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Old 08-01-2007, 12:55 PM
  #22  
UnskilledFXer
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Joined APC: Jul 2007
Position: B767/CPT
Posts: 56
Default Where are you getting this stuff?

[quote=TonyC;206686]
[I'm sure I'll regret doing this.]




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.]
.[/quote
This is what the LOA says:

]Federal Tax Equalization Services
Pilots accepting permanent vacancies in CDG or HKG are both entitled and required to use the tax equalization procedures and tax return filing services (US and foreign) offered by the Company through its vendor. The purpose of tax equalization is to provide that 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. To facilitate accurate tax computations and reporting, pilots will be required to provide all necessary tax information to the appointed tax provider

Where does it mention tax gross up? Don't put language into the contract or LOA thats not there, it is neither honest nor enforcable. The person you chastised in you previous post pointed out the factual definition and explanation of a "tax gross up" not some hidden reference to a web site and theoretical tax program.

Have you read the Price Waterhouse Cooper's (PWC)Information?

This is a theoretical tax program. Lets say you used to live in California, you sold your house and have no economic ties to the place. You pay all applicable federal state and local tax deemed appropriate by (PWC) including special local tax provisions. On the other hand you move from Anchorage sell your house and have no economic ties, you pay only theoretical federal taxes. Two identical people same job, same place, same income, no home outside the FDA, two very differnt tax obligations.

Oh, and you put the proceeds from your home in a CD. Better check the tax implications, spousal income, and income earned from investments both inside of and out of the host country may be taxable by the host government and is not covered by the employeer.

IRS information, check pamphlet #54 on the IRS web site. Especially for the persons interested in HKG. Without tax equalization, $82.4K tax exemption, tax credit or income adjustment for host government taxes paid, credit applied to income above exemption amount (Captains may want to take a look at that). Income earned outside of company still taxed by both. Live where you want. If you can get a work visa? Will not get the $2,700. If you don't take the move package no taxes on move benefits. Your local tax professional can run these numbers for you and get you an accurate estimation of you tax obligation. Seen any examples from the company or PWC. Don't use the excuse there are too many different individual situations. Use the generic 6 yr wide body FO and 10yr wide body Capt living in Memphis. Give an educated person something with which to compare.

Remember, this copied from LOA

NOTE: Proposal made with
the assumption that Hong
Kong government authorities
approve a pilot FDA

Do you think the FDA will be approved if the LOA is not ratified?

Leverage? This is not about leverage, it is about an informed decision.

But, according to the recent flood of e-mails, from our block reps, union, and company "leadership", they seem to elude to some esoteric information that has been explained to them in such a manner as to overide any concern that may be put forward on this, the ALPA webboard, or by personal interaction. They are telling you how to vote based on information they have received. Why not put out that compelling information to everyone so we can all be so sure this is a good deal.


Your parting note was that you would not discuss if this is a good or bad deal. How could you? You have no comparisons, no examples, no solid information. Just a theoretical tax program that tells us we will pay "approximately" , is that more approximately or less approximately, than we would have paid if I remained in place in the US. In addition, with the complexity of this type of tax program you will have to live what PWC tells you. Unlike most tax programs you will not be able to simply check this yourself. You could hire an international corporate tax consultant, that shouldn't cost much, if you don't agree. Remember you, by agreeing on the LOA have agreed to this tax program, even though you have not been shown any examples of how it would "theoretically" work.

Tony, I appreciate your willingness to address issues in this forum. That goes a long way towards establishing your genuine concern about this issue. I just think, having seen how the previous contracts have been enforced, that noone should count on anything, not in specific enforcable language, being binding, improving or changing unless it is in the best interest of the company.
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