Gov. Neil Abercrombie’s proposal to tax pensions is shortsighted and just plain wrong. Here are the reasons why this is a very bad idea:

» The proposal is fundamentally unfair. Retirees who make one dollar over the adjusted gross income (AGI) thresholds will find their entire pension taxed. Retirees who make one dollar less will pay nothing. (The governor says Social Security will not be taxed, but last time I looked it was included in the computation of the federal AGI and the draft legislation makes no specific exception for Social Security.)

» The pension tax is a big enough tax increase to force higher-earning middleclass people out of the state and discourage them from coming here in the first place. We already have the highest marginal income tax rate in the country. The pension tax will just raise the tax bar higher and, in the long run, be more likely to reduce tax revenues than raise them.

» This tax will hit those least able to go back to work — the elderly — with a very large surprise tax increase. People made plans, committed to mortgages, made long-term health provisions based on long-standing state tax policy which is now going to be changed without warning. Financial obligations don’t just magically go away because a politician suddenly decides a taxpayer has excess income.

» This will be a permanent, never-ending tax to address a temporary, recession-induced shortfall. With every recession in our history, tax revenues have fallen, then recovered as the economy regained its footing. In effect, the governor will be using a short-term crisis to increase funding for his post-recession plans. All taxpayers should be concerned about what the next fiscal crisis will bring.

» This isn’t just about elderly retirees. Hawaii’s military retirees in their 40s and 50s will now have to think hard about whether or not they can afford to live here. A single person or a two-earner couple with a military pension could easily exceed the AGI threshold. It would be a shame to lose more good citizens, many of them locals, who leave the military and hope to stay here. Is this a way to thank the veterans who have just spent the last decade at war?

» The AGI threshold amounts aren’t indexed to inflation. Meaning, as pensions are increased by cost of living allowances, more pensions will cross into tax territory. Soon enough, by the governor’s definition, we will all be "wealthy" enough to bear more taxation.

» The governor hasn’t shown he’s serious enough about cutting duplication, waste and unnecessary programs. Nowhere in his piece does he mention cutting state programs or eliminating those that duplicate the city’s. Until he’s done that, new tax revenues will just go into the same old political black hole.

Abercrombie misled the voting public about taxes during his campaign and now, he is defining "the wealthy" down to what most consider to be middle class. Where will this mentality take us next? Forty years ago, the state made a deal with retirees. He now proposes to break the promise represented by that tax policy.

This brings us to the key paragraph in his commentary piece last Sunday ("Pension tax would end preferential treatment," Star-Advertiser, Island Voices): his determination that all retirees are obligated to "service the unfunded liability of the pension funds themselves."

In saying this, he cloaks the mismanagement of state retirement funds and denies the state’s responsibility for the scale of the miscalculation it has made.

Shortsighted, cynical, deceptive — these are just a few of the words that come to mind regarding the governor’s position. Any legislators who back this proposal, or any version of it, will rue the day they raised their hands in support.

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Jeff Pace, of Kapahulu, is retired from the U.S. Air Force and is a former defense contractor.