38 Comments - Anonymous - Monday, Nov 29, 10 @ 6:05 am: I used to think the tax exemption for retirement income was silly. Well, until i retired anyway. After that I figured it out. I can pack up and move to another state without much problem. Do not know if I would but I know it would be worth considering. Seniors ride free? Now that is silly. Ok, I use it but it is silly. - Lakefront Liberal - Monday, Nov 29, 10 @ 6:36 am: You are completely right about this. First off, in general, we should always try to put things into context. Huge amounts of the public debate are spent on extremely trivial things while big issues are left untouched. Secondly, the tax exemption for retirement income is a good example of something that I think is a problem in many areas, namely when the extremely wealthy are able to hide behind other, less-wealthy segments of the population to give themselves a nice tax break. Tax retirement income over a certain very high amount. It won’t affect anyone but those who can well afford to pay, and if we don’t tax them then we better be prepared to have OUR taxes cover what they are not paying. - John Galt - Monday, Nov 29, 10 @ 7:59 am: Lakefront: Although true, the wealthiest (especially the retired wealthiest) are also the people most willing & able to move from Illinois. They don’t have day-to-day jobs or school aged children to anchor them here. And they have the means to own multiple dwellings. They’d maintain a home here and simply change their official residence to Florida, Texas, or Nevada–all states with zero income tax. I agree with Rich that larger budget solutions need to be done. This piecemeal stuff won’t get us there. However, this free rides for seniors is REALLY low-hanging fruit. If there’s no political will to even get THAT done, then our pols have absolutely zero backbone. Unless it just boils down to legislative tactics. “Improve incrementally as we can” is one method. But the apparently prevailing theory is “I’m not going to risk pissing off large swaths of the electorate unless I can say in the same breath that it’s largely fixed our budget mess.” - WRMNpolitics - Monday, Nov 29, 10 @ 8:31 am: Illinois is one of the few states not to tax retirement income either when it is deposited or withdrawn. As the population of retired persons increase, it will further erode the tax base. The state should change the tax system to set a floor level of non taxable retirement income.Maybe set the floor at the median retirement income, based on prior year tax filings , adjusted for inflation. - cassandra - Monday, Nov 29, 10 @ 8:44 am: A flat income tax is really a regressive tax, add in the retiree exemptions and it’s really regressive with respect to well-off retirees. With the population shifting to an increase in the percentage of elderly (not to mention dramatic increase in longevity over the past century) this particular tax is going to cost more and more over the coming decades. On the other hand, the middle class working age folks are really struggling as a group. They will bear the burden of Quinn’s income tax proposal. Quinn and Co like to soft-pedal this part but it’s true. So they will have less to invest in their own retirements, college for the kids, and other expenses. Quinn and his group have already shown that they have no political courage. In addition to being heavily indebted to public employee unions, Quinn has waffled endlessly on free senior rides. He couldn’t bring himself to cut or even significantly modify free retiree health insurance for early retirees from state government-that’s early retirees, people who left, for the most part, voluntarily, many to take other jobs. Why would we expect him to reverse course and get some courage. He won’t. It’s easier to just hit up the broad middle class for more cash while leaving the wealthy retirees with their extraordinary perks intact. - wordslinger - Monday, Nov 29, 10 @ 9:21 am: Good luck messing with seniors now that the Baby Boomers are retiring. They’ve been the dominant group in American society since they were born, and that ain’t changing anytime soon. - AllKids for everyone - Monday, Nov 29, 10 @ 9:22 am: “…so it, like AllKids, is naturally suspect” How can you say that? AllKids passed with big numbers in Springfield. There was little to no dissent. It is a very popular program. - BIG R. PH - Monday, Nov 29, 10 @ 9:24 am: Add to this the Illinois Cares Rx program that gives seniors an additonal $1750 in benefit above what they are getting from Medicare Part D. - Niles Township - Monday, Nov 29, 10 @ 9:48 am: Rich: In fairness, this was a joint BGA/WFLD (Fox Chicago) investigation. - zatoichi - Monday, Nov 29, 10 @ 10:06 am: What percentage of seniors actually use this benefit? Since CTA, Pace and Metra do not extend services to central Illinois not too many around me. My senior relatives in Chicago suburbs, who do not drive, use local township senior transport systems which go door to door for $1-$2. None of them ever use mass transit. Using free ride cards after the user died? Just shocking that people would abuse something that is free! Right up there with using mom’s handicapped card for better parking and ‘borrowing’ that windshield tollway box to ride the expressways for free after Uncle Jim is gone. - OldIllini - Monday, Nov 29, 10 @ 10:22 am: I’m retired on SURS and Social Security, and pay no Illinois tax. I agree that there should be a tax floor so that relatively wealthy seniors contribute their fair share, and those below the floor would pay nothing. - Cheryl44 - Monday, Nov 29, 10 @ 10:40 am: Every single benefit we give to seniors should be means tested. - Jo - Monday, Nov 29, 10 @ 10:58 am: 160 instances out of 300,000 seniors enrolled? That’s “rampant”? - Plutocrat03 - Monday, Nov 29, 10 @ 11:06 am: Taxing all income above floor seems like a sensible path. Tax policy should broaden the number of users who pay taxes, not narrow the number. When you systematically start to exclude potential taxpayers, the rats simply shoot up for the remaining folks. It is important to consider that there are many people whose retirement income is marginal in the face of rising expenses. New tax policy should not impact these people. - just sayin' - Monday, Nov 29, 10 @ 11:08 am: The elderly are treated special in all kinds of ways: prescription drugs, movie discounts, etc. etc. I don’t see the big issue with public transportation. It’s hardly some new concept. Also one big thing that is never talked about is the public interest that’s served by taking these drivers off our already overcrowded expressways and streets. Not only does it promote public safety and reduce congestion, but what’s wrong with encouraging grandma to reduce her carbon footprint? - Holdingontomywallet - Monday, Nov 29, 10 @ 11:22 am: “In reality, however, this is chump change when compared to things like the seniors income tax exemption. They pay no state taxes on retirement income, no matter how high those incomes are. They also get some property tax relief.” Our federal and state budgets are in such a mess, I think we need to look at everything and cut wherever possible. I keep hearing and reading about a lot of these programs and other things, such as earmarks, as being “chump change.” So what? If something should be cut, cut it. If we start adding up all of these cuts (”chump change’) maybe they will add up to a significant savings. It couldn’t hurt… Time to slow down the gravy train. - Skirmisher - Monday, Nov 29, 10 @ 11:43 am: I am retired myself and I think it is absolutely insane that I pay no taxes on any of my retirement income. Seniors use state services at a rate that is as high or higher than those still working and we should pay our fair share. I personally would not support an income tax increase that didn’t result in my income being taxed at some reasonable level. To do otherwise would be the height of hypocrisy. - 3 beers to Springfield - Monday, Nov 29, 10 @ 11:56 am: Keep the owner occupied exemption for residential property owners of all ages; get rid of the second exemption that applies only to seniors regardless of their income; rewrite senior assessment freeze to apply ONLY to property owners over 65 who make less than the median income for the county in which they reside. The property tax burden has been unfairly shifted to young families, owners of rental property and the business community. - Bubs - Monday, Nov 29, 10 @ 11:59 am: It was illuminative to watch a multi-millionaire pull out his Senior Pass to get on a bus. - cassandra - Monday, Nov 29, 10 @ 12:26 pm: Each one of these suggestions–taxes on retiree pensions, changes in property exemptions for some elderly, ending prescription drug perks, ending free state retiree health insurance, even free senior rides, would require a knock-down drag-out fight with uncertain political results for the legislator-combatants. The Quinn admin has already shown it has no appetite for such fights. They want to hit the easy button and raise taxes on the middle class, while making as few cuts in the status quo (a status quo which benefits, among others, legislators and all govt employees greatly)as they can get away with. - Responsa - Monday, Nov 29, 10 @ 12:40 pm: In this day and age to lump (just for example) 60 year old retirees and 80 year old retirees together as “the elderly” is asinine. Government at all levels needs to have the courage to address this both in terms of benefits and perks. This is not a simple “boomer” problem, though. Health and lifespans have been improving over many decades since the concept of a senior safety net was envisioned. - amalia - Monday, Nov 29, 10 @ 12:49 pm: I think the BGA work is just more to the idea of merging the transit agencies. Pagano’s work was not supervised, the boards have paid members with benefits, there are questions of contracts and riders for free. It’s just part of a pattern, certainly not the biggest part of a pattern. With agency merger there will be cost savings, a higher level of scrutiny, all the usual arguments when discussing metropolitan governments. - reflector - Monday, Nov 29, 10 @ 12:57 pm: I have been getting the senior citizens tax breaks ,but I really believe there should be limits.My real estate tax is too low and I probably would not have to pay much income tax but I should pay some.I am not going to volunteer though. - wordslinger - Monday, Nov 29, 10 @ 1:28 pm: –It was illuminative to watch a multi-millionaire pull out his Senior Pass to get on a bus.– I’d be curious as to who the multi-millionaires are that ride the bus. What’s the point of being a multi-millionaire if you’re still riding the bus? - Yellow Dog Democrat - Monday, Nov 29, 10 @ 1:30 pm: I was talking to a conservative Democrat a few weeks ago who railed against the fact that state employees don’t pay any taxes on their pensions. Although generally well-informed, he was completely unaware that NO ONE in Illinois pays income taxes on their pension. Taxing retirement incomes has long been a third rail in Illinois politics. I think there would be a great deal of public support for means-testing Illinois’ pension exemption. I also think we should explore taxing pensions earned in Illinois, regardless of when they are paid out. State employees shouldn’t be able to evade paying taxes on their pensions by moving to another state, nor should CEO’s who earn Golden Parachutes. - Fed up - Monday, Nov 29, 10 @ 2:05 pm: YDD, I also think we should explore taxing pensions earned in Illinois, regardless of when they are paid out. HMMM maybe we could tax the income distribution of retirees 401k if the money was earned in Ill. no matter where they live now. Not trying to be lumped in with any tea partiers but that does sound like taxation without representation. - Bitterman - Monday, Nov 29, 10 @ 2:07 pm: True enough that the free rides are small pickins’ but the state is in the tank and it has to be a shared sacrifice eh? Also, tax the retirement income at the same rate present day workers are taxed. And what ever happened to that Whitney idea to tax BOT transactions? Crazy anti-free market idea but it’s got a populist bent that might fly. - Rich Miller - Monday, Nov 29, 10 @ 2:08 pm: ===the free rides are small pickins’ but the state is in the tank and it has to be a shared sacrifice eh?=== I’d agree if we were talking about state cash. We aren’t. - Yellow Dog Democrat - Monday, Nov 29, 10 @ 3:03 pm: @Fed Up - How’s that taxation without representation? We tax incomes earned in Illinois for major league baseball players, football players, journeymen construction workers, even if they resided in another state at the time they got paid. Taxing income earned while an Illinois resident even if its not paid until you move to Florida maybe a stretch, but its a small stretch. - wordonthestreet - Monday, Nov 29, 10 @ 3:06 pm: Back in 2003, the new Blago administration forced me into retirement before age 60 (I was on top of my game and well worth the modest salary I was earning). I’m in good health now, and could live to be, say, 89. If I do, I will draw state retirement for 33 years… the same # of years I worked for the government. And by then I will have drawn SS for 24 years, as well. And spent God-only-knows how much of our Midecare $ to keep me alive those last few years so I could keep drawing those ever-increasing pension bucks. And my kids are gonna have to pay for all this? I guess I’ll save a bunch to leave to my kids… ’cause they won’t have any “social security” when they get old. My entire generation is so far removed from our parents’ generation. Dad taught me that “the world don’t owe you a living.” My generation seems to have a different credo: “I’m entitled!” Is there no end to our lack of common sense and unbridled greed? At least tax me on my income, you idiots! - Fed up - Monday, Nov 29, 10 @ 3:13 pm: If you live in Florida and are taxed in Illinois you are being taxed without being represented. The pro athletes are being taxed in Illinois for income earned in Illinois the year it was earned. Not 25-30 years later when they have no connection to Illinois. I still think its wrong to tax everyone who is here for one day on money earned in the state that day. Bill Gates was recently in Chicago to give money for Libraries I bet he earned a million dollars that day just in interest on his holdings should Illinois send him a tax bill? Do you thin we should tax 401k distributions on money earned Illinois but the retiree moves elsewhere? - Obamarama - Monday, Nov 29, 10 @ 3:49 pm: ===Gates was recently in Chicago to give money for Libraries I bet he earned a million dollars that day just in interest on his holdings should Illinois send him a tax bill?=== So what you’re saying is: you have no idea how payroll disbursement, asset liquidation, capital gains taxes, or income taxes work. - Fed up - Monday, Nov 29, 10 @ 4:10 pm: Obamarama read YDD’s post he wants to tax everyone and everything not me. I understand capital gains are not taxed the same as income neither are pensions (where we started). He wants to tax people who dont live in Illinois I think we will run into some problems with that plan. - Mr. Whipple - Monday, Nov 29, 10 @ 4:13 pm: If Quinn or any other Illinois politician were to decide to start charging state income tax on retirement income it would be tantamount to Pat Quinn drinking “Draino” toxic drain cleaner. It would be “instant poison” for any state elected official. People based their retirement planning on there not being an Illinois state income tax on retirement income. Now, if they are told that, “okay everybody, here we go again. We have decided to change the rules in the middle of the game on you in order to fit our self-imposed situation.” This is the same mentality that has our nation’s economy and our business leaders currently in gridlock now. They are afraid to invest their corporation money because they have no idea what Obama is planning to change next whenever the mood strikes him.If you want to change a stated policy or plan, then give the people and the business community a warning way in advance before you decide to be the bull in the china closet. Perhaps the way to go about it is to alert the senior citizens that starting in 2020, the state of Illinois is going to do away with the current policy of not taxing retirement income. Let it impact the younger people that will be coming along. These younger people have already figured out that they are going to be so far in debt due to our government fiscal recklessness that these young folks will have to look up to look down. Yes, I can afford a state income tax on my retirement income but many of my fellow retirees are just barely getting by as it is. They can’t stand to have anymore financial surprises sprung on them in their lives. There are huge consequences to seniors for such sudden and unexpected actions. There is no doubt that politically it would be suicide for Quinn and the Illinois Democrat Party. - Anonymous - Monday, Nov 29, 10 @ 4:47 pm: ==maybe we could tax the income distribution of retirees 401k if the money was earned in Ill. no matter where they live now.== YDD — federal law prohibits this. Only the state of current residence can tax retirement income, no matter where it was earned. So it’s not an issue. But without that law, there is no reason Illinois could not tax retirees residing in other states on income that was actually earned from employment in Illinois. States tax people on income from sources within the state all the time, even when the person has never been near the state personally. In your Bill Gates example, he isn’t earning income from Illinois employment merely because he’s passing through. - Ain't No Justice - Monday, Nov 29, 10 @ 5:42 pm: The senior free rides are not “free”. Taxpayers are paying for it and thanks to Blago and his hacks at Aging, we will continue paying for it. I don’t think it is needed as are alot of other freebies. It affects mostly the northern part of the state, since most of the elderly I know live where there isn’t such a service offered. - sal-says - Monday, Nov 29, 10 @ 6:24 pm: Unfortunately, EVERYONE is going to need to take a hit. So far, in folks thinking, ‘my personal, private cow’ needs to be exempt from pain. Can’t continue to happen. Things in America are ‘downsizing’. Income, jobs, state & federal revenue. Unions, employees, retirees will need to take some cuts; ‘downsize’, to keep this all going. Nobody wants to be first. Putting this off only makes it all worse. - wordslinger - Monday, Nov 29, 10 @ 8:27 pm: Meh, taxing pensions strikes me as searching for coins in the couch cushions. We never did it before. Why now? It’s like every time there’s an economic downturn you hear about workman’s comp and tort reform. When the economy is going great guns, not so much. Illinois should build the best education and communication (roads, rail, broadband, etc.) systems in the world. That’s been our bread and butter forever, and we’re already ahead of the pack. It’s not like Illinois kids are on waiting lists and slitting their wrists trying to get into Chinese universities. Sorry, comments for this post are now closed.