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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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Viewed in a vacuum, retirement income taxation with an exemption may seem reasonable, but it enters the realm of the undoable when you add in retiree property taxes (even with a homestead and senior exemption they are onerous), increasing medical costs and the likely tax increases coming from other local governments. You’ve got to look at the entire Illinois and local government tax load, and the added cost of just living especially in Cook County with such things as insurance, food, entertainment, etc.. Maybe public sector retirees can afford this, but it is out of the question for most private… Read more »
They should exempt income below a certain threshold, but if you exceed it then you pay. Since the unions always represent retirees as getting a pittance, I’m sure they wouldn’t balk if those making over 40-50K had to pay. Right now instead of them paying their fair share I have to pay it. If you get a $68K a year pension like my neighbor you can darned well afford to pay state income tax.
A $40-50K exemption seems pretty large. Why does the 58 year old making $50K – while paying 6.2% SS AND 10% towards his own retirement – have to pay full state income tax and his 62 year-old retired neighbor pays zero? Younger taxpayers actually have more expenses – mortgage, saving for their own retirement, kid’s college fund, etc – than retired folks. The bottom line is 401k, IRA, and pension contributions are tax-deferred, not tax exempt. So when are we going to tax it? The main reason IL does not tax retirement income dates back to 1970 when the income… Read more »
If it is paid in the State of Illinois and it’s over $100k then tax it at 50%. That way all those high paid public pensions can fund the school teachers pensions that only make $30,000. Seems fair.