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Rauner “not a fan” of taxing retirement income

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Illinois

Gov. Bruce Rauner on Thursday said he is “not a fan” of collecting taxes on Illinoisans’ retirement income, an idea that’s seen pushback in a stream of radio spots, print ads and robocalls in recent days.

AARP started railing against the idea in ads across the state this week as Rauner and Democrats try to work out a long overdue budget.

“I’m personally not a fan of taxing retirement income,” Rauner said.

But also: “The legislature is talking about a lot of different tax reform ideas,” he said. “I don’t want to jump in early. Some of the things they’re recommending, I’ll be maybe OK with. Other things I won’t be.”

Despite his all too usual qualification, I’ve heard for quite some time that Rauner doesn’t want a retirement tax.

posted by Rich Miller
Friday, May 20, 16 @ 1:22 pm

Comments

It would be nice not to be forced to move to Florida.

Comment by Anonymous Friday, May 20, 16 @ 1:27 pm
He doesn’t like any taxes. Nobody does. It’s true, the Democrats don’t like taxes either.

But there will never ever ever be a balanced budget unless he specifically calls for specific tax increases. He’s the governor he should lead and say which taxes he will support and how much.

instead all he says is “maybe I will work with them and I’ll think about allowing THEM to raise taxes if . . . ”

Taxing retirement income is a perfectly valid idea for discussion, it comes with a large revenue amount as an upside. If he doesn’t want to use it - say which taxes he supports and how much.

Believe it or not Governor, it takes some effort to raise taxes and you need to build support and arguments for your position. The sooner you start, the sooner this ends.

Comment by siriusly Friday, May 20, 16 @ 1:28 pm
I’m against taxing retirement income as well, but I support a closer examination of what exactly retirement income really is however.

Comment by Just Me Friday, May 20, 16 @ 1:29 pm
We wouldn’t want the generation that caused most of this mess to actually take some responsibility in fixing it.

Comment by Tier II Employee Friday, May 20, 16 @ 1:33 pm
Oh heaven forfend if Rauner jumped in with his own opinion on revenue “too early.” I mean it’s only been ten months without a budget guys. Let’s pace ourselves.

Comment by hisgirlfriday Friday, May 20, 16 @ 1:34 pm
Of course Rauner doesn’t support taxing retirement income; he’s probably going to be “retired” in less than 3 years /s

Comment by RNUG Friday, May 20, 16 @ 1:35 pm
Retirees drive on the roads and consume social services. Some might argue that they consume services at a higher rate than middle aged adults. I’d support taxes on retirement income, allowing for a tiered approach.

The retirees in my family would also support it. They see that they consume services and they want quality schools and infrastructure for the grandkids.

Comment by Fairness and Fairness Only Friday, May 20, 16 @ 1:36 pm
He’s obviously “not a fan” of Meals on Wheels, home care, or other services seniors need that a tax on retirement income could help pay for. It could be structured to exempt/partially-exempt low and middle income earners. This is actually a tax that a lot of Republicans had expressed a willingness to support. Another wasted opportunity, but then again, Rauner probably doesn’t care.

Comment by Bull Moose Friday, May 20, 16 @ 1:36 pm
Just raise the income tax to 5.5% and apply it retirement income as well. Just exempt the first $35k for those over 65. Problem solved. Most people could live with that.

Comment by Robert the 1st Friday, May 20, 16 @ 1:37 pm
In non-presidential election years (read: gubernatorial election years) young voters don’t turn out and older voters make up a greater share of the electorate so this is pretty basic politics.

Having said that I lol’d at Tier II Employee.

Comment by The Captain Friday, May 20, 16 @ 1:39 pm
Robert the 1st that’s a very sensible idea, but I’d say exempt all the way up to 50k and index the exemption so it escalates over time.

Comment by siriusly Friday, May 20, 16 @ 1:42 pm
Non starter, older people vote!

Comment by Anonymous Friday, May 20, 16 @ 1:43 pm
===We wouldn’t want the generation that caused most of this mess to actually take some responsibility in fixing it.===

Let’s be clear here. The politicians caused this mess. Not the public at large. They were elected, among other things, to balance revenues and expenditures, just like I and many others in my generation did and still do. So @Tier II, let’s watch the broad brush that you’re painting with.

Comment by PublicServant Friday, May 20, 16 @ 1:44 pm
+1 to my colleague at 1:33

Comment by Another Tier II Worker Friday, May 20, 16 @ 1:44 pm
Amen, Tier II Employee, Amen

Comment by Bull Moose Friday, May 20, 16 @ 1:45 pm
I feel for you tier II folks. I’d be demanding my union to fight for an option to opt out. You’d be better off with a 401k, even without any match.

Comment by Robert the 1st Friday, May 20, 16 @ 1:51 pm
“I don’t want to jump in early.”

The LOL Comment of the Year, to date.

Even if it were May 2015, not 2016, that would still be a belly-laugh.

I guess he has his own pace.

Comment by Anonymous Friday, May 20, 16 @ 1:51 pm
u want to tax my$1800 a month pension. but refuse to tax millionaires and billionaires? which will raise 1 billion dollars. how about stop giving corporations 2 billion a year? stop spending 1 billion on foreigners a year who come to Illinois! put lawmakers in the same pension system as union members. we do not get 80 percent of our last monthly salary like they do for a pension. lay off thousand of managers from the the last 5 governors who are still there. put support groups of both parties who are patronage in a pay schedule like the unions. remember 32% payrise rauner just handed out to the superstars. I could keep on going but u union haters do not care.

Comment by democrat man Friday, May 20, 16 @ 1:54 pm
I’m not a fan of not taxing retirement income. Given a choice of raising the income tax rate to 4.85% with and exemption for retirement income or raising the tax rate to 4.25% and taxing retirement income over $50,000, I greatly prefer the broader based, lower rate approach. Heck, if some sort of graduated rate proposal could have been passed in a timely fashion and combined with a tax on retirement income, a huge piece of the State’s revenue needs could have been met before taxing the 99%ers who are under 65.

Comment by SAP Friday, May 20, 16 @ 1:57 pm
Anonymous, I’m not a frequent commentor but I keep seeing your”cutesy” negative posts every time a tax increase idea is floated. OK, smart guy, if you’re going to shoot down every revenue increasing idea, what do you propose the State do to extricate itself - ourselves - from this mess? And try keeping it practical and legal. NO ONE wants ANY taxes increased, but those who have studiously examined our problem agree that it can’t be solved without a revenue increase. It’s not if we raise taxes, it’s how and by how much.

And to Tier II Employee, I am sorry and embarrassed by my generation’s failings. We elected the officials who led us down this path and now are doing our best to escape the consequences. I do not believe that is how the greatest generation would have tackled the problem.

Comment by Original Rambler Friday, May 20, 16 @ 1:59 pm
Yep, let’s raise that income tax to 5.5%. So instead of 4 years with a 67% increase and about 1 1/2 years of a 25% increase, it makes sense to increase it more, 47% increase over the 3.75% current rate.

And, why we are at it, let’s nail grandpa and grandma!!

Dem speak at its best!!!

Comment by Anonymous Friday, May 20, 16 @ 1:59 pm
Oh fercrissakes, Bruce, I know you want Dems to take all the blame for tax increases, but that ain’t gonna happen. Ds and Rs and the gov all need to bite the bullet and get on board. This is a complete abdication of leadership.

Comment by Chicago Cynic Friday, May 20, 16 @ 2:00 pm
Despite campaigning to “Shake things up”…all he seems to do is “Wait things out”.

At least he staked out a position. Oh wait, he didn’t.

Comment by Jocko Friday, May 20, 16 @ 2:08 pm
I’m not a fan either, but if your retirement income is more than $100K it seems reasonable to consider.

Comment by Indochine Friday, May 20, 16 @ 2:09 pm
If retirement income were to be taxed then any income tax or property tax should be credited against the amount due.

Lot of talk about taxing income with anecdotal comments about how they are retired or they know people who are retired and they are all for it.
Really? So what is their specific plan and how much would they actually pay. And how much do they pay in Illinois income tax irrespective of their retirement? A lot of phony baloney HYPOCRISY out there. Of course as long as their amount of income is excluded they will be all for it.

Keep senior taxpayers in Illinois and don’t drive them to Texas and Florida.

Comment by Federalist Friday, May 20, 16 @ 2:10 pm
Most of the retirees I talk with, support the idea of taxing the income. They feel it isn’t fair to the next generation not to pay in.

Comment by DOWNSTATE DEM Friday, May 20, 16 @ 2:13 pm
Obviously arguments on both sides. But as a retired worker who saved pre-tax in an IRA for years counting on the fact that Illinois DOES NOT tax retirement income on IRA withdrawals, I think I should be akin to the union workers who were told their pensions would not be diminished. If they do vote to tax retirement income, I will be forced to leave the state and take my taxed other income with me. And by the way, I don’t use any of the social services in Illinois that I pay for, other than my gas tax for the roads. And before you tell me not to let the door hit me on the way out, you need independent people like myself that DO NOT consume services, but rather contribute to the revenue stream only and not the expense stream. In the long term, taxing retirement income will most likely be a net zero proposition to the state, or even worse, create a bigger deficit as people leave. Don’t under estimate the number of people that will leave. This is the only thing financially Illinois has going for it.

Comment by sloman2001 Friday, May 20, 16 @ 2:20 pm
-Federalist-

As a retiree, including SERS, SS, required IRA distribution, and the wife’s SS, we have a quite good retirement income. Even though I planned for it to be untaxed, I would be OK with a partial state tax on it. However, I’ve talked about helping our kids, and if you tax all of it, I’ll just tell them to get on Section 8 … a D it will cost the State more than they will get from me in taxes.

Comment by RNUG Friday, May 20, 16 @ 2:20 pm
“Most of the retirees I talk with, support the idea of taxing the income. They feel it isn’t fair to the next generation not to pay in.”

Sure they do..

Comment by Mouthy Friday, May 20, 16 @ 2:23 pm
===Of course Rauner doesn’t support taxing retirement income; he’s probably going to be “retired” in less than 3 years /s===

From your keyboard to the voters’ eyes RNUG!

Comment by Cubs in '16 Friday, May 20, 16 @ 2:23 pm
Racing retirement income in Illinois is the third rail of politics. Hey- does anyone believe the ACA would have passed had they treated Medicare recipients the way they treated those under 65. No one who wants to be reelected will ever touch this

Comment by Sue Friday, May 20, 16 @ 2:24 pm
RNUG- Remember Rauner is already retired:

http://www.chicagobusiness.com/article/20121019/NEWS01/121019735/rauner-makes-it-official-retires-from-gtcr

Comment by Anon221 Friday, May 20, 16 @ 2:26 pm
Rauner knows what will happen if he steps on the third rail.

Comment by DuPage Friday, May 20, 16 @ 2:28 pm
=I think I should be akin to the union workers who were told their pensions would not be diminished.=

It would only be akin if the state constitution said your retirement income would never be taxed.

To suggest that the only thing you use that the state provides are roads is laughable. You probably don’t attend grade school either so maybe you can have that deleted from your property tax bill.

Comment by pundent Friday, May 20, 16 @ 2:32 pm
@mouthy 2:23

Most of the retirees I talk to don’t support the idea of taxing their income. They are wondering if they can pay their bills this month.

Comment by DuPage Friday, May 20, 16 @ 2:32 pm
@Sue

“no one who want to get reelected will ever touch this” - #1 Reason to get the younger generations involved in voting. The debt and the can is kicked down to my peers as a general are not paying attention.

Comment by upstater Friday, May 20, 16 @ 2:41 pm
pundent wrote:
It would only be akin if the state constitution said your retirement income would never be taxed.

To suggest that the only thing you use that the state provides are roads is laughable. You probably don’t attend grade school either so maybe you can have that deleted from your property tax bill.

I sold my home in Illinois 3 years ago, but still reside in Illinois, so I don’t pay Illinois property tax so I can not delete that line item. If I was able to at the time, I would have. When the annual property tax on my home hit $13,000, I decided it was time to sell, so I did. I fully know my IRA withdrawal is not protected by the Illinois constitution as a tax free right, but wouldn’t it be nice if politicians meant what they said and did what they said. Not fully funding the public pensions year after year has created the problem we now face. Maybe the pension system could become less corrupt? When a union big wig works 1 day as a substitute teacher for the Chicago public school system and then draws a full pension, something is wrong. Not only “why should I pay for that”, but rather, “why should any of us pay for that?”. BEFORE any of us pay any more for any of these pensions, there needs to be some reform, or I am afraid IL will lose quite a few of its residents.

Comment by Anonymous Friday, May 20, 16 @ 2:45 pm
@ 1:33 “We wouldn’t want the generation that caused most of this mess to actually take some responsibility in fixing it.” Be careful of the generational warfare blanket statements. The retirement system is actuarially sound, when FUNDED. A generation didnt create this mess. Pols did.

Comment by Anonymous Friday, May 20, 16 @ 2:46 pm
The post above written by “Anonymous” at 2:45PM was by “sloman2001″. I inadvertently left the name field blank.

Sorry.
sloman2001

Comment by sloman2001 Friday, May 20, 16 @ 2:47 pm
RICH pls remind me why Rauner didn’t want the GA to extend the 5% income tax????

Comment by scott aster Friday, May 20, 16 @ 2:51 pm
==I think I should be akin to the union workers who were told their pensions would not be diminished== That argument makes about as much since as the argument that I should not have to pay an income tax because I was born before 1970 when the Illinois Income Tax Act became effective.

Comment by SAP Friday, May 20, 16 @ 2:54 pm
Someone please clarify: would it be constitutional to exempt from taxation a certain lower end of retirement $s?
Wouldn’t that require a constitutional amendment?

Comment by Anonymous Friday, May 20, 16 @ 2:55 pm
==The politicians caused this mess.==

How trite, last time I checked illinois is not north korea or yemen. our “politicians” are elected. the people who vote for them are to blame.

I don’t support raising taxes at this moment but if my taxes are going up everyone elses should too. There are very few reasons to single someone out due to age or source of income.

Comment by atsuishin Friday, May 20, 16 @ 2:55 pm
Taxing state retirement would be a diminishment of benefits, and might not pass legal muster. Before someone points out that as long as all retirement income is taxed it would be legal, it is only state pensions that have constitutional protection. What if all retirement income was taxed at 50%– still legal?

Comment by Anonymous Friday, May 20, 16 @ 3:00 pm
The pensions being underfunded has been going on since 1919, so I think there are plenty of generations to blame.

Comment by Anonymous Friday, May 20, 16 @ 3:02 pm
==”Some of the things they’re recommending, I’ll be maybe OK with. Other things I won’t be.”

How can one be “maybe OK with” a bill? You are either ok or you are not ok.

Comment by Mama Friday, May 20, 16 @ 3:15 pm
==What if all retirement income was taxed at 50%– still legal?==

My understanding is that different sources of income cannot be taxed at different rates.

My AGI is over $150,000, mostly from SURS and SSA, and there is federal tax on that, but zero State of Illinois tax. Why not? I’m still scratching my head.

Comment by OldIllini Friday, May 20, 16 @ 3:19 pm
“Some of the things they’re recommending, I’ll be maybe OK with. Other things I won’t be.”

After all this time, he should just state which is which instead of hoping the legislature guesses.

Comment by Arsenal Friday, May 20, 16 @ 3:20 pm
It all depends on how much they want to tax me, but if you are going to tax me, you better make sure you tax the 1% too!

Comment by Mama Friday, May 20, 16 @ 3:20 pm
Glad Rauner feels this way. It will save me from having to move!

Comment by Anonymous Friday, May 20, 16 @ 3:21 pm
@RNUG,

So what is partial taxation? What amount? Should some get an exemption so they do not have to pay income tax at all as many of the proposals seem to talk about exempting the ‘first $25K or $50K or whatever. That sure does not help the state and means some are not contributing.

What about my point of having it taxed but any income tax or property tax you already pay in Illinois be credited against that amount due?

What if the retirement income was not taxed on those 65+ and older but for those under it is?

And according to a study by the IGPA based upon Comptroller data in 2012 that there were $8.356 billion in “tax expenditures” of which $1.967 billion were retirement related leaving another $6.4 billion on the table- which somehow never seems to come up for discussion.

Your thoughts?

Comment by Federalist Friday, May 20, 16 @ 3:24 pm
== It would only be akin if the state constitution said your retirement income would never be taxed. ==

Not that it matters, but the federal government said they would NEVER tax Social Security. You can’t trust any government promise unless it is in writing in a form that can’t be changed.

Comment by RNUG Friday, May 20, 16 @ 3:43 pm
-Federalist-

Nice idea but it may not work in practice. A lot of old folks are house rich and cash poor. They pay out a lot in property taxes, especially in the collars, where houses are worth a lot.

If you did a dollar for dollar credit for property taxes, a lot of people would still be paying nearly zero in income tax. For example, let’s say you have $50K in retirement income that results in a $42K taxable, and it is taxed at 5%. You would owe a tax of $2100. Depending on house value and senior and homestead exemptions, you are probably paying anywhere from about $1300 to over $4000 on a home in the Springfield area. Subtract that tax from what is owed, and you end up with zero or close to it.

Now it might cause the higher income retiree to pay some tax, but they would also be the group most likely to own more expensive homes with corresponding higher property taxes.

Just don’t see it working very well.

Comment by RNUG Friday, May 20, 16 @ 4:03 pm
===I’ve heard for quite some time that Rauner doesn’t want a retirement tax.===

This may be due to the fact that guaranteed payments to partners on a K-1-P can count towards the subtraction and he could literally stand to avoid having many millions of dollars taxed under current policy.

- RNUG -

===$50K in retirement income===

Is it federally taxed retirement income? What’s your hypothetical federally taxed retirement income source?

Comment by Anon Friday, May 20, 16 @ 4:58 pm