This answers it all
 

This is an excerpt from the LEC 79 latest email


STVs. All the talk about STVs pertained to opening Paris (not HKG) because CDG is being opened up with new airplanes. 757s delivered at the same time pilots are going thru training. In the event of bust, etc, then FDX could STV. Bob came up with the idea – hotel, per diem, families, thinks it’s a great idea. As far as inverse seniority, Bob doesn’t think it’s going to happen. Bob feels FDX is not going to take a new hire and send them over; the likelihood of an STV for HKG or CDG is not going to happen. If it does it will go senior.


Now I understand why he is so defensive

Could you post that entire email if possible. I read his latest update , but it did not have that wording. Bob's idea huh?

The 79 Snippet
 

July 2007

Many of you have asked what I personally think of the FDA LOA (verses the ALPA line). The long and short of it is that my personal belief on an issue does not affect my ability to represent you nor address your concerns. Guy, Ron, and I have been besieged by your questions and opinions pertaining to the FDA LOA. Hopefully the following notes will shed some light on any issues regarding the LOA, helping you make a well-informed decision. My sincerest apologies in the delay (beyond my control) publishing these notes.


When I first heard of the LOA I was excited about the prospect and believed it offered many benefits above the CBA. Heaps of negative info, comments, and questions followed on a myriad of aspects of the LOA, including the lack of an education allowance, the ‘inadequate’ housing allowance, and how the STV provisions could be a bad deal for junior pilots. I was undecided on how to vote, able to talk myself into voting YEAH or NAY on any given day, eagerly searching for more information.


After attending our LEC meeting July 19 with special guest Captain Bob Chimenti, ALPA Negotiating Committee Chairman, I have resolutely decided to vote ‘YES’ in favor of this LOA. After listening to Bob’s presentation, I now firmly believe that the Scope and RLA protections, as well as the flexibility and compensation of this LOA are better than what we currently have under the CBA-which has no provisions for any housing allowance, education allowance, tax-gross-up, nor STVs (for FDAs except as provided under SIBA.)


What follows is a lengthy recount of what Bob discussed. Lack of communication and access to information has been a big complaint of ANC pilots. Since most of us don’t have the option to attend Hub or Town Hall Meetings, what follows are the notes that I took at the LEC 79 meeting on July 19th. Please feel free to call or e-mail Guy, Ron, or myself if you have any questions.


In Unity –


Captain Susie Latvala


** Message from ALPA Communications: While well-intended, Captain Latvala’s notes may not be an accurate representation of the comments offered by Captain Chimenti. Please read this recount with caution and in the context of other MEC publications regarding the LOA.


July 19, 2007 – Snow Goose Restaurant, Anchorage

Special Guest Captain Bob Chimenti


Bob recognizes that some people think the LOA is inadequate in certain areas. Bob wouldn’t have brought the LOA back to the MEC if he didn’t think it was fair. He’s never brought anything to the MEC that he didn’t consider fair and gave the example of the proposed cash balance plan for new hires a few years ago which was turned down at the table. He didn’t think it was fair for everybody.


Bob said it’s not true that ALPA is accused for negotiating this LOA to benefit only a certain group of pilots (i.e. empty nesters). Certain domiciles have always been more attractive to certain groups (i.e. LAX favored Tigers and Navy pilots from SAN, or if MEM was attractive for everybody to live there, 70% of MEM based pilots would not be commuters). Obviously, only particular pilots will want to bid CDG or HKG, but the LOA is fair for everybody.


ALPA negotiated HKG in lieu of CAN (Guangzhou) - that city was so bleak and dirty that they told the company FDX pilots couldn’t be forced to live in CAN. The company agreed to make the base HKG (it’s within 100nm). HKG base requires GT and this will cost the company 15% productivity from the crew due to 3 hours commute each way.


Are there $9k apartments in MEM or LAX? Yes…just as expensive apartments exist in HKG. However, there are lots of apartments ranging from $2500-$4000 in great areas with expats and they are clean. The Negotiating Committee did not think a pilot going to HKG should have all their housing expenses paid. Just like the company doesn’t pay housing in MEM, ANC or LAX. The company figured the average mortgage+utilities for a pilot is around $3000. ALPA used $2000 a pilot for an estimate of out of pocket, so housing allowance (FDX) $2700 + (pilot) $2000 = $4700 month (apartment in HKG or CDG). If you don’t want to pay some out of pocket, don’t consider the base.


One of the biggest aspects of this LOA is enhanced Scope protection. This is a huge benefit for FedEx pilots because over the years we are getting lots of growth and most of it is international. Having ALPA and FedEx agreeing to extend the RLA to HKG and CDG benefits both groups in the long run.


During LOA negotiations, ALPA didn’t talk much about CDG – many very senior people are going to bid it. Many senior pilots will bid HKG too. 65% of pilots on our seniority list have been hired since 1995. Lots of new guys who don’t know some of the ‘inglorious’ history here. When SFS was opened, FDX said not to be covered by RLA. ALPA put out a notice not to bid SFS. That bid filled up in days - plenty of folks bid it anyway. And there were no financial incentives to bid the base. HKG will be bid whether the LOA passes or not – they only need 75-80 pilots. Bob’s not going to preach doom and gloom, but he doubts that FDX will go back to renegotiate LOA if it’s voted down.


Pilots had the same attitude in 1995 when that TA was voted down - lots of anger. In 1998 when we finally got a contract - it was no better than the TA voted down in 1995. In two areas it was much worse – Scope and trip rig. SCOPE clause in the TA voted down was with the holding company, not just Express. TRIP rig was 3.43:1, but became 4:1 in 1998, with not a significant pay increase. That may not happen here, but pilots should vote for this LOA because it’s fair.


When we open the bases in 2008, less than 2 years from Section 6 openers, that’s the time to improve the LOA because self help is available. If LOA is in place, we’ll only be arguing about the numbers, not trying to structure a deal from scratch. Any problems with the $2700 or tax-equalization may be addressed in Section 6.


STVs. All the talk about STVs pertained to opening Paris (not HKG) because CDG is being opened up with new airplanes. 757s delivered at the same time pilots are going thru training. In the event of bust, etc, then FDX could STV. Bob came up with the idea – hotel, per diem, families, thinks it’s a great idea. As far as inverse seniority, Bob doesn’t think it’s going to happen. Bob feels FDX is not going to take a new hire and send them over; the likelihood of an STV for HKG or CDG is not going to happen. If it does it will go senior (editor’s note: a side letter was approved 25jul07 limiting STVs to 1 bid period).


During negotiations for Contract 2006, ALPA sat down every day, every week no matter what the section was and started with section 1. Bob figured there was no sense in having an agenda if scope wasn’t worked out. Nothing else really mattered until scope was complete. Look at NWA – 4 operating certificates…Plus code shares with KLM and CAL. We don’t do that. We get all the flying. We want all the flying. The problem is because we want it all and FDX gave it to us, we have to do it. If we want it and we don’t do it, we greatly weaken our position in the future. The LOA is for 2 years before we can amend it (Section 6). We need to open the bases under this LOA and do all the flying! HKG is not going to be an Airbus base for long. It will turn into an MD base (MD10-30?). CDG will eventually be a widebody base too (not sure if A300 or MD). The new Paris flying is not replacing what we’re currently doing, they are all new cities. We’ll be serving 56 new cities in Europe. All new flying. Bob wasn’t going to stand there and tell us if we turn it down that we won’t get the flying, we probably will anyway. But it’s important for us (ALPA) to make deals and keep deals. ALPA knew that we’d have a contract last 7/20/06 – that was the first time the company came in and made a deal on scope. The fact they agreed there would be only one operating certificate is huge.

The 79 Snippet Part 2
 

Q&A


---Are the allowances taxed?

Housing allowance is a taxable allowance in the US, but the company pays that. Not sure if storage allowance is taxed, but if it is, the company pays that, too.


---What about schooling?

FDX was never going to pay schooling. We’re pilots, not executives, we’re also not E1. When they send an executive over, they get to pick who they send. They can look and choose a person without kids and for pilots anybody can bid it – the company doesn’t get to make a choice on that, so doesn’t have a way to control costs like when sending an executive over.


There are options for enrolling your kids into American or British school in HKG…There’s also Xuhai, Shenzhen, and Macau, and you can get your kids into school there.


Bob told a story about kids being signed up for good private schools when born, so still hard to get into the best private schools in the US. Some people had to move from NY to CT because they couldn’t get their kids into school in NY. This is a problem happening everywhere, not just HKG. If schooling is your problem, then maybe shouldn’t bid it right now.


For some reason everybody thinks these bases (CDG and HKG) have to work for everybody, but have never thought that for other bases when they’ve been opened.


---The way the LOA is written seems to be very loose – there seems to be a lot of vagueness in the way the LOA is written (like the GT). How are the details going to be worked out?

Lots of issues are covered under CBA, but a few specifics for LOA have yet to be implemented. Everything in the contract applies to the LOA, plus the LOA. There is still a little sense of adventure built into this. GT will be on the clock at the present rate of pay for GT. The SIG GT waiver only applies to HKG and CDG.


---How did this LOA come about?

The average cost for the company to move a pilot is $50,000 (there and back) under CBA. The LOA is worth over $100,000 over 2 years, verses the CBA move package over 3 years (50k). The ability to bid under CBA Section 6 is still available. All these questions pilots are asking would still be in existence if the domicile was being opened under section 6 now, without the LOA. 2000 pilots had LAX on their standing bid before the details were figured out. The same thing will happen for HKG. People will bid it whether the enhanced package is there or not. It’s a moot point about getting answers to all the details. The base will be opened whether we want it or not. The only thing voting the LOA down will do is eliminate an enhanced financial package.


---Does Jack Lewis’ email have the effect of modifying the LOA?

ALPA didn’t think STVs were going to be an issue that’s why they didn’t tackle them in the LOA. Both sides knew that for inverses, one bid period would be the limit if they ever occurred. Everybody has always worried about inverse conversions. For the Airbus, they inversed SIBA only the first time. Every SIBA after that has gone senior. Even if the STV is implemented it is not going to go junior. We have 60 pilots living in Europe – 30 currently in Paris. Paris is a non-event. The big issue in Paris is whether a pilot living in Italy can qualify for the $2700/mo. Just as many FOs as CAPs living in Europe, so narrowbody pay is not a big deal. If you live 10 min outside of Paris, the cost of living is considerably less. One FedEx pilot has an apartment overlooking at the Louvre for 3200/mo (or was it $3700?) The standard of living in these bases is much smaller than the US. Usually less than 1500 square feet. ALPA was trying to get package for a shorter period of time than the CBA for people to be flexible and have an adventure. It gives lots of pilots an opportunity they wouldn’t have under the CBA. (editor’s note: side letter LOA 25jul07 limits STVs for 1 bid period.)


---Does the LOA and signing the letters tied to it restrict your ability to commute to any of those domiciles in anyway?

No. This is a supplement to the contract not replacing the contract. FDX tried to make it mandatory that you have to live there. They don’t want a Mailboxes Etc mailbox address. Are they going to tell you that you can’t have a roommate? No. Can you have a house somewhere else? Yes. Can you visit that house any time you want? Yes. Do you have to see your wife all the time? No. This issue will never come up unless somebody makes it come up by flaunting. Steve Hanks (FDX relocation) is removed from the factor of making the decision whether or not you live there. The Chief Pilot makes the decision whether you live there. If you have a receipt for a place you live, then that’s good enough. CDG has a larger area of approval due to the TGVs and straight to the airport. Possible for more options for commuting from way out in the countryside.


---CDG – if we have kids of any age, is it possible to get our kids into school in Paris?

Yes, the company should help you out. Several of our pilots have lived over there for a couple years and had no problem getting kids in school.


---Did the subject of valuing the compensation to the valuation of the dollar to the Euro or HKD.

It was discussed, but obviously not agreed upon. The Dollar vs. Euro is at a bottom now, so if it goes down any further, we’ll have much larger problems. In the past, there have been adjustments to offset yen, etc in extreme cases, so it can be addressed if it becomes an issue.


---Could you comment on the specter of if we decide not to pass the LOA if we might have FDX CAN and FDX CDG?

If we don’t approve the LOA, FDX could make CAN (Guangzhou) the base instead of HKG. They probably won’t, but they can. We should be worried about the effects of the optimizer – instead we’re fighting amongst ourselves regarding this LOA.

If we vote down the LOA, we open the possibility of the company creating another certificate to do the flying. There are folks in the company that hate the union and will say I told you so. If the LOA is voted down, they’ll say I told you so and press to have a subsidiary do the flying overseas. These same people thought we’d never get our act together to make a deal (contract 2006).


---What about 777 pay?

As to 777 pay, we don’t have to negotiate – that’s in the contract. When they bought the 777, FDX said it was a replacement for the A380 - it does the same thing the A380 does, so A380 pay rates should be applied to the 777.


---How long can you live in Paris? Can I stay 10 years in Europe?

We’ve been told you can stay there as long as you’d like. There is a 5 year visa limit, but that has been waived for France. China has a 5 year limit which should not be enforced. The expensive part of staying more than 5 years is paying into their social security system. The French have waived that, but they may change their mind. The Chinese are supposed to waive it.


---If you move lock stock and barrel to CDG do you have a choice between the LOA and Section 6?

Yes, but ANC has the LOA enhanced option plus the section 6 move (if you qualified for a move package to ANC). ANC folks have the regular move – you can take the value of the move to the lower 48 and move to Paris. If you have the enhanced option, you can still have your house here. When you move back, the company still owes you the move from ANC to lower 48.


---With FDX paying the tax equalization, what about confidence that FDX doesn’t know anything?

All Price Waterhouse is going to tell FDX is how much money they owe the government based on your taxes. You don’t have to have PW do your taxes, but PW is the only one FDX will pay for. If you use a third party, PW has to approve your tax return and tell FDX how much you owe.

Thanks Max.

"We should worry about the optimizer, not this LOA...

WTF is that?

What can we do about optimization except A) worry? B) call in sick/fatigued or C) b1tch? Are our NC imply that if we roll over and give milk on this the company will magically reducing the optimizer? Sorry--I don't buy it.

How about this? Why don't we worry about WHAT WE CAN CONTROL. Voting in a substandard LOA that WILL have our junior guys inversed for 30 days (+/- transit time...TBD)--and that is something we can prevent. If they make CAN the hub, then folks can bid it, or not bid it. If folks will eat $2000 out of pocket to live in CDG, then they can grab a couple trips and make another 2k or so the union seems to think is acceptable.

If we roll on STVs and this thing, then we'll be just as powerless against being inversed overseas as we are against the optimizer. Then our next NC chairman (who won't be Bob) can say "gee...why are complaining about wages--you ought to be worried about getting STV'd!"

Sad, the whole thing is really sad.

Is there really not one dissenting opinion on the MEC outside of Subic?

Are there no independent thinkers?

...someone who isn't drinking the Kool-aide?

..someone without blinders on?

...someone that isn't using divide & conquer, doom & gloom or brinksmanship tactics to scare up the "Yes" vote?

...someone that can approach the company and say "Sorry, we've took a second look, a hard look, rethought this whole thing and it's inadequate---but hey, we can sit down and work something out that works for the Union and the company. We need to tighten up the language in a few places, and there are areas where we'll need some improved QOL compensation, but we all know the kind of profits the company is currently making and will make when these FDAs open. We're really not going to accept this as our "base std" and negogiate this up in 2 yrs. Let's sit down calmly and work this out now."

I really wonder what we could do together, united, if we were led by an MEC that wasn't so defensive, but rather stopped for a momemt and listened, truly listened, and then realized they can stand up to mgt and get a better LOA now.

The complicity they seem to have with management is truly amazing.

Let me get this straight...

BC assumed this would be a great idea and go senior?

Therefore, possible thought process of 'let's hook up the senior guys who want/can afford a one month trip in Paris. Give them a hotel, per diem, and fly that special someone over on the company's dime'.

If it turns out to actually be a horrible deal then the senior guys would be protected by invol junior manning.

Got it. Thanks. :rolleyes:

And no, there are no black helos over the house...just questioning motivation.

Hard to believe that the NC came up w/ STV. I imagine that if the LOA fails, that will have him shown the door.........

Can you imagine if he stays? Every time he brings something up in a negotiation ----"Is that your idea Bob, or does that have the backing of the membership?"

And what was all the crap about the line-item veto? I don't want to line item - I want to help tube the whole deal!

Do you think the company's negotiators were salivating when they costed out the potential savings STV could represent? Good luck getting them to let go of it if this LOA passes. I still have not heard whether travel to and from the STV will be handled as a deadhead or just a free ticket.

Convinced two people tonight who had voted yes to go back and switch votes to NO.

Sweet....it's going to take every last vote, and it ain't over until the voting closes.

Rest assured, the MEC and company haven't fired there last e-mail/FCIF salvos yet.

(Isn't it amazing how they're coordinating their fire --- I wonder what what happen if they spent that time addressing the issue which have been brought up in these forums and worked hard to find middle ground.

Satisfied/motivated workers = increased productivity = reduced costs = profits!

Remember, it's all about maximizing the bottom line --- but of cousre, the question is how do you get there.)

You guys need to lay off of Bob. He is just misunderstood.

He is just the big black lovable lab that comes into the house soaking wet, mud on his paws, with that dead skunk in his mouth. He drops the skunk on the new persian rug, wags his tail, and waits for his master to praise him for the wonderful gift he has just sat before his feet.;)

Then growls at you when you grab it up with a gloved hand and throw it outside...

<< ... 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.

Just one more thing to fan the fires.

I read the Block 4 update on the ALPA website. According to the author, the company wanted seperate LOA's for CDG and CAN. ALPA insisted on a one document covers it all. WHAT WERE THESE GUYS THINKING?

The more details that come out, the more I understand why they are defending this POS so much. They will lose big time credibility with the company. They were supposed to be speaking for us and they have realized that they have no clue what the rank and file wanted.

I guess after the age 65 thing they just knew what was good for us :(

In fact, the 17% HKG tax you'll be paying isn't even going to the Chinese gov't. -- it's going back to FedEx. Foreign companies have to sign a commitment to pay the Chines gov't. an amount equal to 17% of the expat employees' pay. It's a cost of doing business, and it's not unusual at all. What IS unusual (I would say even reprehensible) is that FDX is making a grab at your check to partially offset that cost of doing business ... by withholding "HKG tax" from your check in an amount up to what you'd be paying if you lived in the U.S. What it means is that even though when you file your Federal tax return, Uncle Sam still gives you the Foreign Earned Income Exclusion (FEIE) of about $82K (for 2007), you effectively lost that when FDX took some of it to help defray what they're on the hook for to the Chinese gov't. You think they put us in HKG because it's cleaner and we'd have more fun? Hah, you dreamer. They put us in HKG because the commitment they'd have to sign on for if we were living in CAN (Guangzhou) is more like 51% of our pay, and there was no way we'd tolerate giving up that much pay -- they knew they'd never be able to pull it off. But if they put up a smokescreen, we just might bite off on 17%, up to the level we'd be paying if we lived in the States, anyway. Why would you move overseas and give up a benefit Uncle Sam gives you for going there in furtherance of the business interests of a U.S. corporation? Not just give it up -- but HAND IT OVER TO YOUR EMPLOYER??? Are you out of your mind?

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.





.

I do believe pilots should have the choice on wether to participate in the tax equalization benefit offered by FEDEX or opt out (...just like healthcare, life insurance etc)

With that said, I do not think "tax equalization" is a "cornerston gripe" with this LOA --- it is a std expat benefit, like indoor plumbing in your rental house

(...ok guys, have you seen the opening I've left you with there?)

Just add verbiage which allow pilots to "opt out" and I believe this "particular" isse with the LOA will be resolved.

...of course, we definitly need some more tweaking in other areas.

It's really OK guys --- vote "NO" -- then reopen equitable negogiations between the NC and Mgt.

A "win-win" for all can truly still happen!

From the 79 snipet:

<Are there $9k apartments in MEM or LAX? Yes…just as expensive apartments exist in HKG. However, there are lots of apartments ranging from $2500-$4000 in great areas with expats and they are clean(emphasis added...couldn't help myself). The Negotiating Committee did not think a pilot going to HKG should have all their housing expenses paid. Just like the company doesn’t pay housing in MEM, ANC or LAX. The company figured the average mortgage+utilities for a pilot is around $3000. ALPA used $2000 a pilot for an estimate of out of pocket, so housing allowance (FDX) $2700 + (pilot) $2000 = $4700 month (apartment in HKG or CDG). If you don’t want to pay some out of pocket, don’t consider the base.>



First, yes, there are $9K apartments in LAX, perhaps MEM, but those are on the upper end. Guess what, Hong Kong is the most expensive city in the world for housing. The average ex-pat pays over $8,000USD per month! LAX wasn't mentioned in the top 20, but CDG was. I believe it made the top ten chart. $2500-$4000 for great areas with expats, and they are clean. At least he didn't say nice as company officials stated in a briefing to the "subic demagogues" a couple months back. Actually, they claimed $3500. It's obviously changed since then. I like the trend though.

The company figured the average mortgage(I prefer to use the word rent, or since HKG, perhaps let would be in order) + utilities for a pilot is around $3,000. Personally, I don't care what the company "figured." I want to know what figure the NC came up with in their cost analysis. Surely there was some sort of analysis done on Hong Kong housing/living expenses. I would think that would be a minimum prerequisite for any negotiating of an FDA. And, that would include more than just a cursory look at Hong Kong Living Magazine.


<One of the biggest aspects of this LOA is enhanced Scope protection.>

Again, show me the beef.


<When SFS was opened, FDX said not to be covered by RLA. ALPA put out a notice not to bid SFS. That bid filled up in days - plenty of folks bid it anyway. And there were no financial incentives to bid the base.>

I did not bid SFS until fairly recently, but no financial incentives? I beg to differ. When the base initially opened I believe there was some sort of "bonus" money. I thought it was upwards of $10,000-$15,000, but I'm not sure. What I am sure of is that three years ago I bid it for the financial incentives. I got 79 CH's pay to come out and I'll get 79 CH's when I go back. In December of next year, that equates to over $18,000! I have also been able to utilize my foreign earned income exclusion, which this year will enable me to keep almost $22,000 of my income. Income normally paid for federal taxes, if I lived in the states. That same $22,000 per year disappears with the LOA and its tax equalization. A formula/plan which I remind all, is NOT mandatory!

Hey, the company could provide the $2700 housing and pay foreign taxes. Let us keep the foreign earned income exclusion and the writeoff for foreign taxes. Our U.S. tax liability will be zero and the extra $50,000 + the pilot would keep from his/her gross income would be enough for a nice and clean apartment. Plus, there might be enough to supplant the tuition costs for schooling.

Speaking of schooling:

<FDX was never going to pay schooling. We’re pilots, not executives, we’re also not E1. When they send an executive over, they get to pick who they send. They can look and choose a person without kids.>

They also send executives with children as evidenced by the executive in Singapore who had a stepson. You know the one that got caught vandalizing and was subsequently caned.

Admittedly, the schooling issue is a cost that's largely unknown until the bid is posted. In Subic there are about 25 school age children. The solution is to simply put some sort of cap. But the company simply will never pay schooling. They told the NC personally. I'm not sure what the NC's response or counter was.

<There are options for enrolling your kids into American or British school in HKG…There’s also Xuhai, Shenzhen, and Macau, and you can get your kids into school there.

Bob told a story about kids being signed up for good private schools when born, so still hard to get into the best private schools in the US. Some people had to move from NY to CT because they couldn’t get their kids into school in NY. This is a problem happening everywhere, not just HKG.>


What? I would like to throw out one word here...choice. So some kids couldn't get into the "best private schools." Could they get into others? Were there public schools available? Many families actually move to certain neighborhoods because of the schools in that district. The difference between that and HKG is their is relatively no choice in HKG. Kids don't speak Cantonese...looks like private school then, huh?

As for schools in Xuhai(Zhuhai?) and Shenzhen, those are in mainland China! Shenzhen is almost an hour and a half drive away. Zhuhai, on the other hand is only about a 30 minute drive...after you take the 50 minute ferry ride to Macau. Oh, so Macau is only a 50 minute ferry ride. Yes, that's all, and perhaps a 5-10 minute taxi to school, each way. Did Bob really say this?

I have voted. For those of you still gathering data/facts, I encourage you to listen to our MEC and our NC well, but not blindly. When something is described as set in stone, required, or mandatory, I encourage you to ask, by whom.

This LOA is woefully inadequate, ill-prepared, and hastily pushed forward. They can tweak it all they want. As I said before, You can squirt all the sprays of perfume you want, the floating turd will always stink until its flushed.

Just voted...
 

Just voted and feel lovely....

I'm on a trip and have been discussing the LOA with my almost 60 and over 60 crew members.

Quick aside: it is my opinion that the MEC feels this LOA is good because it solidifies scope. That may be true. The Block 4 email that just came out further confirms this thought. If this is true, I wish "they'd" be straight and say, "dudes, this thing stinks BUT is worth it because it solidifies scope."

Back to the subject...after some discussions, the other guys on my crew comfortable with what BC says.

I began to read some of the LOA pertaining to STV and about 15 minutes later, one crewmember said, "SVT or STV? I thought this was about Single Visit Training for those folks at FDA's...which is a good deal...."

Needless to say we talked some more.

The reality to me about the LOA is it creates loads of grey areas. Additionally, I don't like the idea of STV, especially since I'll end up getting STV's.

Where are you getting this stuff?
 

[quote=TonyC;206686]



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.






.[/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.

(I quoted the fourth sentence ("Without tax equalization...") because I don't understand what you were saying.)


I tried to provide you with facts, and I apologize if you felt I was chastizing.

I can answer any of the above questions you have raised, but I won't do it here in public with 4760 amateur tax accountants and the rest of the world looking on. If you'd like to ask a specific question on the ALPA Webboard, I'll do my best to accomodate you.

The first time a math teacher demonstrated to me on the chalkboard how to use the Quadratic Formula, I watched, and followed the calculations, and believed that it was correct. I could not have immediately stood up at the same chalkboard and demonstrated to another class of students how to do the same thing. Since then I've practiced, and applied the skill, and even "re"-learned it to help teach my own children. :)

Similarly, the first time an accountant stood at a white board and explained the industry standard method of Tax Equalization, I watched, and followed the calculations and believed it was correct. I worked through more examples, asked questions, and discussed hypotheticals. That doesn't mean I'm prepared to stand before 4760 amateur tax experts and tell you how Tax Equalization works. I'm not going to school to become an acountant. However, I'll be happy to share with you my "class notes" and the "teacher's handout" (I'll bring them to the Hub Turn Meetings tonight and tomorrow (if I don't get called on Reserve) and do my best, but I'm not an accountant. That's why we hired an accountant. There's nothing esoteric about that.


Let's deal with the facts.




.

Tony,

Perhaps the Accountant I helped hire can fill in this table:

>>>>>>Estimated Tax Equalization Benefit
Memphis
Income..............CDG...........HKG>>>>>>>CAN

100K
150K
200K
250K

Tell him its OK he can get his numbers from Price Waterhouse again:p

A couple of questions.

1. Is it a fact that FedEx will withold a hypothetical "tax" based on your federal, state and local obligation as if you were actually there?

2. Is it a fact that if the total burden to the US government and Hong Kong Governements combined is LESS than the hypothetical tax withheld, the company keeps the difference?

3. Given the facts that (a) Hong Kong tax is on the order of 17% and (b) that the company is allowed to apply the FEIE to that persons' federal obligation, and (c)that all the money paid to the Hong Kong govt in taxes is deductable or creditable to the US Federal obligation, that the norm rather than the exception would be a person having an actual burden lower than the hypothetical that the company withholds?

1 and 2 should be an easy answer here. 3 might take a little figuring, but again, where are the examples? The company only uses an example of a domicle that won't exist as someone who wouldn't benefit and a generality of "special situation" to describe the other people from whom they will be witholding money which should rightfully be in their pocket.

4. Isn't it a fact that passage of this LOA gives the pilots permission for the company to "keep the change" in regard to tax "equalization"?

I expect the company to use such convoluted tactics to confuse us and sway our vote. I'm disappointed that my Union seems to be doing the same thing.

Just as Expected
 

Fact, Nothing you say in a telephone call is legal or binding, unless it is recorded, with your permission, and you have the expertise in the area you are commenting on. You already said your not an accountant. You can tell me what ever you think you know but that's about it.

Fact, you shouldn't be standing before 4760 amateur tax accountants. Thats not your job.

Comment, You obviously have had some sort of class that enabled you to understand the tax equalization concept. Why hasn't the union sent out information to the rest of the crewforce, of at least a generic tax example.

Fact, I spoke with an IRS representative, specializing in US citizens living abroad, I asked one question, after aprox. seven minutes of research the questions still could not be answered. I was directed to an e-mail address and resubmitted my question. The question was answered with supporting documentation and tax code references.

Non-Fact, Question, Still think you can answer any question I pose?

Fact, The more I'm told to call someone, and get their opinion, that's all it is, for reasons stated above, the less I like it. Professionals, accountants, were hired to give information, if you believe that a select few should receive this information and the rest of us should accept hear-say from our reps you are mistaken.

Fact, misinformation or wrong assumption with regards to tax questions can harm people financially.

Question(I don't expect you to answer) Empty nest couple with rental property income, and large annual dividend and interest income. Will income generated from either of these sources be taxed by the Hong Kong or French Government? Will FedEx pay any portion of this? Better check before you vote. If you get an answer from the company, better get it in writing.

Remember, what you don't know will cost you.