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The report by the Civic Committee of the Commercial Club of Chicago is a new message from a group that opposed Gov. J.B. Pritzker on the graduated income tax in 2020.
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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Why are people fleeing Illinois?Land of Lincoln now one of the most unpopular states in the nation
Why are people fleeing Illinois? – Washington Times
If these dead heads as a group got out on election day to vote maybe they wouldn’t want to leave…but that takes effort crowd wide
“People are looking from the Northeast and relocating for jobs — not retirement — and companies are looking” for offices, Ross said. “It’s tax issues, and there’s the security issues. There’s just the ease of living.”
In the past two years, major technology, finance and law firms have moved or expanded to South Florida, drawn by the lower taxes and warmer weather. Ken Griffin’s Citadel has relocated its headquarters to Miami from Chicago, while companies including Apollo Global Management Inc. and Blackstone Inc. have taken space in the region.
Illinois should start taxing AIR. That way everyone pays the same amount.
All the money in the world is not enough to fix Illinois problem of overly generous pensions.
That is what is causing all the problems.
Those thinking of taxing high-income retirees, aka to IL pols as middle-class and above, to help fund pensions, etc. should think again. After that taxing occurs, there will be a giant out-migration of retirees, including public pensioners, from IL to more tax-friendly states. I think those in IL nearing retirement will be ready to move, too. IL will suffer a significant population loss, meaning those remaining will pay even higher taxes to support pensions, etc. That means some of those remaining will have reached their threshold of pain and will move out. The description I gave is that of a… Read more »
mqyl – I don’t understand the down vote for you. Democrats in a post mortem exercise referenced the mention of a tax on retirement funds as a reason the progressive tax amendment failed. Who knows why it failed? My view is that people have ceased to trust Illinois governments with the handing of revenue, but in any event a number of people on both sides of the aisle believe taxing retirement revenue will lead to a significant out migration of people. While not subject to an income tax, retirees pay any number of taxes, including property taxes, so a prognostication… Read more »
Just sayin’: Do the IL pols think IL residents will continue to take blows to the head with new and increasing taxes and fees? Everyone has their breaking points. Residents who only five years ago hadn’t given a thought to relocating out of state are now seriously thinking of doing so. Most residents don’t see a light at the end of the tunnel in IL.
““Our sense is that to do anything, it’s going to require a bipartisan approach,” he said.” Well, actually in fact, no it won’t. Illinois Democrats could do it all on their own without a lick of Republican support just because Illinois Dem’s think it’s the right thing to do. Dem’s have supermajorities in both the Senate and the House, Pritzker’s a Dem, the Illinois Supreme Court’s justices are 5 Dem’s and 2 (sort of) Republicans. The public employee unions want their pensions funded, and are one of the Illinois Democratic Party’s most influential supporters. Nothing stands in the way of… Read more »
Numerically you are correct but politically you are wrong. The point is the democrats have no incentive to do so unless Republicans are on board. That’s exactly why it won’t happen until it absolutely has to. Of course, that means it will cost billions more than if the legislature had the intestinal fortitude to come to an agreement. Look to the last Rauner budget stand off as to the road map. Democrats could have over rid Rauners veto but they played games to make sure Republicans were also on board to call it bipartisan.
Thing is, your argument works less and less as time goes on, and the pension underfunding increases beyond its’ already disastrous levels. Illinois taxing authorities (state, county and municipal) already owe public employee pension funds what – $200 billion all told? Something like that. The state of Illinois’ share is well north of $120 billion all on its’ lonesome. An amount equal to four or five years of the entire state budget, right? It’s going to get harder and harder for Illinois Democrats to avoid being blamed for the consequences of their legislation and policies because, as you suggest, they’re… Read more »
Pension funding levels are about the same percentage of funding as they were over 50 years ago. Even if pension funding isn’t increased from current levels, the ramp requires more and more money going to pensions. Sure future legislatures can skip payments as they have done in the past but the credit ratings agencies have let the states know they will suffer. If Democrats end up taking the blame that would only elect Republicans into leadership position. They have no idea or plan to deal with it so it would be short lived. The worse it gets, the more it… Read more »
So, I can anticipate that the public employee unions are going to adopt a “pox on both your houses” attitude toward both Democrats and Republicans?
Throw all the bums out, and start endorsing candidates who will insist on taxes being raised to fund their pensions?
Aren’t many of that sort of elected official in Springfield at the moment….
PPF – isn’t the reality that the State will borrow until it can no longer (although I think Chicago is the most fragile)? You make an interesting point about Republican participation. Do they need to be in the mix so the Democrats can pin some “blame” on Republicans (perhaps irrational, but such is politics).
Any IL ‘Republican’ that went along with such a half-baked Democrat scheme to dump more $$$ into the broken pension racket is just a sap. However a number have already shown themselves to be saps.
So you’re saying Republicans complaining about the budget not being balanced really don’t care if it’s balanced? I agree, it’s all theatre to Illinois Republicans.
What’s their solution to ending structural deficits? More Bailey type statements of just finding $4.4 billion in waste and fraud? lol
I think that Bailey’s proposal to find $4.4 billion really meant that he was going fire state employees and cut jobs by executive fiat. He can’t say that outloud though.
Public employee pensions are guaranteed by the Illinois constitution, and taxing authorities – which is to say Illinois’ citizenry – are in debt to those funds by $200 billion dollars for all the other stuff-n-services we bought with that money.
“Someone” is going to have to do “something” about all this sooner rather than latter.
The “justice” or “sensibleness” or “fairness” of what’s happened in the past, or blame for it, is of no consequence. Now we have to pay up, or move to a state that hasn’t made so many horrible decisions.
I’d love to know the true story why biz community is releasing this plan and not the machine? What the gun that’s being held to the biz communities head (or what’s left of biz community)?
Another point. This is being proposed as a surcharge tax lasting only 10 years. But who would believe after 10 years 0.5% tax would be rescinded? In reality its an increase in flat tax disguised as surcharge.
The big thinkers in this business group can’t distinguish between an alleged improvement in the state’s financial condition due to an infusion of federal Covid funny money and supposed fiscal discipline exercised by the one party state government. They have no credibility to provide any further comments or recommendations.
$1.2 billion in more revenue just by updating our tax code to better align with today’s service economy. $1.8 billion by taxing high end retirees. $2.9 billion with a slight adjustment to the flat income tax. Plenty of taxes to help us get out of this problem. Pay more now or pay a lot more later.
This would be like pouring gas on fire. People will stampede out of Illinois. I hope they do, leave PPF and the likes of them to pay the Pension time bomb debt or let it go broke.
It is not pay more later, it is see you later. Can not tax people who have left and they are leaving at a ever increasing rate. Thank you PPF for the economic incentive to leave for Texas or Florida.
Chicago Municipal pension fund posts net -11.7% return for 2022Just tax more money to make up for the loss. No big deal, it is only taxpayer money.
Whatever you do never expect a government Lackie to take any kind of cut.
Except our sales tax rate is very high because it excludes the service economy. Expanding sales tax to services (which I believe it should) should also coincide with lowering the sales tax rates across every level of government. Revenue neutral but brings stability and scalability. Over the long term, sales tax revenue receipts would more accurately reflect our evolving economy.
Revenue neutral defeats the purpose. The state needs more tax revenue as this business group notes. This group has shown that it’s not mathematically impossible as many have suggested but instead just politically inconvenient.
$1.2 billion in more revenue just by updating our tax code to better align with today’s service economy. $1.8 billion by taxing high end retirees. $2.9 billion with a slight adjustment to the flat income tax. Plenty of taxes to help us get out of this problem. Pay more now or pay a lot more later.
“The revenue impact of expanding the sales tax to services would depend on which services the State chose to tax. 2017 estimates from the Commission on Government Forecasting and Accountability (CGFA) projected that Illinois could bring in approximately $1.2 billion if it taxed the same set of services taxed by Iowa.34 A later look at sales taxes on services by the Taxpayer’s Federation of Illinois produced a comparable revenue estimate.35 It is clear that Illinois could substantially increase revenuesby better aligning its sales tax to today’s service-based economy.” $1.2 billion in more revenue just by updating our tax code to better align with… Read more »
Currently six figure retirees pay nothing while Joe six pack worker pays at least 5 grand per year in state income taxes for the same income. Totally unfair. Just by bringing a little fairness to the tax code, Illinois can collect another $1.8 billion per year. Clearly the money is available to fund pensions. Just need to make it happen.
All of your pensioner buddies will move out of the state. The free ride on state income tax is probably the only thing that keeps them as Illinois residents.
You`re Totally Clueless states like Florida Texas Neveda have better weather and better economies better strandard of living so no ones staying that can get out DUNCE
I’m down, Except whatever exemption is applied to retirement income applies to all income. If the retiree with a $99K pension is exempt from income tax, so should the working guy making $99K.
The total exclusion of retirement income is a matter of inequality. The guy making $100K still has to contribute to social security and his retirement, two expenses the $100K retiree doesn’t have to make. Net pay is how we pay for things.
With just a small tax increase the state can collect $2.9 billion more in revenue.
Proving that funding pensions is a political problem not a financial one.
Illinois is addicted to structurally unbalanced budgets. Acceptance is the first step to recovery. It looks like CCC is trying to help Illinois finally recover accept their reality. Adulting is hard but necessary.
Your tax suggestions aren’t wrong. The best we could hope for is all of these taxes coming due at once. There would be a bonafide tax revolt so swift it could flip the IL house Red and with it some real structural reform. Even rich progressive liberals have their limits. Bring it on.
I agree with you debtsor. I actually believe there would be a revolt. I don’t think that revolt would bring any pension reform but it would bring about a group of politicians that would be fiscally responsible and would end all the madness around so many spending initiatives.
The. true costs of pensions needs to be brought to the voters doorsteps if Illinois is ever to gain fiscal sanity. It’s the only way the voters will wake up.
Temporary tax hike has been re-branded as surcharge.
… or reform the IL pension policy to pay more reasonable pensions and health care benefits compared to other IL retirees, so IL can survive and prosper.
Unconstitutional. They tried that and got smacked down. The only choice left now is to pay.
7 soon to be pension receipts said it was unconstitutional. And Chief Justice Burke thinks her husband is an innocent said too railroaded by the Feds
That and the plain and clear unambiguous language of the Illinois Constitution.
The right to ‘abortion’ was clear and unambigious too, see it right there in the 14th amendment?
More lies debtsor. No where in the constitution does it say people have a right to have an abortion in clear and unambiguous language.
Pension and Retirement rights…..“the benefits of which shall not be diminished or impaired.”
Where is the section on Abortion rights with clear language? I won’t wait because no such language exists.
Writing for the majority opinion in Roe v. Wade, Justice Harry Blackmun said that the court held a woman’s right to an abortion was implicit in the right to privacy protected under the 14th Amendment
SEE IT RIGHT THERE, IT IS SO IMPLICIT IT BECAME THE LAW OF THE LAND. ….SUPER-PRECEDENT
The court also said the state is not required to cause a fiscal crisis in order to pay the pensions leaving the door open to fuqing you parasites. Pucker up ppf.
Nothing of the sort is in that decision. Provide the quote or we will all just know that you are lying per usual. Here is what the ILSC actually said regarding crisis. “The General Assembly may find itself in crisis, but it is a crisis which other public pension systems managed to avoid and, as reflected in the SEC order, it is a crisis for which the General Assembly itself is largely responsible.”“It is especially important in times of crisis when, as this case demonstrates, even clear principles and long-standing precedent are threatened. Crisis is not an excuse to abandon… Read more »
Here is one more nugget for you Marko. “Moreover, no possible claim can be made that no less drastic measures were available when balancing pension obligations with other State expenditures became problematic. One alternative, identified at the hearing on Public Act 98-599, would have been to adopt a new schedule for amortizing the unfunded liabilities. The General Assembly could also have sought additional tax revenue.“ Since you seem completely lost as to the rule of law and this decision, let me break it down for you. Raising taxes is considered a less drastic options than cutting pensions. Get out that… Read more »
I’m already a FL resident for 6 month and a day each year. I unfortunately still have a business in that shithole and still pay some income tax. You can bet your parasitical ass I wont be for long and taking all revenue with me as we transition out. I will find the quote regarding the IL supreme court, unlike you I have to work and cant sit on my lazy ass all day on Wirepoints. Too bad covid didn’t take out more of you old worthless slugs.
So you don’t have the data. Typical liar. Don’t worry Marko it’s what everyone expected. Keep paying that income tax. haha.
It’s probably next to the law that says the state can do anything it wants and the federal government can’t do anything about it.
There is no such thing as clear and unambiguous language anymore. Leftists change definitions all the time- domestic terrorists, insurrection, equity, gender, “safe and effective”. They can’t even define the word “woman”. Better keep those leftist politicians in your pocket. But beware, history shows that power-mad revolutionaries usually end up devouring their own.
“Unconstitutional.” … until it’s not. The part of the IL constitution on pensions is so very many years in need of amending.
Government does not have to follow the laws, they make them. If they do not like them, they just change them at will. Do not fund pensions and let them run dry and deal with it then. Government services come before pensions. End all taxes and the quicker death happens the better.
Toll roads were supposed to be free.
Illinois Democrats: Making Florida look better every day.
The public accounting profession is a tool of the Government Industrial Complex.
Chicago Municipal pension fund posts net -11.7% return for 2022 – Pensions & Investments
Do not fund the pensions and when it runs out of money deal with it then. Wait till a few checks do not show up. The greedy government lackies will be more negotiable when this happens.
meanwhile all are neighboring states are cutting or have proposals to cut flat tax rate
we would support a personal and corporate income tax surcharge if funds raised in the surcharge are legally obligated to be contributed to the pension funds (in a lockbox-style approach) and incremental funding of the Rainy Day Reserve Fund. Money is fungible. This is a non-starter unless the state is also required to make the full actuarial required contribution (normal cost + debt) from the regular budget. In other words, incremental funding from this surcharge goes above and beyond the ARC payment. And this surcharge is fully refundable if that ARC payment isn’t made. This would force the state into… Read more »
Chicago’s Corporate Creep Lobby Wants To Let Democrats Rob Illinois Taxpayers, To Bail Out The State’s Crooked, Corrupt, Gold Plated Benefit Public Pensions
Public pensioners are getting paid either way. More taxes aren’t bailing out pensions but rather bailing out other needed services. This group has finally come to terms with the truth and recognize that if the city is going to be successful it’s going to need to support more taxes.
The people not accepting this reality are like a toddler crying that he doesn’t want to go to bed now. Sometimes you need to let them cry it but eventually their infantile behavior improves.
The Commercial Club wants every Illinois taxpayer to pay more, so that pension fraudsters can continue to collect inflated pension payouts, based on scams like triple dipping, and working the last day at a job with twice the salary the employee ever earned.
It’s a proposed state flat tax increase not city..where’s the equity
Businesses will not eat the surcharge. They will pass it through to customers, who already will have less money due to the individual surcharge.
edit: That’s a good point about the targeted funding level only being 90%, not 100%. Try paying 90% of your property tax bill, tell Maria Pappas that’s good enough and watch what happens.
Finally the business groups are coming to their senses and realize the only solution is more taxes that are specifically ear marked for pensions. Let’s see they mentioned the following taxes: Taxes on services Taxes on retirement income Income tax surcharges – Although this same group opposed a progressive tax now they are ok with a surcharge. Too funny It’s like I’ve been saying all along, plenty of taxes left to be raised. If too many people leave then the state should almost implement a real estate transfer tax. Say 9% of the property value where one could also get… Read more »
PPF, in another life you were a Soviet commisar collecting exit taxes from Jooish emigrees leaving the Soviet Union for Israel.
When Illinois implodes and you’ve gotta go back to “work” a gig in the proposed Real Estate Transfer Tax office would be a good fit for your world view.
I’m curious Old Joe. When the old age welfare program of social security is required to cut your check by 25% will you be advocating for tax increases to continue receiving your welfare check at the same level? I think we should cut entitlements but you’re probably one of those tax and spend individuals when it comes to your welfare.
Better start applying for that Walmart greeter job now to beat the rush. I have a feeling a lot of you are going to need it.
PPF, I don’t anticipate any drastic outright cuts to SS. However, I do expect future increases to be less than the inflation rate so nominally I and millions of other people will be “impared.”
I would argue that we “repurpose” money set aside for public employee pensions to be used to pay SS benefits though. Especially those above a certain level — say 100K for example.
PPF is right.The law states that when the Trust Fund runs out of money, in about a dozen years, social security will be only pay out with revenue that comes in. That will be about a 25% cut. Start budgeting now. Language from the SSA.gov. below
Trust fund exhaustion, which is currently projected to occur for OASDI during 2037, would mean a precipitous drop in the level of benefits that could be paid.
The 2037 number is actually later than many predictions. Just a year ago it was in the 2033 range with an expected payout of 77%. An automatic cut. Polling shows that SS recipients want taxes raised not a cut. Somehow I think politically that is exactly what will happen. Old Joe will be right there demanding an increase in taxes rather than take a cut. Social Security is not a contract and can be cut at will. The only thing stopping the cuts is political reality. Pensions on the other hand are a contract and the courts have said Illinois… Read more »
The 2037 date was a bit optimistic and was made before the latest 8.7% increase to benefits for 2023. I think 2033 or 2034 was a more accurate target for benefit reductions The good news is that inflation looks to be getting back to the 2-3% range more quickly than expected and future increases in benefits will be lower and extend the inevitable out another year or two.
Another tax? Are they serious?
The machine can now 100% do whatever they want. What’s interesting is tax plan is a business groups proposal. Or, jb’s putten the screws to big business, telling then to get behind increase in flat tax or else or maybe revive graduated tax? Or, who knows, it all seems out of nowhere/ behind closed doors planning as usual.
Yes they are serious. Anyone that is truly serious understands that we need more taxes.
What’s business getting in return would seem the big question? Or, maybe behind the scenes jb & the crew are telling big biz to get behind flat tax increase or else? Who knows, but anyone who thinks big biz proposed this out of the blue in completely naive
It would seem then that the discussion of new tax children tax credits should not be on the table yet my guess is it will be enacted somewhere in the future
I agree. No new state spending programs until actuarial pension contributions are being made. That should be the standard but unfortunately voters don’t support fiscal common sense.