-- 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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Ah, so the wonderful weather will be what keeps retirees here.
Taxing retirement income in Illinois WILL happen. It’s just a matter of time. The time frame will be shortly after the progressive income tax amendment passes. Then it will be retirement income above 50 or 100k per year will be taxed with lower amounts exempt. JB or the next governor can put together a graph that shows this will only impact “rich” retirees and 97% wont be impacted. They can even call it the “fair retirement tax” to make it sound more appealing. They will have examples of a hard working family with two incomes making 75k a year paying… Read more »
I respectfully disagree with your projection for the foreseeable future. Politicians and Government workers, the political class in other words, are the reapers of large rewards with the current pension just the way it is. It is hard for me to recognize that they would vote to raise their own taxes any more than I would expect an Illinois Judge to rule against legal move to reduce State pensions when they, the Judges, are in the same pension system. Consider too that as a group senior citizens tend to vote. Because of this they seem to be handed out considerable… Read more »
No doubt my timeline may be aggressive but Illinois finances will eventually come calling for more tax revenue. Just as Quinn tried to reduce pensions (although I would contend that was a ploy), Democrats will eventually be forced to go after that revenue. They will probably adjust the progressive tax rates a few times first but eventually retirement income tax will be on the table.
Remember there was some chatter about taxing private retirement accounts to pay for public pensions. I’m sure that would sit well with taxpayers. Also read up on The Boston Tea Party. “taxation without representation”. Sound familiar? Most of our lawmakers are pretty much self elected with enacting laws that benefit only a few like “shall not impair or diminish” What tax eventually will break the Illinois’ taxpayers back? The potential 1% statewide property tax or progressive tax or some unknown tax yet to come?
As the crisis deepens and the “what, me worry?” delusion of the last 50 years begins to dissipate, no doubt that the first step will be to tax everything not currently taxed, and then to double and redouble taxes on EVERYTHING.
Politicians today are corrupt, con-artist morons. Only when crisis fully arrives and most people are thrown into crushing hardship is there a chance that honest statesmen will return to politics.
I’m reminded of the simplified 1040: send in everything you earn, we’ll send back what we think you need.
Simple. I’m not wealthy. I’m retired. If my pension/SocSec is taxed I will sell the house within the year and I’m off to Florida or Tennessee. Zero tax dollars either way, but in leaving I’m no longer spending into the Illinois economy.
Why wait?
Lisa, you better hope every other retiree doesn’t do the same thing at the same time because the huge increase in housing supply that would result from that would cause a run on real-estate and you may be looking at taking at least a 30% haircut on the value of your home.
Regardless of the right or wrongs on taxing retirement income I have some very strong doubts that would ever come into play. Remember this is Illinois and it’s “about grandma” or “it’s about the children” or so on and so forth.
I might think about supporting this ONLY IF he would also propose taxing wealth (and income from it) held in Caribbean Trusts.
They call it retirement income but most people living off their retirement savings are really just living off peanuts The real giveaway are the $8,000 a month pensions that aren’t taxed. Few non-government workers ever save enough to spend $8,000 a month in retirement, whereas so so many former government workers take their pensions in their 50’s at that size.
It’s hard to save up for retirement when social security takes a large chunk of your earnings. For a mere 3% more of your gross pay (and tax-deferred, no less), public sector workers get a far superior retirement package. I know social security is technically insurance and not a retirement plan, but still. Imagine 12.4% of your income deposited into an IRA instead of SSI. Combined with your and your employer’s 401k contributions, it would make for a nice retirement package.
3%? Where? A teacher pays 9.4% directly into Teacher Retirement System (it is considered “pretax,” however, unlike FICA taxes which regular people STILL pay tax on, which is robbery.)
I fully expect that before the lights go out in IL they’ll add retirement income to what the state taxes. If that day is delayed enough I have every intention of pulling as much as I can after age 59-1/2 (below a federal income tax progressive breakpoint) from an IRA each year it doesn’t also incur state tax.
All roads lead to collapse.
3% more (6.2% vs 9%). BTW – I don’t think teachers pay that 0.4% anymore as that was for the early retirement option which is no longer offered.
Yes, it’s totally hard, and the more money a household makes, the larger percentage the federal (And soon state) government confiscates from you. everyday there are articles about the poor being so poor and few retirees having any money. And yet our wonderful politicians fail to connect high tax burdens with low retirement savings.