[I'm sure I'll regret doing this.]
Originally Posted by
HerkyBird
<< ... the CBA-which has no provisions for any housing allowance, education allowance, tax-gross-up ... >>
WHOA, WHOA, WHOA, NELLIE !!! Let's get one thing perfectly clear here ... THERE IS NO TAX GROSS-UP IN THE LOA. This is a particular bone of contention, as a matter of fact. Where on earth did you get that idea? Or do you misunderstand the meaning of that term? "Tax gross-up" means that if the host country taxes an employee, say 15% (call it $15,000 for this example), the employer will raise that employee's gross pay by a like amount, so it is the employer who actually pays it, and the employee does not feel the effect of it. In fact, the employer usually raised the gross pay by a bit more, to cover the IRS's share of that $15,000 gross-up (the IRS will tax you on the amount of gross-up provided by your employer). If you think FedEx is going to raise the pay of any pilot bidding CDG/HKG by an amount to cover the foreign taxes, you have been out to lunch. You need to seriously rethink your backing of this LOA, because obviously, you do not see the issues clearly.
Tax Gross-Up is EXACTLY what makes Tax Equalization work. It's not only "in" the LOA, it's a key component that allows the language, "a pilot bears approximately the same US Federal tax burden as he would pay if he were assigned to a domestic base rather than CDG or HKG."
Taxes paid by the employer to the host country are accrued to the employee as taxable income, and thereby increases the employee's tax obligation to the U.S. (and maybe the applicable state). This is not the choice of the employee or employer, it is IRS regulation. In effect, that "raises the pay" of that employee. A gross up is applied to ensure that the tax obligation on that increased income does not impose a tax burden that he would have not borne had he been assigned to a domestic base.
I hope this brief explanation will help everyone see it more clearly. (If not, you can find my contact info on the ALPA FEDEX website.)
Consider also the
Price Waterhouse Cooper's explanation of Tax Equalization Policy. As you read their information you might notice Tax Equalization is not a scheme devised by FedEx -- it's a standard option for companies with expatriate employees.
I won't get into a discussion about whether this is good or bad -- I leave that debate in your hands. I simply believe the debate will be more relevant if the subject matter of the debate is better understood.
[My post on this subject and silence on other subjects should not
be misconstrued as agreement with the views being expressed on
those subjects. This post indicates nothing more than my inability
to bite my lip. Please forgive me.]
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