to recieve payments.

    In fact, if the plan is underfunded(which many corporate and government plans are), the payback to the employee can be higher than the amount paid in.

  7. electric says:

    What the noted Saunders does not understand is that not all government employees in Florida are under the state plan which Alex Sink sunk. Many cities have opted out eons ago as they did not trust it.
    What the representative should be watching is in some cities the PD contribute, The FD contribute, an The City Hall types contribute but teachers do not contribute a penny to theirs at all.
    Now union dues are a better point of-contention. Members have no say so in who the Union decides to contribute at all.

  8. Broward Politico says:

    @ electric

    Alex Sink had nothing to do with FRS going down. That’s all fraudster Rick Scott’s propaganda. The truth is it was the financial meltdown. When Sink left office as CFO, FRS was as healthy as ever.

  9. Westville says:

    Question for consideration: If employees are required to contribute, will they be able to decide if they want to continue to contribute to the FRS. Would employees be able to take their money out of FRS and contribute where they can get a better return on their investment?

  10. steveo says:

    in referance to mr. Kapalan post i worked for a city and contributed to my pension but that was done pretax so when you collect it could be taxed then.

  11. steveo says:

    About the pension system everyone seems to forget that all county’s pool their money together and give it to the state so the state can invest that money along with state employees. The state makes their percentage and gives the employees a return of 1.6 or 3 % depending on what class you’re in. And with the upcoming changes of possibly 5% the government pays 5% less and 5% is taken out of the employees pay check. This changes nothing to affect the so called possible shortage of pension money in the future. And with that are the county’s now going to ask for the 5% back from each department and place it back in the general fund? I have never heard the state complain when they were making billons off of our money!!! Make no mistake about it if 5% percent is taken out of your pay check it will be a state income tax plain and simple. Maybe all the Florida County’s should get together and pool that money together and take it away from the state. It seems the state and county employees are being targeted because they do not contribute to their own pension and this is not the employee’s fault this was one of the many benefits’ given so the state could pay lower wages and save a lot of money. If you are told up front you have to contribute when you start then there would be no problem but to change the rules in midstream is just wrong. Check this link out and you will get a clear picture.