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Comment by preinheimer | Hacker News Reader

As a business owner this crap terrifies me. Washington State was looking at changing their tax code retroactively to get more money from Microsoft, luckily level heads (and I might presume, extensive lobbying) prevailed.

I can't plan today for what yesterday's laws will be tomorrow.

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Unfortunately, I think you'll see more of these problems as states get crushed under their existing debt and new expenditures from pension obligations, etc.

See: http://www.usgovernmentspending.com/compare_state_spending_2...

Shove them (States) in between a rock and a hard place, and they pretty much run out of options. Not surprising.

They've got tons of options. They could, for example, cut back the bloated private sector.

...but the governments are on the side of the government workers (most government workers are unionized and these funds lobby the politicians).

The result is that it becomes an "us vs them" fight, and while common citizens may theoretically have political power through the ballot box, in practice power is mostly exercised through campaign donations and backroom deals, so the politicians are taking the decisions that they're incentivized to take: stealing seed corn and feeding it to the public sector employees.

> They could, for example, cut back the bloated private sector.

Isn't that what they're trying to do? :D But I guess this is a typo for "public sector"...

Perhaps defined-benefit retirement plans should not be in the public sector since they haven't been in the vast majority of the private sector for quite some time.

This is the exact same argument the supporters of Ohio Senate Bill 5[1] used. One reason people in the public sector are willing to be paid less than their private counterparts is because their benefit plans are genuinely better. Saying they should eliminate one of the better benefits public sector employees get is stupid.

[1] http://en.wikipedia.org/wiki/Ohio_Senate_Bill_5_Voter_Refere...

People say this all the time, but I really don't see it. I really don't think teachers are that underpaid, and I say that as someone married to a teacher. They only work 9 months of the year. If private sector employees only worked 75% of the time, it's likely they'd make less money too. Would I like it if my wife made more money? Sure. Does that mean I think she should, at the expense of everyone else's tax dollars? No.

Contrary to what you say, most people don't choose teaching because of the benefit plans. They might do it because they only have to work 75% of the time, but it isn't the benefits. They choose it because that is what they want to do. Help kids, teach, etc.

The benefits do not make sense as a reason to do this job. If that's what you're going for, you'd just take a job in the private sector, work more, and make a lot more money.

Unsustainable benefits are stupid.

Of course, when legislators pass pension hikes, they do so knowing that it pleases powerful unions now and the costs to tax payers are decades down the road. So it is one of the more appealing ways for a legislator to screw their state. They may even be out of office by the time the bill comes due!

Defined-benefit pensions are a huge drag on many state budgets, and paying them does nothing to improve the quality of current government services. The bluer the state, the more they are screwed:

http://money.usnews.com/money/blogs/the-best-life/2012/11/08...

Blue states are also richer, so you would expect them to spend more on government services and thus pensions. The real issue is pensions are based on the idea that future growth reduces the burden however in a stagnate economy they become a real issue.

First of all, I don't know about you, but I don't come to HN and try to have a somewhat intelligent conversation just to be called stupid for expressing an opinion.

Secondly and to your point, I am only speaking of defined-benefit "If you work here for x years you get y% of your salary." This is to say nothing of the health care (which is generally better than the private sector), the hours (which if you don't work for a legislator are generally better than the private sector), the guaranteed pay raise every year, the access to jobs you can only apply to if you already have a state job, and various small perks like free or cheap parking, food, etc. These are all benefits of the job and I had to take a serious look at the health care and hours for a state job when deciding between that and a corporate offer.

I'm not here to argue whether or not defined-benefit retirement plans are inherently good or bad. I'm saying it's irresponsible and dangerous for a state to guarantee by law that they'll pay anyone a fixed amount of money for decades at some distant point in the future. This is why it's most dangerous. If the state gets bankrupted by some unforeseen catastrophe 30 years from now, it can't suspend, eliminate or trim pension payouts. Not even $0.01. By definition the fact that pensions offer better retirement income than defined-contribution plans like a 401k should be a giant red flag. The system implodes if you can't at least break even off of it, and if it was possible to make money off of them the private sector would still be using them.

"First of all, I don't know about you, but I don't come to HN and try to have a somewhat intelligent conversation just to be called stupid for expressing an opinion."

He didn't call you stupid for expressing an opinion, he called that particular view stupid.

Saying that a particular view is stupid without offering any additional information or another viewpoint is... well...

This isn't 7th grade — come up with another word that really means what you want to say. There are a lot of ways to disagree with someone and/or an idea without the derogatory language.

I don't think it was intended to be persuasive, but I don't believe it was meant as a targeted insult either.

"Perhaps defined-benefit retirement plans should not be in the public sector" - that's not an opinion, that's an idea. Not a good idea, either.

Why is it not a good idea? Given that he and I both don't understand why public sector jobs inherently require defined-benefit retirement plans when the vast majority of workers don't have them, it's apparently not obvious that it's a bad idea.

I was not under the impression that public sector employees are paid significantly less than private sector. This seems to be the most reputable source I could find:

http://www.cbo.gov/sites/default/files/cbofiles/attachments/...

"Saying they should eliminate one of the better benefits public sector employees get is stupid"

It's not stupid to them, they want labor compliant, they don't want better options available to compare to.

"Why worry about retirement? You should be lucky you HAVE a job..."

Offering deferred benefits is the thing that is "stupid" - it should be all cash to state employees so that their cost is correctly accounted for as part of the current budget.

Yes, I understand this might mean we have to pay higher salaries, but it will be far less than these crazy benefits they are getting.

Perhaps so, but that doesn't change the fact that they exist. If the State killed all new pensions they'd still have to pay existing obligations.

It completely baffles me how any reasonable person could look at the retirement and health benefits situation in our country and come to the conclusion that our problem is being too generous to the working class.

Yes, the private sector has been much more effective than the public sector in collectively diminishing workers' wages and benefits in recent years. The logical conclusion is not that the public sector should do more to keep up with the downward spiral.

In case you didn't realize it, that costs the states money, and money is what states don't have.

The states can find other things to cut than middle class benefits.

Like what? E.g. in Chicago, the infrastructure is crumbling so that teachers can get paid far more than they would earn in the private sector given their qualifications, meanwhile getting 13 weeks off each year.

It's entirely possible for a state to have reasonable policy w.r.t. current and future expenses given a certain tax base, then lose that tax base and get stuck with unsupportable obligations. If NYC became Detroit over a period of 10 years, just pension liabilities would destroy it going forward.

In case you didn't realize it, tax rates closer on par with other developed countries are a perfect solution to that problem.

You are right about the status of retirement. However, the role of government is to serve the public first, not to serve public employees. Everyone should have a dignified retirement, perhaps on the order of 60% of earned wages. Social security benefits should be raised accordingly, retirement age should be lowered back to 65 for max benefits and we should mint a platinum coin to ensure its all funded.

It completely baffles me how any person who can add could look at state budgets in our country and come to the conclusion that our problem isn't guaranteeing massive levels of debt for work done decades ago.

It's not so much a wage thing, but companies that continue to act recklessly with their money typically go out of business. Governments and companies propped up by governments simply print more money and attempt to take more from their populace. There are simply no consequences for repeated poor actions.

I am looking out my window now at a city project to build a park that is maybe 25 yards wide and 75 yards long. The property sits between a private car lot and an office building with no nearby parking, so I'll be surprised if I ever see anyone use it. That of of course assumes it is ever finished. It has been under construction for just over a year and still looks nowhere near complete. We joked a couple months ago while we watched workers move dirt from one pile to another and back again over the course of a month.

Now of course this is a small probably <$5M project, but if government can't manage it how am I supposed to trust them to manage healthcare or retirement? So yes, it baffles me how any reasonable person could look at the retirement and health benefits situation in our country and come to the conclusion that government can provide a fix.

You indulge in too many fallacies here to address individually, but since you bring healthcare into the discussion, the bottom line is that we know that government-run healthcare works. See: almost every other developed Western country, while the US system remains fundamentally broken.

You can engage in all the a priori pleading you like, but until you address that empirical, real-world fact there is no worthwhile argument to be had.

Government spending has nothing to do with constutionality of law. The law was simply struck down by the courts, in this case. It's not some government plan to increase tax revenues.

That will work until one of the Microsofts of the world decides it's more cost effective to move everyone 2 hours drive north to Vancouver than it is to pay this giant bill.

The US is quickly going to learn that there is a rather modern country to the north that isn't in the same financial distress as Europe or most states are.

I'd imagine given that, this line of thinking would probably play itself out pdq.

But I thought their financials would be in ruin, what with giving out all of that free healthcare?

Don't get me wrong, we will eventually get to the spot Europe is in if we don't make changes to our health care services of one type or another.

We have however shown a remarkable ability to vote for people that tell us we can't afford things we can't afford. We took drastic austerity measures in the 90's and we actually voted for it - twice.

I'm not too worried about our finances, once people get the numbers in front of them, they tend to be convinced.

A cohort of reasonable voters? You just keep racking up reasons to move there...

Vancouver has horrible housing affordability ratios (housing price : income), income is lower at the entry level for software by almost double compared to WA (MS can change that), cost of goods is about %15-%30 more expensive across the board. Housing prices are just now reversing because of stricter mortgage requirements. Interest rates are really low and an interest rate hike is just waiting to happen.

The reason why Vancouver is so bad for housing is because wealthy foreign investors see Vancouver as a stable store of value for their money. It's a complicated bank account for large sums of money.

Alberta is the money making place to be in Canada, since the resource industry & banking drives over %50 of the TSX. Rent is also a lot better in Alberta. But Canada is not a country right now to be a techie compared to the USA. It's a great place to be in the oil industry although.

I don't disagree with anything you say, but if you are moving from Seattle to AB you may as well pick a friendlier US state.

The reason I suggested Vancouver is because of it's proximity. It's pretty much the same place.

Europe's healthcare has nothing at all to do with "the spot they're in". The spot is due exclusively to short-sighted compromises in the structure of the Eurozone - the idea was to get into cheap markets and it paid off great for Germany, but now they have to pay the bill the voters are balking.

But no, the Canadian healthcare system is not going to pull you under.

You don't know much about Vancouver if you think this is a realistic possibility.

Vancouver, BC has barely any tech industry (a few software companies like Business Objects, and EA Sports are up there, but nothing meaningful), and the taxes are high. British Columbia has one of the highest tax rate in Canada. One of my Canadian friends told me that the 50% marginal tax rate started around $65k, although I haven't double-checked this for accuracy.

You can't compete between Washington State, with no state income tax, and Vancouver, BC.

According to this, it's pretty comparable to the US if you live in California. Higher than the US if you live in Washington under their current tax laws.

http://2vancouver.com/en/articles/vancouver-bc-taxes-on-inco...

High taxes aren't an issue, since healthcare is free and there is a very strong social safety net.

Also, taxes aren't high.

It's all relative, no?

Long ago, when I moved to the US from Canada, I figure out what I'd owe in tax in Canada vs. what I was paying in the US.

Keep in mind that I owed a home (mortgage interest deduction) and maxed out my 401k (which isn't a % of income like Canada).

I was only making $50K/yr, but I was taking home an extra $5K by living in the US and not Canada. 10% more income is pretty good, no?

Depends how long ago you were here, but we've been seeing tax rates fall pretty consistently for a decade.

Add it all depends on what state/provinces you're comparing. I would fathom to guess that the lowest in Canada vs. the highest in the US isn't all that different, especially if you don't take advantage of country specific deductions.

Well, for example, Albertans pay less tax (federal and provincial combined) than Californians, but more than Washingtonians (who pay no tax, but also have to pay for their own healthcare). Keep in mind, raw salaries tend to be higher in Canada, as is cost of living. It'd be pretty complicated to actually sit down and puzzle out real take-home wages as compared to PPP, but I doubt there'd be a massive difference.

I live in Vancouver. Have you ever actually lived in Canada?

>Vancouver, BC has barely any tech industry

http://en.wikipedia.org/wiki/Economy_of_Vancouver

Let's just ignore the fact that MS has a development centre in Vancouver, specifically because its easier to hire game developers here. Halo is being written here.

> British Columbia has one of the highest tax rate in Canada.

You may want to tell that to BC: http://www.bcjobsplan.ca/?facts=b-c-lowest-personal-taxes

>One of my Canadian friends told me that the 50% marginal tax rate started around $65k, although I haven't double-checked this for accuracy.

Your friend is either an idiot, or hasn't lived here in a long, long time.

http://www.knv.com/cms-assets/documents/40364-256654.bcperso...

>You can't compete between Washington State, with no state income tax, and Vancouver, BC

How's your health care? How much does that cost your employer?

There are many great things about WA. I love it. However if the state is going to retroactively go after companies, BC starts to become very, very attractive. We are not that different, tax wise. We obviously need to stay competitive.

> How's your health care? How much does that cost your employer?

This point is significant in and of itself. It's no coincidence that health insurance is a central point in just about every major recent union dispute.

Health insurance is wildly expensive, and the cost to private corporations is not to be underestimated. Anyone who's ever had to provide health insurance to employees is acutely familiar with these costs.

My friend worked for EA Sports, so I trusted the information he provided, but I guess he was wrong. The marginal tax rates are 43% at 135k.

Yes, Vancouver has some tech companies, but I wouldn't call it anything like a tech hub like Ottawa or Toronto. Also, UBC and SFU do not have a strong tech program. I'm sure it's average compared to most cities, but you won't find the same amounts of tech people in Vancouver like you will in Seattle or Silicon Valley. In fact, I'd bet that most above average developers in Vancouver would move to a more tech-oriented city.

He also mentioned that the cost of housing in Vancouver is twice the amount of Seattle. Not sure how accurate that is either.

> Let's just ignore the fact that MS has a development centre in Vancouver

Wow, MS centre! It will save us all. And they don't have MS centers anywhere else, right? Vancouver here.

* All of Canada has as many my profile job openings as Seattle.

* Salaries are lower here than there.

* Taxes are higher here than there.

* Prices are higher here than there.

* Selection of everything is miserable here.

* It's impossible to have a career if you can't talk hockey for 2 hours. Nobody gives a f$%k about your abilities - you must be "one of us".

> How's your health care?

Pathetic, thank you. I just waited 4 months for an ultrasound. They said everything was OK - but why then would I have insisted on it in the first place?

> BC starts to become very, very attractive

Do you have a house for sale? Because it sure sounds like it. BC does not start to become very, very attractive to anyone ambitious and able - and these guys will go to US for the same reason that all ambitious and able Canadians move to US.

There are M.D. taxi drivers and Ph.D. WalMart cashiers here - because their names are Davinder and Reza rather than Sean and Tim.

No doubt, BC is a great place for natural resources barons, drug traffickers, porn and gambling shops, and bribe-happy Party officials from China. It's extremely neophobic, hypocritical and hostile to changes.

YMMV

You're right. What am I talking about? Vancouver is a shit hole. It's clear that nobody wants to live here.

I mean just look at where it ranks!

http://en.wikipedia.org/wiki/Worlds_most_livable_cities

http://www.telegraph.co.uk/property/propertypicturegalleries...

http://finance.yahoo.com/news/the-world%E2%80%99s-best-place...

It's too bad such an informative post had to be accompanied with so much condescension. You easily could have made your point without name calling.

"Halo is being written here"

Some of Microsoft's game studios may be based there, but I believe this is not necessarily true for Halo. 343 Industries is based in Kirkland.

https://en.wikipedia.org/wiki/343_Industries

Sorry, I understood it wrong. It's being referred to as "the next Halo", which is kinda silly.

Ah neat!

http://www.joystiq.com/2012/12/02/microsoft-vancouver-is-now...

The corporate tax rate is actually lower than it is in the US though.

How much does Microsoft actually pay in corporate taxes to the US?

[0] https://encrypted.google.com/search?q=microsoft+tax+avoidanc...

"50% marginal tax rate started around $65k"

I think your friend has very poor math skills.

http://www.ey.com/CA/en/Services/Tax/Tax-Calculators-2012-Pe...

$65K gross income in BC nets nearly $52K; a ~20% average tax rate. This is before any eligible deductions.

Even if your friend was making $1,000,000 gross salary, they'd still pay less than 42% tax on average, and that's ignoring several legal tax shelters available to all Canadians.

Note, he said "marginal" not "overall" tax rate.

Don't forget that BC has 12% sales tax and monthly premiums for health insurance.

Income tax is only one of the many taxes.

BC has (or rather will return to) a variable sales tax that floats around 7% normally. There is also a 5% GST everywhere in Canada. (Like a VAT)

Correct on MSP (Medical Services Plan). Personally, I'd love to abolish this and roll it into general revenues. It's a nightmare.

ok, the highest marginal tax rate for a $65K gross salary is ~30%. Everyone gets the first ~10K tax-free, then it's ~20% (in BC) off the next ~$40K, then ~30% off the next ~$40K. Only the last ~$15K gets taxed at 30%, and you can easily reduce that to zero with available legal tax-shelters/deductions/credits.

BC health premiums are $65/month for a single person. Sales tax is a consumption tax and not really relevant.

Sales tax is not a 'marginal' tax, and is certainly not unique to BC.

No, it's not a marginal tax, I was just referring to the fact that total tax burden has to include more than just income tax.

What are property taxes like? Vancouver real estate is absurdly expensive compared to even SFBA from what I remember (although I was looking at London Properties), so the rate is on a really high base, too.

I'd be interested in an objective comparison of SF, Portland, Seattle, and Vancouver from the perspective of a startup and ~10-20 developers making O($100k/yr) each. Maybe throw in Las Vegas or Austin, for the lowest possible US case, and someplace like Calgary for the cheapest Canadian case.

Superior Canadian immigration rules would seem to dominate if taxes are even within 50% of each other in some cases (founders or substantial early employees not being willing or able to work in the US), and would also dominate in cases like "gaming", anything privacy/anonymity based where US law was an issue, etc. I'm not sure how Canadian investment rules work (I know there's the weird R&D tax credit, and there were issues until recently with taxing or reporting gains).

Renting is the only sane choice in Vancouver right now as most Van RE is extremely overvalued. Median household income in Vancouver is ~$67K, which indicates RE prices are definitely out of whack. Calgary would not be my choice for "cheapest case", I'd place Windsor Ontario (EST) in that slot, although I wouldn't want to live there :P. For a low-cost large city Ottawa Ontario (EST) is quite attractive.

Corporate taxes are lower in Canada, but there are other mandatory payroll costs like CPP (9.9% of the first eligible $50k earned split 50/50 between employer/employee) and EI (employer pays 1.4x whatever the employee pays at 1.88% of the first eligible $50K earned).

Come to Florida, it may be a red state but they stay out of your business and costs less.

It's a red state and thus they stay out of your business and it costs less.

Texas isn't too shabby either. Plus, fewer natural disasters means less downtime.

Hopefully you aren't fond of electricity[0], water[1], schools[2], or roads[3].

0 - http://www.ercot.com/news/press_releases/show/26375

1 - http://droughtmonitor.unl.edu/DM_south.htm

2 - http://www.statesman.com/news/news/state-budgets-call-for-cu...

3 - http://www.statesman.com/news/news/state-regional-govt-polit...

(Texas is my home state. I left, though I keep close ties to it through family and frequent visits.)

Electricity is being worked on, as that press release indicates. On the hottest day or two of the year, the power might go out for a little bit. It's not a big deal.

Water is going to be the biggest issue this legislative session. California has similar water problems.

Schools... are complicated. That one might not get fixed, but performance is better correlated with household income than education spending.

Roads are easy. Tolls. The people who use the roads pay for them.

Texas is my home state as well. I went to California for a few years, then came back. I don't plan on leaving.

I did half of your roundtrip. Grew up in the Bay Area, moved to Texas. Swore I'd end up moving back but seven years later I have absolutely no intention of doing so.

CapitalFactory.com is by far the most up and coming startup community in Austin.

I'm actually in Houston but I've been heavily involved with some of Geekdom's efforts in San Antonio. Great stuff going on there.

Also looking at the Texas startup scene to name a few. TechWildcatters http://techwildcatters.com/ Texas Entrepreneur Network http://texasenetworks.com/ BarCamp Dallas http://barcamp.org/w/page/400642/BarCampDallas

I moved here to Austin from the DC area two years ago and absolutely love the place.

And I do visit the Bay Area regularly as I work for Twilio. I just wouldn't want to live there.

Same here, went to the bay area for a few years and came back to Austin. It's just a better area, so many things to do and better quality of life.

Considering TXU is still being "managed" quite well by its leveraged buyout partners, "no big deal" may very well become a big deal. Texans already pay some of the highest average per-kWh rates in the country though the falling price of natural gas has helped.

Unless Texas is going to take water from Oklahoma by force, I wasn't meaning a solution to the problem from the state government. Texas is in a long-term, structural drought. The Ogallala aquifer is a shadow of its former self and the next major underground aquifer in East Texas is in danger of being rendered unusable by the Keystone pipeline. Several surface lakes have simply gone...away (check out aerial maps near Bronte).

As for tolling, I suppose the city folk will just keep letting paid for highways like 121 or capacity expansions (basically anything; 820, 183, Westpark, 635) go toll because hey, poor people don't need to get around. Mass transit will take care of that. Oops, no it won't. Besides, developers in rural areas gotta have their pristine FM roads (which are paid for by the state).

I didn't leave Texas for California (heavens, no) and I had the chance to come back this year making more money than I do in the (higher cost of living) state where I now live. Couldn't do it. Until the Legislature gets its head out of its ass and realizes that government is expensive--both for needed things like roads and schools, and nice to have things like state parks--and that you just dishonestly[0] can't cut your way to perfection, my state is going to be set up more and more for long-term failure. Even the Comptroller, who is legally required to make an accurate assessment of the state's income, can't get it all to balance without slight of hand.

0 - Sure, the state government hasn't raised taxes or imposed new fees in years. They just leave that hatchet job for the local governments. Never mind the several billion dollars earning crap for interest in the "rainy day fund" that's never once seen an emergency worthy of tapping it.

My apologies for the extreme derail; I'll stop ranting now.

Born and raised in Austin, still live and work here. I suppose I should learn a bit more about my own state as I didn't know much of this or the above comments...

HN: where all y'all learn you somethin'.

Also left Texas for the Bay, but ... I just got off the phone with my parents, and they assure me Texas still has electricity, water, [public] schools, and roads.

The electricity problems are more or less self inflicted by the generators to loosen up wholesale rules. Texas has /plenty/ of energy.

Water is a problem...a BIG problem. But...we have a large coastline, salinated deep water tables etc, so if it comes down to it we could expensively desalinate. That would be brutal, though.

As far as schools -- the overall decline in public schools is counter-balanced by the rise of good charter schools. If you care about your kids' education there are options.

The road situation is kind-of a pain but here in Austin and Central Texas area at least, we have improving public transportation. And there is the toll option (of which I am not a fan).

But the tax policy is pretty nice. And Austin cannot be beat in terms of livability if you can stand the summer heat. I think we have a $20-25 billion surplus this year so we won't be going broke anytime soon.

I find it amusing that you described Austin, the one big area of Texas that leans dramatically against the rest of the state, as the most liveable and put together. Kind of proves my point relative to the Legislature at large.

For what it's worth, Texas has never had a $25bln surplus. In the 2011 biennium, the budget had to cover a $27bln shortfall. (Note that all Texas budgets are written to cover two years, as the Legislature meets for 140 days on every odd-numbered year.) This biennium's budget will start out with approximately $8bln in unspent revenue (mostly left over from dramatic cuts made in the 2011 two-year budget) and starting out with $5.3bln in "unpaid bills" around the Women's Health Insurance Program and natural disaster spending. (http://www.dallasnews.com/news/politics/texas-legislature/he...)

And no state income tax.

I went to college in Florida. I love Florida. But their schools are no place to educate your children. Same goes for Texas.

If they're allowed to retroactively change how much they taxed you, can you refile your financial statements?

Yeah, didn't think so...

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