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[Gov. Pat Quinn] also broached the issue of state taxation of retirement income. Noting a Tribune editorial that said ending the tax exemption for retirement income should be looked at, Quinn said: “I feel the same way.”

“I think any kind of review should be comprehensive and should cover anything, including reducing taxes,” Quinn said later. “If there’s ever a discussion on subjects involving tax and revenue, I think everybody should look at everything.”

* The Question: Should Illinois tax retirement income? Take the poll and then explain your answer in comments, please.

panel management

posted by Rich Miller
Tuesday, May 21, 13 @ 11:21 am

Comments

I voted no. I am not a senior but know plenty of seniors who do not work currently and live solely on their retirement income so they can avoid paying taxes.

If their retirement income is taxed - they will consider moving to another state.

Comment by Dark Side of the Moon Tuesday, May 21, 13 @ 11:25 am
“Illinois,

Please do not tax Senoir Retirement. We have no more space here for your residents to move.

Sincerely,

Florida”

To the Post,

Voted “no”, just because keeping more people in Illinois, especially those who will be spending money here, and every “Daily dollar” spent in another state, is another dollar not in Illinois’ money circulation creating and keeping jobs, and assisting growth for state revenues in the long run.

Comment by Oswego Willy Tuesday, May 21, 13 @ 11:32 am
I didn’t vote because there’s something missing from the question. If the individual received a pension contribution on a non-taxable basis while they were working, that income when it is collected as a pension should be fair game to be taxed. If you pay tax on it when you receive it from the employer (pre-retirement), then it should not be taxed. That’s the distinction between a 401(k) and a Roth IRA.

Comment by phocion Tuesday, May 21, 13 @ 11:32 am
Quinn just shot himself in the foot.

Elections are won by adding voters to your cause.
Seniors are voters.

Comment by anon for a reason Tuesday, May 21, 13 @ 11:33 am
No. Just no, leave seniors alone.

Comment by Chavez-respecting Obamist Tuesday, May 21, 13 @ 11:36 am
unequivocally “yes”. With an allowance or deductible so that we are not taking a poor retirees last dime, above a certain level retirement income should be like any other income. There are individuals with literally millions of dollars in income who pay no Illinois income tax, because we are one of the few states to exempt all retirement income from taxation. Exempt the first $50,000 or some reasonable number and tax the rest. Broad bases, not high rates, are the way a government should levy taxes.

Comment by steve schnorf Tuesday, May 21, 13 @ 11:37 am
I voted no. I would support it though if the State had a definite plan on what to do with that money, such as reduce pension debt, and stuck to it.

And if something was in place such as the first $24,000 or so being exempt in order to help those out who have only limited retirement income such as SS or a small pension to live on.

Comment by Joe M. Tuesday, May 21, 13 @ 11:38 am
I voted yes.

As a group, older people tend to be far wealthier than younger people.

As of 2011, according to the census bureau, the average household headed by a person 65 or older has a net worth that is 47 times greater than the net worth of a household headed by a person 35 or younger.

Old people get Medicare. They get Social Security. They get reduced fees for a range of government services. Heck, they get free coffee at McDonalds. Yet they are far wealthier than younger people who get none of the above benefits.

There is no good reason to shield retirement income from income taxation.

Comment by so... Tuesday, May 21, 13 @ 11:39 am
I’m with Schnorf.

Comment by Small Town Liberal Tuesday, May 21, 13 @ 11:39 am
I voted no. Generally speaking, it seems to me that it is tough enough for most seniors to get by on their retirement income as it is. Now you want to look at reducing their income more? Geez. And I’m a Democrat. This is yet another nail in the coffin of the Pat Quinn for Governor re-election campaign. Cue the Lisa Madigan campaign ad in 3…2…1….

Comment by Howdy Tuesday, May 21, 13 @ 11:41 am
Absolutely. Just because you’re old doesn’t mean you’re poor. There is no reason to exempt retirement income, or even give retirees a higher exemption, while taxing the working poor on all of their income with a tiny exemption.

Comment by Anon. Tuesday, May 21, 13 @ 11:42 am
I’d go with what schnorf said with the addition that the exemption level be indexed to inflation so that it keeps pace with the cost of living.

Comment by Name Withheld Tuesday, May 21, 13 @ 11:43 am
I voted no, although I could go either way.

The reason I voted no is the numbers I’ve previously worked up, using 2010 Census info of household income for age 65 and older, show it would only bring in about $0.8B to $1.4B at the current 5% rate, depending on a couple of assumptions about exact household makeup and property tax deductions. Feel free to do your own numbers and come to your own conclusions.

And even that amount is questionable since the better off seniors would likely relocate to a retirement tax-free state. We’ve looked at that and considered moving just for the better climate; elderly parents and grandkids are the only thing keeping us here now … and that could change.

If you were going to expend the political capital to pass a revenue enhancement, go where the money is. Otherwise you’d just be back raising taxes again in a year or two.

You would get a lot more by either raising the income tax higher (about $3.5B per 1% increase) or a sales tax on services (could be as much as the current tax which brings in $9.8B, although it would more likely be $5B - $7B after adjusting for underreporting of cash based services).

Comment by RNUG Tuesday, May 21, 13 @ 11:47 am
I agree with Schnorf, from the specifics of this question to the broad base for taxation.

Comment by Earnest Tuesday, May 21, 13 @ 11:49 am
so… @ 11:39 am:

Net worth does not equal income. A lot of people are asset rich, usually a house or farm, but cash poor.

Comment by RNUG Tuesday, May 21, 13 @ 11:49 am
What Steve said.

Can have a reasonable debate as to the specific threshold, but I’m not going to feel guilty is someone who has a retirement income in excess of the 75%tile wage earner has to pay an income tax on the amount in excess of the exemption.

Comment by Plutocrat03 Tuesday, May 21, 13 @ 11:52 am
I voted no, but if they do it would give me a good excuse to move to a state where the winters are milder.

Comment by Jack Tuesday, May 21, 13 @ 11:54 am
Some seniors, like my mother-in-law, are living on extremely fixed incomes as it is. She can get a discounted coffee at McDonalds so that must make her “entitled”.

Comment by Lil Enchilada Tuesday, May 21, 13 @ 11:55 am
I voted yes, but…Agree with Steve on the base $50,000. I don’t think it links to the discussion on pensions (unless you, personally, are going to see a cut in your pensions and the tax along with it).

But logically, Illinois needs to broaden the tax base - not just to increase revenue but to protect against future economic downturns.

Comment by archimedes Tuesday, May 21, 13 @ 11:58 am
No before we broaden the base to include even more of the middle class and poor seniors, we should implement a graduated income tax.

Comment by PublicServant Tuesday, May 21, 13 @ 12:02 pm
Yes. Tax retirement income of all seniors, and use it to pay against the pension deficit. I know my self interest when i see it. Seniors understand the importance of retirement planning, so lets all pitch in and help me out.

Comment by Langhorne Tuesday, May 21, 13 @ 12:04 pm
Illinois already lost one congressional seat in the last census due to slower growth in population relative to other states; let’s not add to the problem by creating an environment which encourages senior citizens to move.

Comment by SirLankselot Tuesday, May 21, 13 @ 12:04 pm
Isn’t it wonderful that Quinn is willing to open the discussion regarding taxing retirement income and taking more from retirees, but will not even think about a graduated income tax that would increase tax revenue from those with more ability to pay? What a great Democrat Quinn is!

Comment by Meaningless Tuesday, May 21, 13 @ 12:06 pm
Yes. Using RNUG’s $0.8B-$1.4B range, let’s assume that taxing retirement income leads to 25% of folks leaving the state for Florida. That’s still $0.6B-$1.1B in new annual revenue or services that don’t need to be further cut.

But how foolishly honest for Gov Quinn to admit it is worth considering! As if Lisa Madigan didn’t need yet another fact for a negative ad on him.

Comment by Robert the Bruce Tuesday, May 21, 13 @ 12:06 pm
What Steve Schnorf said. Not a complicated issue, IMO.

Comment by dupage dan Tuesday, May 21, 13 @ 12:07 pm
Yes.We retirees can afford a small tax.I have been retired over ten years and my retirement as frozen when I retired.My SS is more than my retirement but I would still support a tax on retirement income.

Comment by reflector Tuesday, May 21, 13 @ 12:09 pm
No. As a recently retired State employee, I’ve had enough from our “leaders” with my free health insurance no longer free, 2 pension bills that will further erode my retirement income and who knows what next. To say that taxing retirement income should go towards the State’s pension debt is too much as I’m already helping to solve that problem. I should have kept working although as one of the minority of State employees not in the union without a raise in years, I wasn’t getting ahead much anyway.

Comment by Sir Reel Tuesday, May 21, 13 @ 12:17 pm
No.

You’re already cutting their income and/or benefits.

Now you’re going to tax them as well?

As someone else recently pointed out, why should they be the only ones receiving a “haircut” but not the bond holders, vendors, etc.?

Now we’re going to retirees twice? No thank you.

Comment by Formerly Known As... Tuesday, May 21, 13 @ 12:26 pm
Robert the Bruce @ 12:06 pm:

You’ll get less than that because it will be mostly the upper quartile that bails …

Comment by RNUG Tuesday, May 21, 13 @ 12:29 pm
Before folks get all excited about moving to another state to avoid taxes on their retirement income, you better look at a state’s entire tax burden before you leap. All states get the money from somewhere. Take a look at Dallas area property taxes. Consider the insurance costs in Florida. Or the state where I reside, which has a graduated income tax which is applied to retirement income after $6500. However my property taxes are dirt cheap. It is easy to say you would leave, but in the long run, I doubt most would do it.

Comment by kimocat Tuesday, May 21, 13 @ 12:30 pm
The connection with public pensions is the hypocrisy of the many who propose that the State appropriate anywhere from 10 to 40% of a public sector employee’s retirement income yet are howling here at the idea that their own reitrement income might be subjected to a 5% tax. Oh yeah, tell me again about those greedy public employees.

Comment by anon Tuesday, May 21, 13 @ 12:33 pm
We voted “yes”
Clear’s out a lot of dead wait
They can go with the JimmyJohn’s duefus

Comment by CircularFiringSquad Tuesday, May 21, 13 @ 12:36 pm
I’d rather see a restructuring of the whole system than just going after seniors, and I expect Quinn does as well. It’s an interesting statement. If Lisa doesn’t run, Quinn is likely to be governor at least until 2018. Even if she does run in the primary, he has a decent chance of beating her. The Repubs, w/ or w/o Rauner, are a pathetic sideshow–we’re a one party state.

So maybe this is a hint of what is to come. Not necessarily a bad thing, but makes me wonder why the Dems are so obsessed with dinging government retirees. In a few years, state revenues could begin increasing substantially. But politically it might be difficult to restore losses to existing retiress at that point. There will be many demands on the new cash.

Comment by cassandra Tuesday, May 21, 13 @ 12:36 pm
OK, let me get this straight. First Gov Quinn wants to reduce the pension of state retirees, and then he wants to tax what pension is left? Talk about a double wammy!

Comment by rusty618 Tuesday, May 21, 13 @ 12:39 pm
Florida is looking a lot better.

Comment by foster brooks Tuesday, May 21, 13 @ 12:43 pm
I think we ought to tax everybody else to pay me my benefits and support my organizations! Seriously, taxing pensions will just drive more retirees to Florida and Texas and Nevada. They are leaving Illinois now in droves; this would accelerate the mass migration.

Comment by Curmudgeon Tuesday, May 21, 13 @ 12:46 pm
Taxing retirement income will increase the incentive for seniors to leave Illinois.

Then, they would not be spending their dollars here.

Comment by Anonymous Tuesday, May 21, 13 @ 12:46 pm
No. This will drive wealthier seniors and their spending from the state and penalize the poorer ones. Most seniors do not enjoy COLAs across the board on their retirement income stream. And social security is considering going to an inflation index which will result in a smaller COLA on this retirement stream. You can count on property tax increases swallowing up the pittance of an exemption offered to seniors in several years. And medical costs appear poised to sky rocket for this age group. Most retirees in Illinois will require fiscal help in the future, not more fiscal pain.
Why not look at the drivers of Illinois’ fiscal mismanagement, which places it at the bottom of all the states alongside CA and NY. Over-reliance on property taxes for education? Work comp laws? Med-mal reform? Fix gov employee pensions permanently? Need for almost 7000 government units? Loosen up the union shop mentality?
Talking about plucking more from vulnerable constituencies seems to indicate business as usual is expected.

Comment by Cook County Commoner Tuesday, May 21, 13 @ 12:56 pm
I am all for supporting income tax as long as there is property tax relief. I would prefer to pay based on my ability to pay as opposed to being punished for owning property.

Comment by RetiredStateEmployee Tuesday, May 21, 13 @ 12:57 pm
If Quinn taxes retirement that will be the excuse I need to convince the family to move from Illinois.

Comment by fonefly Tuesday, May 21, 13 @ 1:05 pm
Skipped the post so far, but wanted folks to know that SERS, in their latest quarterly mailing, included a map of where the retirees are located. FL had (I believe) less than 1000 retirees living there, for some reason I’m thinking less than 400. Either way, the number of retirees who left the state was not even 75% of the total retirees. People aren’t leaving the state in droves after they spent their life here working.

Comment by Colossus Tuesday, May 21, 13 @ 1:13 pm
No
Don’t want to Wake Up and Tick Off the Gray Panthers

Comment by x ace Tuesday, May 21, 13 @ 1:14 pm
I agree with steve schnorf @ 11:37 am:
== There are individuals with literally millions of dollars in income who pay no Illinois income tax, because we are one of the few states to exempt all retirement income from taxation. Exempt the first $50,000 or some reasonable number and tax the rest. ==

This is one of the best plans for shared sacrifice in solving the Illinois’ financial problems.

Comment by Ruby Tuesday, May 21, 13 @ 1:25 pm
Abso-fracking-lutely! See Schnorf’s comment for details.

And all this relocation talk is nonsense. I’m with kimocat. Retirees are way more likely to move for climate or family reasons than some minimal income tax.

Comment by Original Rambler Tuesday, May 21, 13 @ 1:34 pm
If you think changes to the Pension systems have been problematic you haven’t seen anything yet!

Comment by Kerfuffle Tuesday, May 21, 13 @ 1:43 pm
Not taxing retirement is one of the few things working for Illinois, especially in border areas when people look at retirement living options, whether that means downsizing or upgrading, or assisted living etc.

I get trying to be more fair, but given we are so screwed up in so many ways, I’d not run the seniors out. And I say that decades before my own retirement.

Comment by Shemp Tuesday, May 21, 13 @ 1:46 pm
Schnorf is correct. In addition, the current broad-based exemption generates some strange results. For example, an employee participating in a deferred compensation program (457) or a 401K program is not taxed on the income that is contributed to the deferred compensation or 401k plan. Assume that person begins with an employer at age 25 and contributes the maximum allowable amount for 15 years. That person then leaves his or her employer, at age 40, and draws out everything in the 457 or 401k plan. The total contributions and income are completely exempt from Illinois income taxation although they proceeds would be subject to federal income taxation - and in the case of the 401k also subject to an early withdrawal penalty. There is absolutely no policy justification for exempting a 40 year from Illinois income tax on such amounts. However, the current law mandates such a result.

Comment by Just the Facts Tuesday, May 21, 13 @ 1:47 pm
Tax retirement income and raise the state income tax rate - when there is a financial crisis, everyone shares pain.

Comment by skeptical Tuesday, May 21, 13 @ 2:03 pm
If they tax my retirement income, I will move to another state and they will collect my sales taxes, license fess and any other taxes I pay now in Illinois.

Comment by huhcu Tuesday, May 21, 13 @ 2:04 pm
I vote no the impact on many seniors near or below the poverty line would be too great. However, if Illinois would ever go to a graduated income tax, it would bear review at that time.

Comment by Robert0117 Tuesday, May 21, 13 @ 2:06 pm
Schnorf makes a good case. It’s hard to fathom why someone with a six-figure pension plus Social Security should be exempt from any income tax, even as we tax the working poor. On the other hand, should the amount exempted from the income tax be higher for retirees than for the working poor?

Comment by reformer Tuesday, May 21, 13 @ 2:16 pm
Illinois does need tax reform, and reviewing the total exemption of retirement income should be part of the mix. I don’t see such a movement on the horizon. Does anyone?

I bet our Republican friends won’t be eager to jack up income taxes on seniors. Nor will Democratic targets. I doubt Quinn would waste what little political capital he has left tilting at that windmill.

Comment by reformer Tuesday, May 21, 13 @ 2:23 pm
I’m with Schnorf, and I have heard other former politicos that have said the same thing. Although I hear what Joe M is saying and am open to Name Withheld’s suggestion.

Comment by Dirty Red Tuesday, May 21, 13 @ 2:36 pm
I voted no. You are just feeding the beast that is government. And don’t fall for the “this money will be earmarked for such and such”. It just ends up being spent on some new feel good program. How about a QOTD about cutting taxes or a program? Quit focusing on the revenue side and let’s knock down some on the spending side.

Comment by Fan Tuesday, May 21, 13 @ 2:38 pm
===How about a QOTD about cutting taxes or a program? ===

It’s been done. Several times.

Comment by Rich Miller Tuesday, May 21, 13 @ 2:40 pm
All these proposals amount to a reduction in benefits and are unconstitutional.

Comment by Stones Tuesday, May 21, 13 @ 2:53 pm
If pension is taxed, why not political contributions.

Comment by EBCDIC Tuesday, May 21, 13 @ 3:01 pm
Colossus @ 1:13 pm:

Not at the moment. But a lot of them do spend from 1 to 4 months in Florida or Texas … and it wouldn’t take too much to push some of them into making their winter location their full time residence.

Comment by RNUG Tuesday, May 21, 13 @ 3:05 pm
I too agree with Steve Schnorf. If you exclude retirement income below an indexed amount such as $50,000, no retiree is going to be forced to do without dinner as a result of the state tax. How can retirees (public or private) say to the low income young family that they have to pay taxes, but we do not? And no one will move to Florida because they have to pay state income tax here–at least not if they check out property taxes and insurance costs in Florida.

Comment by Concerned Retiree Tuesday, May 21, 13 @ 3:10 pm
I had a good friend,and prolific Conservative blogger, who moved South, writing that he could “no longer take Illinois’ toxic tax climate” — only to be “shocked” that his new state taxed his retirement income.

I guess it was the cold Winters after all.

Comment by walkinfool Tuesday, May 21, 13 @ 3:11 pm
Ct. had a 10 per cent tax on unearned income, dividends and interest. When wealthy people retired they switched their legal residence to Fl. The savings on Ct. tax paid for their Fl. condo. Ct. also lost on sales tax.
Taxing those most able to avoid taxation by moving is generally poor policy. Especially in this case where income tax gains are offset by sales and property tax losses.
Additionally, those who leave would be those who hire others to make their lives easier. So jobs leave with retirees.

Comment by Last Bull Moose Tuesday, May 21, 13 @ 3:29 pm
How many tax increases does he want to pass before the next election?

I really don’t think we need another reason for people to move to other states, especially ones with warmer temperatures.

Comment by Downstate Illinois Tuesday, May 21, 13 @ 3:31 pm
I voted yes. Now would be a perfect time to let the 2% tax hike expire but make some changes such as this to replace that lost revenue (maybe a constitution update for a graduated tax too). With an exemption on the first x dollars (ideally applicable to non-retirees as well - a $6k exemption just isn’t enough), it wouldn’t substantially hurt the retiree. If you want to stop them from leaving the state because of the tax, you could tax it at the time it was earned, not at the time of withdrawal.

As it is now, we’re shooting ourselves in the foot. I can shove some $47k/yr into retirement between 457, 403b, my IRA, and my spouse’s IRA and pull that money out the very next year (assuming I retire, otherwise qualify, or pay the federal penalty) and save 5% in taxes. And the kicker is that some retirement accounts are already taxed in IL. Roth accounts pay at the time of contribution to federal and State and get out of taxes at withdrawal. Traditional accounts get out of taxes at contribution and only pay federal at withdrawal. So the retirees with Roths are at an immediate 5% disadvantage on their returns. They’ve got to maintain a 13% return every year just to keep pace with a traditional account with an 8% return.

Comment by thechampaignlife Tuesday, May 21, 13 @ 3:46 pm
Just to let you know my property taxes in Florida are 1/3 of the amount that I paid in Illinois for the same worth. I won’t be coming back to the most corrupt state in the nation any time soon. Quinn is a Tax and Spend guy just like Madigan

Comment by Willy Tuesday, May 21, 13 @ 3:59 pm
We are retired and our grandchildren are in Florida. The only thing that is keeping us in this corrupt state is the fact that our pensions, social security, and deferred retirement savings withdrawals are not taxed by the state. Tax them and we are gone in a heartbeat.

Comment by Chuck Fellman Tuesday, May 21, 13 @ 4:01 pm
I said I wasn’t going to go pull the data again … but since a number of the opinions being expressed don’t seem to be grounded in facts, I did.

From the 2010 US Census data for Illinois:

http://factfinder2.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=bkmk

Social Security receiptants - 1,241,314
Mean SS income - $16,526
Total SS income - $20.5B
Tax revenue @ 5% rate assuming standard deductions of $2050 per person plus the extra $1,000 per person for age 65 - $836M

Person w/non-SS retirement income - 786,141
Mean non-SS retirement income - $23,678
Total non-SS retirement income - $18.6B
Tax revenue @ 5% rate assuming standard deductions of $2050 per person plus the extra $1,000 per person for age 65 only for TRS & SURS annuinants (from 2012 annual reports) so we wouldn’t be double counting the deductions - $908M

Note: there is a bit of slop in the above non-SS calculations because some SURS annuiants did pay into and receive SS; on the other hand there are some life/safety SERS annuiants who did not pay into SS and do not receive it, and I didn’t take the time and trouble to break those groups out explicitly. Figure they probably come close to a wash.

Now you have some choices:

Tax it all - it could total $1.7B … which is almost enough to fund the Martire plan

Not tax SS - it could total $0.9B … which is about half of what the Martire plan needs

Exempt the first $40K per person - on average, you get $0 because the “average” person on both a pension and SS has an income of $40K … in reality, you would probably get about $0.6B to $0.9B …

Note: the $0.8B to $1.2B range I tossed out earlier had some different assumptions on my part about possible tax breaks, including the property tax deduction

IMO the bottom line is still the same as I stated earlier … the revenue to be gained isn’t worth the political capital it will cost. Better to spend that capital on either changing to a progressive tax or expanding the sales tax base to services.

Comment by RNUG Tuesday, May 21, 13 @ 4:05 pm
thechampaignlife @ 3:46 pm:

Dropping the temp 2% income tax is a loss of $7B or more

Taxing all retirmenet income is, at max, $1.7B

What’s your plan to make up the other $5.3B?

Comment by RNUG Tuesday, May 21, 13 @ 4:10 pm
And yes, Rich and others, I realize a small part of the 2% temp is permanent but it’s easier to use the round 2% number in illustrations because that is what people remember, the 2% …

Comment by RNUG Tuesday, May 21, 13 @ 4:12 pm
This would be the last staw for me. Tax retirement income, and Florida here I come!

Comment by Anonymous Tuesday, May 21, 13 @ 4:16 pm
Why would we want to expand the sales tax base which is very regressive rather than tax retirement income? There is no consideration here for the low income family.

Comment by Concerned Retiree Tuesday, May 21, 13 @ 4:18 pm
If you’re looking to move out of state, Georgia is definitely worth a look. No tax on SS, first $35K of pensions exempted, once you’re 65, in general, the first $65K is tax exempt. And some counties (it’s a county by county option) exempt seniors from the school property tax.

Comment by RNUG Tuesday, May 21, 13 @ 4:20 pm
Exempting pensions assures the tax and spenders extra votes for their giveaway vote buying plans. Seniors should pay as much as others since they also have equal voting rights.

Comment by Equality for all Tuesday, May 21, 13 @ 4:40 pm
No. We need a more comprehensive solution including a graduated tax. I wouldn’t be opposed to Schnorf’s idea as part of the bigger fix.

Comment by Arthur Andersen Tuesday, May 21, 13 @ 4:52 pm
Taxing retirement income will result in me moving to a state that doesn’t tax retirement income and probably other, and will keep some people from moving to Illinois. Seniors are becoming a big part of the population.

Comment by Vant Tuesday, May 21, 13 @ 5:01 pm
No, all this will do is to exacerbate the movement of Illinois residents to another state that does not have personal income taxes or estate taxes. The net effect will be a reduction in total tax income to the state, because Illinois will lose even more taxpayers to other states.

Comment by ParisIllini Tuesday, May 21, 13 @ 5:14 pm
and expanding the sales tax to services follows the same “broad base” logic

Comment by steve schnorf Tuesday, May 21, 13 @ 5:20 pm
No,

Considering the property tax burden in this state it is hard enough to be retired here now…

Comment by Oneman Tuesday, May 21, 13 @ 5:26 pm
The Dems have drawn a bullseye on the backs of retirees. If they decide to tax my pension, I’m otta here.

Comment by Pacman Tuesday, May 21, 13 @ 5:31 pm
Steve,

I think we both agree on “broaden the base”.

My only disagreement is the politicians should think big if they are going to expend that much political capital. The voters will be just as mad over a big revenue expansion as they will a small one. And the voters will be even madder if the State has to come back for more taxes in a couple of years.

Comment by RNUG Tuesday, May 21, 13 @ 5:32 pm
I’m OK with taxing retirement income over a certain point…$40k seems like a good break point to not affect the seniors living on fixed SS and/or modest pension incomes.

Comment by Six Degrees of Separation Tuesday, May 21, 13 @ 5:32 pm
RNUG @ 4:05 pm:
Taxing retirement income would include IRA, 401 and 403 required distributions as well as pensions and Social Security. Did you include this in your DATA?

Comment by Ruby Tuesday, May 21, 13 @ 5:37 pm
Yes.Illinois is one of only four states in the nation that exempts all retirement income from taxes. As noted earlier by Steve Schnorf and others, only incomes though above a certain level should be taxed.

Comment by BryanE Tuesday, May 21, 13 @ 5:52 pm
Agree 100% with Steve Schnorf.

Comment by illinifan Tuesday, May 21, 13 @ 6:57 pm
There are nine states that exempt all federal, military, and in-state pensions as well as all Social Security benefits from income tax: Alabama, Hawaii, Illinois, Louisiana, Massachusetts, Michigan, Mississippi, New York, and Pennsylvania. Alabama, Hawaii, and Illinois also exempt income from certain types of private pensions.

Pennsylvania and Mississippi are unique in that they are the only states in the country that exempt all retirement income, even IRA and 401(k) distributions.

Comment by vitaman Tuesday, May 21, 13 @ 7:14 pm
The Tax Foundation, a nonpartisan tax research group in Washington, D.C., found that people living in Louisiana, Hawaii, Alabama, the District of Columbia, Delaware, and Mississippi paid the least property taxes compared to home value. Florida, a retirement mecca, came in nearly right in the middle, ranked at 24th.

So if you want to have a nice home and a good retirement income, go live on the Gulf Coast of Mississippi. Just watch out for the next Katrina or Camille.

Comment by vitaman Tuesday, May 21, 13 @ 7:19 pm
At this point, in my opinion, No. But John Cullerton and Pat Quinn are right in that ALL reasonable possibilities of raising revenue to solve Illinois’ current and future financial woes SHOULD, of course, at least be seriously conSIDered! It would be foolhardy NOT to, otherwise!

Comment by Just The Way It Is One Tuesday, May 21, 13 @ 7:35 pm
Ruby @ 5:37 pm

If you went and lokked at the census data reference I supplied, it said all non-SS retirement income.

Comment by RNUG Tuesday, May 21, 13 @ 7:48 pm
If the link I previously supplied isn’t working, go to:

http://factfinder2.census.gov/faces/nav/jsf/pages/index.xhtml

enter Illinois under Community Facts, hit go, select Income, select Income, Employment, Occupation .. and dig into the tables

Comment by RNUG Tuesday, May 21, 13 @ 7:56 pm
State retirees already paid taxes on their retirement money. Why should we pay taxes twice on the same money?

Comment by Mama Tuesday, May 21, 13 @ 8:31 pm
“Now would be a perfect time to let the 2% tax hike expire…”

My sides are hurting from laughing.

Comment by wishbone Tuesday, May 21, 13 @ 9:01 pm
AA, RNUG-agree, ideally done as part of a larger overhaul of our system of taxation, including progressive income tax

Comment by steve schnorf Tuesday, May 21, 13 @ 9:58 pm
Mama, I THINK pension contributions are out of before tax dollars, though it’s been long enough I’m not certain

Comment by steve schnorf Tuesday, May 21, 13 @ 10:03 pm
So does this mean I would lose my COLA from TRS AND have to pay 5% of my pension check back to the state? If that happens, it looks like the state would have plenty of money for more waste, political favors, and corruption.

Comment by Dinosaur Tuesday, May 21, 13 @ 10:13 pm
Steve, most retirement contributions are pre-tax dollars. All public retirement, 403b, 457. Not an expert on 401k but believe they are as well. IRAs are subject to various restrictions and limits.

Comment by Arthur Andersen Tuesday, May 21, 13 @ 10:17 pm
Retirees have been moving to Florida, Arizona and other sunshine states for decades, despite the total tax exemption on their income. They haven’t needed the excuse of paying taxes on their pension to leave.

Comment by reformer Tuesday, May 21, 13 @ 10:42 pm
Man, by reading the posts on this thread, you would think that people really hate living in Illinois. Is Illinois such a miserable place that a 5% income tax would be the straw that breaks the camels back forcing every retiree to move? Geez, if people really do hate it that much, maybe they should move!

Comment by Fred's Mustache Tuesday, May 21, 13 @ 10:51 pm
It’s all about sharing the load, not just about what’s mine. I vote yes. Set a base limit 25 or 39 thousand and over that amount you pay your fair share.

Comment by Downstate Dem Tuesday, May 21, 13 @ 11:47 pm
Steve / AA / Mama,

In general, the only retirement contribution that is made with after tax money is to a Roth IRA account.

Comment by RNUG Wednesday, May 22, 13 @ 8:47 am
Fred’s Mustache, I think they are.

Comment by Dinosaur Wednesday, May 22, 13 @ 10:03 am