-- Connecting the dots between our economy, government and business --
Summary and audio linked here.
Chicago’s political leadership is floating a pension buyout program as evidence it is seriously addressing the city’s thirty-six-billion-dollar unfunded pension liability, but Mark Glennon, founder of the Illinois policy research organization Wirepoints, said that the proposal moves debt from one column to another rather than reducing it, and that the broader fiscal picture facing the city continues to deteriorate across every measurable dimension. Audio here.
Expect no retraction or apology. This what they do.
The state’s existing buyout program for its own pensions is the precedent for Chicago, which should be a warning: Look out for similar exaggerated claims and shoddy analysis.
Full interview and summary linked here.
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If I were tasked with a plan to tax retirement income, here’s what I’d do: 1) Social security is 100% exempt, regardless of income 2) On top of that, exempt the first $40,000 of retirement income, with that exemption decreased dollar-for-dollar up to $80,000. No exemption for anyone with over $80,000 in retirement income. 3) If you are below age 62, you are ineligible for #2 (sorry, early govt retirees). 4) If you have “working” taxable income above $20,000 while claiming retirement income, you are ineligible for #2 (accounts govt workers who retire then get another good-paying job while allowing… Read more »
It sounds like a constitutional amendment that allows for a progressive tax would be helpful for your plan.
I don’t think you would. They’d been talking about implementing $ exemptions for awhile even with the flat tax.
They talk about a lot of things, doesn’t make it constitutional. I’m sure JB will be thrilled to know that he doesn’t need it. Just imagine…He raises the flat tax rate to 8% for everybody. He then offers and an exemption of 39% of your income for the first 100k in income. Also offers and exemption of 38% of your income between 100 and 250k. He could easily get his progressive tax done without that pesky amendment. The only difference between this plan and yours is that you would offer 100% exemption of income on the first 40K and a… Read more »
Another sad day for all of Illinois, so many times are governor has said during his daily updates on the coronavirus this is not a time for politics, it’s about saving lives. But yet today this governor, if that’s what he really is took the time to promote his progressive income tax. So many people Are out of work for the foreseeable future, families losing homes, people struggling to survive, and businesses going bankrupt. But yet this rich slob took the time to tell people it’s time to raise taxes, damit this man is Either a total idiot or just… Read more »
This is definitely part of the larger picture. They may start taxing retirement income over 100k per year but eventually will lower the amount. They will even be able to garner support from those that hate state pensioners. A couple billion dollars per year is just too much to resist.
It is discriminatory, and probably racist, to tax the senior citizen at who works part-time at home depot, but exempt the pension of the retired teacher who can afford to take two Disney cruises a year on the tax payer’s dime.
Debtsor, it sounds like you are advocating to tax retirement income. Look at you.
It’s only Fair [to] Tax all income and not discriminate based upon its classification. Income is income. It’s better to be consistent and have everyone play by the same rules. As it stands, union state pension retirees get an extra that the rest of us don’t get. Fair is fair.
I completely agree with you I was just having some fun. It makes no sense that a couple retired making 150k per year doesn’t pay any state income tax while a guy making 50k per year pays $2500 per year.
There is some cognitive dissonance between my overall anti-tax positions and the prospect of actually being in favor of a tax increase on retirees. But it is still possible to believe that if we’re going to have a tax, everyone should pay it, and not exempt out some special interest with union lobbyists and campaign donations.
As you well know, taxing retirement income will cause a significant spike in the number of residents leaving the state. It constantly amazes me that the pols and unions, through action and inaction, cause the IL population to continue to shrink. I know you said many times that the pols and unions don’t care about IL continuing to lose population (but they should). They care about keeping this crazy money train going at least until the end of their lives. They may be able to pull it off, especially if the feds help them out.
I’ll call those retirees’ bluff. Progressive Democrats are always happy to pay more taxes.
Retirees can relocate easier than working people. It is extremely risky (for Illinois) to go after this segment of the population when other states offer a better climate, no state tax, no tax on retirement income, and much more reasonable real estate taxes. That being said I also believe Illinois will do it at some point, and that was included in my decision making process to leave Illinois. Also fyi, I’m retired.
Your statement is a little confusing since all retirement income from any qualified source for everybody is exempt from state taxes not just state, county, or municipal workers.
Yes, it is for everyone, but I’d venture to guess that the pension retirees have far more ‘income’ every year than saver retirees withdrawing from their pre-tax contribution IRA’s. Compare that with the median IRA balance for someone in their 70’s is $75,627. The average IRA balance of someone in their 70’s is still only $219,790, which is skewed by outlier millioniares. The median private pension benefit of individuals age 65 and older was $9,645 a year. This is all peanuts compared to municipal pensions. A CPS teacher gets $219,790 in pension income over a few years while a saver… Read more »
Absolutely agree. Taxing retirement income generates way too much money for the greedy pols not to go after. Also, isn’t it ironic that IL, which needs money more than any other state, doesn’t currently tax retirement when the majority of states do? Brace yourselves, IL senior citizens. This will be reality in the relatively near future. Then, as usual, we’ll get to see how the pols misuse the money.