Tax Equalization
 

From the website..

Q: How does the $82,000 annual tax exclusion relate to tax equalization? A: The objective of tax equalization is to provide the pilot with a "tax neutral" position as if he (she) remained stationed in the U.S. It is designed to yield neither a tax benefit nor loss to the employee for taking the assignment. Under tax equalization, the employee does not receive the $82,000 income exclusion, as would be the case if stationed in the US. The majority of pilots would incur a financial loss without the tax equalization mechanism regardless of the exclusion due to these factors:


If you go to CDG or HKG, you DO NOT remain in the USA. Therefore, YOU are entitled to the exclusion, not the company. Why in the heck should they get the benefit? Am I missing something here?

It is a lot more then $82K if you add the housing exclusion. So make sure you justify no more then $2700 to the company.

Maybe the next round we can approach the company about an enhanced enhanced move package. Split the saving on Foreign Tax exclulusion and the company matches 50% of housing costs above $2700 (up to the IRS max for location) if the pilot agrees to meet the Foreign Income Exclusion rules. The company should agree to it as it will cost them almost nothing.

Two demerits this should be purple and orange.

The point is that the pilot does not reap the benefit of the 82K+ exclusion. The company does. Which, in turn, dilutes the $$ they give you for housing. The exclusion, for an FO, amounts to around $30000 in your pocket per year. If the company gets that, which the pilot is entitled to, we actually end up paying the company. NQR!

Of course, the company uses that money to pay your HK or French tax bill, which is on your full salary (no exclusion) and the housing allowance. Boy, the company is making out, especially in France. :rolleyes:

Let 'em eat SIBA
 

I keep seeing the phrase "Cost Neutral" used a lot. Let's do a little math and see what it would take to be cost neutral to SIBA.

$3,000 Airline tickets
$1,040 Per Diem x 15 days
$2,250 Hotel Expenses Estimate... 15 days x $150
$4,800 Increased Productivity... 4 more days flying = 6CH x 4days x $200hr
--------
$11,090

Am I missing something here?

Yes, HK would double or triple a lot of those numbers.

now, take it easy guys,
remember, no windfalls in the LOA----just ask Mgt or the MEC.
well, except for the ACP in Paris or Hong Kong, after-all, they possess special skills and need the ex-pat package to head over there.

hmm, wonder why the existing CBA isn't sufficient......for them, maybe they should go for the "enhanced" option if it becomes available next month.

$133,080 The Cost of one pilot for one year of SIBA
$40,000 The proposed "benefit" offerred to each pilot under the LOA
----------
$.030 30 cents on the Dollar. That is what the Company and the MEC want us to believe is "Cost Neutral":mad:

That sounds like a huge MBO bonus going to someone!

I'm not sure how you came up with those numbers...

The company is still going to have to pay for layover hotels. Yes, there will be layovers. Maybe, 30% less hotel nights? 30% of 13 days/mo = 4 hotel days.

4 hotel days at $150/day = $600 month


They will still have to pay per diem for those layover trips. I'll give em that.


You are way off the mark on the cost of SIBA D/Hs. I added every EUR SIBA lines D/H money(Eur only) and came up with this:

Total Aug Eur SIBA D/H costs(incl carryover D/H) is $176,061. Divided by 24 lines equals:

$7336 avg Eur SIBA monthly line D/H cost.

Of course, they will still need to D/H crews around Europe. So, I'll give them $1000/month for that.


Also, if you examine the SIBA trips...You'll find that a pure Eur SIBA line has about 6 actual duty periods per month, on average. Nearly every 72hr+/- Aug SIBA pairing, works 6 duty periods. That's 6 actual, revenue generating, work days per month!!! I'm not sure what our domestic average is...But, I would guess somewhere around 12 to 13 days of actual work. I would think the optimizer will be able to get nearly the same out of the FDAs. So, that would be 6 days+/-, per month, of productivity gain for the company.

6 days @ 6hrs X $220 = $7920 per Capt


I figure the total company cost savings to be:

Hotel savings ----- $ 600
D/H savings ------- $6336
Productivity gains - $7920

Total ------------- $14,856/month

That's about $180,000 per year per captain. Cost neutral? Are you kidding? I have no idea what the tax equalization plan will cost the company...But, I'm pretty confident it isn't going to be $180,000/year per captain, minus the $40,000 "benefit".

And, that's based on a 28 day month. The actual number would be higher when the four 5 week months are figured in.

Still a big NO here.

Busboy,

Thanks for doing the research and filling in the details. I made some pretty conservative estimates. I was just trying to point out how far off the mark the LOA is on being "Cost Neutral".

I believe the Company has a lot of room ($) to come back to the negotiating table with after we all vote NO!

For me to consider an FDA assignment, my checkbook is going to need to show some black ink.

No way in he11 am I going to HKG and operate in red ink, just so Fred can move up the bilionaire list!