Collapsing Illinois Wants To Steal Private Retirement to Pay For Public Pensions
Illinois is in major financial trouble and now some politicians want to tax private retirement funds solely to pay for public pensions.
The previous administrations have promised HUGE pension payouts to government workers. They promised way too much, and now they’re in serious financial trouble.
They are seriously talking about stealing money through taxation of peoples real retirement funds to hand over to those who have been promised extra large state and public pensions.
Fortunately, State Rep. Allen Skillicorn, R-East Dundee, has introduced a constitutional amendment that would forbid taxing retirement and pension income. But will it happen soon enough? Will it get passed?
Last week, the Civic Committee of the Commercial Club of Chicago released a report saying the state should tax retirement and pension income to help pay down the state’s backlog of bills. The Civic Federation, another high-profile Chicago-based nonprofit, suggested the same Wednesday, saying it would put another $2.5 billion in taxpayer money into the state’s coffers.
“Out of the 41 states that impose an income tax, Illinois is one of three that exclude all pension income and one of 27 that exclude all federally taxable Social Security income,” the report said. “To raise the equivalent amount of revenue by increasing the rates on the existing tax base would require a hike of approximately 0.50 percentage points in the personal income tax rate and a proportionate 0.85 percentage points in the corporate income tax.”
The Civic Federation says the tax exclusion amounts to the largest tax break the state gives and will only grow over time as the population ages.
But representatives of the nation’s largest public interest group representing seniors warn that the exclusion of retirement in the state’s income tax code is a big reason some retirees maintain residency in Illinois and pay the other high costs associated with living in the state.
“Illinois has the highest property taxes in the nation, the sales tax in many communities is nearing 10 percent,” said Ryan Gruenenfelder, director of advocacy and outreach for AARP Illinois. “We have notified our members and many of them are responding, saying ‘if this happens, I am going to leave the state of Illinois.”
Of course, as we have reported, Illinois is in severe financial distress, and could be the first state to collapse under the pressure. Legislators are against the clock and have been looking at a number of different ways to get out of the fiscal mess.
Instead of creating ways to bring in business, they are instead creating ways to tax the people, which is driving people to other states, exasperating the problem.
The AARP is correct on this one. “We have notified our members and many of them are responding, saying ‘if this happens, I am going to leave the state of Illinois.”
Just this week, State Rep. Marcus Evans Jr., D-Chicago, tabled a proposal in the Illinois House of Representatives that sought to create a pilot program for a vehicle miles traveled, or VMT, tax.
Evans introduced House Bill 2864 in the Illinois House of Representatives on Feb. 14, and tabled it a week after introducing the bill.
In a state that ranks lowest in government trust but among the highest in gasoline taxes, more than 30,000 people signed a petition on illinoispolicy.org stating their opposition to a VMT tax after the bill was filed.
If you tax the people too much, they will walk with their wallet, every time.