* Illinois Chamber CEO Todd Maisch and Illinois Treasurer Michael Frerichs spoke at the Mid-Year Economic Summit hosted by the Des Plaines Chamber of Commerce yesterday. From the Daily Herald’s coverage…
Both Maisch and Frerichs talked about the progressive tax referendum that will be on the Nov. 3 ballot. Maisch said the state chamber is against the change from the current flat tax because the top 20% of taxpayers already pay two-thirds of all taxes. In addition, he noted the current system provides “treatments,” such as the earned income tax credit, that favor low- and middle-income earners.
“Even though the rate is flat, you can actually graduate your system if you give some people tax treatments and not give others those treatments,” he said.
Frerichs added one argument for the progressive tax is the consideration of taxing retirement income of those who can afford it. He said he knows people who receive 6-figure yearly pensions and do not pay income taxes, but the current system doesn’t differentiate between them and retirees who barely get by on their savings or pensions.
“One thing a progressive tax would do is make clear you can have graduated rates when you are taxing retirement income,” he said. “And, I think that’s something that’s worth discussion.”
That’ll wind up in an ad.
* His suggestion plays right into the opposition’s rhetoric. Illinois Policy Institute…
The “fair tax” is being sold as a tax on the wealthy, but if voters on Nov. 3 remove the Illinois constitution’s flat tax protection they will be granting state lawmakers broad new taxing power that would make it easier to go after seniors and their retirement income.
Illinois lawmakers in 2019 approved a defining feature of Gov. J.B. Pritzker’s policy agenda by agreeing to ask voters to amend the Illinois Constitution and remove its flat tax protection. They also set introductory rates that start hiking taxes on residents making over $250,000.
Among several other negative policy outcomes, the adoption of a progressive income tax would make it significantly more likely that Illinois will adopt a retirement income tax in the future. That’s because removing the flat income tax protection also removes a key political barrier to imposing a tax on retirement income. […]
Public opposition has historically killed proposals to tax retirement income in the Prairie State. A 2019 poll from the Paul Simon Public Policy Institute found 73% of Illinoisans somewhat or strongly opposed eliminating the retirement exemption, while only 23% somewhat or strongly supported the change.
That poll is here.
* There was, however, this somewhat odd response…
Would you favor or oppose applying the state income tax to retirement income if it exempted from taxes the first $100,000 earned per year?
Other/don’t know 3%
That adds up to only 73 percent.
…Adding… From comments…
Rich, the Paul Simon poll only added up to 73% because it was only asked of the 73% of respondents “who had indicated they were opposed to taxing retirement income in the previous question.” So the poll assumed that 59% of Illinois adults supported taxing retirement income over $100,000: the 36% yes to the specific question plus the 23% who were in favor of taxing all retirement income. Totals on that question are 59% in favor vs. 34% oppose vs. 7% other/don’t know.
*** UPDATE 1 *** From Quentin Fulks, Chairman of Vote Yes For Fairness…
Vote Yes For Fairness believes all seniors should have the opportunity to retire with dignity after years of hard work, and opposes any tax on retirement income. That’s why we are dedicated to passing the Fair Tax, which does not tax retirement income or make it any easier to implement a tax on retirement income. The Fair Tax is about fixing our broken tax system that allows millionaires and billionaires to pay the same rate as our working families, while updating it to the one used by a majority of states and the federal government that works for all Illinoisans.
*** UPDATE 2 *** AARP Illinois…
AARP Illinois supports the current graduated income tax proposal which, in no way, taxes retirement income or makes it any easier to implement a tax on retirement income.
Illinois state law continues to protect retirement income from taxation , including Social Security, pensions, 401(k)s, and IRAs.
In AARP Illinois surveys, 89 percent of older adults said they opposed taxing retirement income, and 71 percent of voters 25 and older were also against it.
With this in mind, AARP Illinois supports a graduated income tax as a step in the right direction toward addressing our state’s budget crisis.
A graduated income tax protects lower and moderate income taxpayers and their families by giving them a tax break. It also ensures that only those who can afford it – the wealthiest 3% — will pay more under this plan.
AARP Illinois continues to oppose taxing retirement income and will fight any efforts to do so.