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* Andy Shaw thinks Illinois should tax retirement income…
It’s estimated a retirement tax could bring in up to $2 billion a year, real money in a state that’s broke and getting broker.
But seniors can chill because, as I said, it’s unlikely this year.
As an old dude who’d be whacked by the tax, I’m relieved.
As an old dude who worries about the mountain of debt we’re piling onto our children and grandchildren, I think it should at least be considered as part of an overall solution.
Lawmakers in 40 states bit the bullet, faced the wrath of seniors and imposed a tax on retirement income.
Most are still around to talk about it.
But this is Illinois, a dystopian government Wonderland where a refusal to even consider the obvious is business as usual.
The Mad Hatter would love it.
* But AARP is not taking any chances and has launched an ad campaign just in case somebody tries to move it forward. Click here to see the newspaper ad, which is running in these papers…
Chicago Tribune
Chicago Sun-Times
Rockford Register Star
Champaign News Gazette
Springfield Journal Register
Peoria Journal Star
Belleville News Democrat
* They’re also running a radio ad. Rate it…
* Script…
Illinois is in a deep fiscal crisis – and special interests and some elected officials are proposing a tax on your retirement income in order to solve it.
That just isn’t right or fair.
Retired Illinoisans did not cause this mess. They certainly shouldn’t be sacrificed to clean it up.
Ninety-percent of older Illinoisans, including those still working strongly rejected a tax on retirement income according to an AARP survey.
A tax on retirement income would have a dire financial impact on retirees and their families.
That’s why AARP is fighting to protect the financial security of retired Illinoisans and to make sure taxpayers are represented at the table.
Take action, fight back and make your voice heard! Urge your legislators to oppose the taxation of retirement income.
Call xxx-xxx-xxxx/visit aarp.org/xxxx today. That’s xxx-xxx-xxxx/aarp.org/xxxx.
[We can’t let them fix the budget on the backs of retired Illinoisans!]
Paid for by AARP
* The ad is running on these stations…
WDWS-AM (Champaign)
WBBM-AM (Chicago)
WGN-AM (Chicago)
WJPF-AM (Southern Illinois)
WMBD-AM (Peoria)
WROK-AM (Rockford)
WTAX-AM (Springfield-Decatur)
WMAY-AM (Springfield-Decatur)
posted by Rich Miller
Wednesday, May 18, 16 @ 3:09 pm
Sorry, comments are closed at this time.
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Problem is with border states like Iowa. Retirees tolerate the far higher property taxes here because their income isn’t taxed. If you’re in the Quad Cities, and you were downsizing for your empty nest home, which side of the river are you buying on ?
Comment by Shemp Wednesday, May 18, 16 @ 3:13 pm
I’m ok with a tax on retirement, a lot of these (especially new) retirees were the ones that voted for these disastrous spending & policies that have created this financial mess, maybe they should help pay for their sins.
Comment by Ahoy! Wednesday, May 18, 16 @ 3:19 pm
=Retired Illinoisans did not cause this mess.=
Funny, whether you’re in the “State pensions are too generous!” or “The income tax was too low for decades!” camp; you disagree with the above.
Comment by Robert the 1st Wednesday, May 18, 16 @ 3:20 pm
==Retired Illinoisans did not cause this mess.==
Actually, you did. You got government services at below cost by building up pension debt.
==Ninety-percent of older Illinoisans, including those still working strongly rejected a tax on retirement income according to an AARP survey.==
Duh. “Do you want your income taxed?” “No.”
Comment by Pot calling kettle Wednesday, May 18, 16 @ 3:20 pm
Iowa taxes some retirement income https://tax.iowa.gov/expanded-instructions/pension-retirement-income-exclusion-0
Comment by Rich Miller Wednesday, May 18, 16 @ 3:21 pm
>> Retired Illinoisans did not cause this mess. They certainly shouldn’t be sacrificed to clean it up.
2014 Exit Polling (via CNN)
18-29 year olds Quinn 51, Rauner 42
30-44 year olds Quinn 49, Rauner 46
45-64 year olds Quinn 46, Rauner 52
65 + year olds Quinn 39, Rauner 57
Count me in the camp of, “um, actually, they kinda did … “
Comment by ZC Wednesday, May 18, 16 @ 3:31 pm
They enjoyed the services and the debt problem is 90 years old, so it is partially their problem too.
Tax retirement income over $75,000
Comment by JS Mill Wednesday, May 18, 16 @ 3:31 pm
===That just isn’t right or fair.
Retired Illinoisans did not cause this mess. They certainly shouldn’t be sacrificed to clean it up.===
Perhaps. But it could also be argued that if you worked in Illinois over the past 30-40 years and are now retired, your taxes were artificially lower than they should have been to pay for all of the spending that went on during that era. So think of a tax on some retirement earnings as a bill for services rendered.
Comment by 47th Ward Wednesday, May 18, 16 @ 3:34 pm
Yes let’s drive couple hundred more thousand out of the state.
http://www.howmoneywalks.com/irs-tax-migration/
Comment by Empty Suit Wednesday, May 18, 16 @ 3:38 pm
Oswego Willy thinks Andy Shaw might be in to something, maybe by accident, Oswego Willy doesn’t know, but… Oswego Willy feels the time may be ripe for this to happen, Oswego Willy can’t see if there’s enough of “fervor” behind it.
To the Ad,
Oswego Willy thinks it’s fine, just lost on the idea that the mass media is the best place for this type of Ad.
Oswego Willy would’ve used AARP’s database and target.
Oswego Willy sends a big shoutout to Andy Shaw…
Comment by Oswego Willy Wednesday, May 18, 16 @ 3:39 pm
Precisely the reason we are moving to FL later this year.
Comment by Stones Wednesday, May 18, 16 @ 3:40 pm
How about that? I saved for forty years so I would have an income large enough not to be a burden to the State. I am already saving you money by not needing your services.
Comment by taxed enough already Wednesday, May 18, 16 @ 3:42 pm
the only seniors that will pay it will be the ones who cannot afford to move.
Comment by northshore cynic Wednesday, May 18, 16 @ 3:42 pm
===Retired Illinoisans did not cause this mess.===
One of the main reasons for the current pension ‘mess’ is that taxes were kept low over many years. Low taxes kept the cash in peoples pockets and did not fund the pension plans. Before the currently retired did retire they reaped the benefits of the low taxes for many years. In financial circles it is called ‘back loading’. It is now time for the retired to pay what they did not pay in past years.
Comment by Hit or Miss Wednesday, May 18, 16 @ 3:47 pm
I think it should definitely be explored above a certain level.
Comment by logic not emotion Wednesday, May 18, 16 @ 3:52 pm
We say we don’t want to leave a mountain of debt for our children and grandchildren to deal with later. But we don’t want to increase our taxes or tax our retirement income to pay down the debt. It is time to take responsibility for our debts as forty other states have done by taxing retirement income just as we tax non-retirement income.
Comment by Enviro Wednesday, May 18, 16 @ 3:53 pm
47: “it could also be argued that if you worked in Illinois over the past 30-40 years and are now retired, your taxes were artificially lower than they should have been to pay for all of the spending that went on during that era.”
Not ‘could be argued’; that’s a stone cold fact.
It ‘could be argued’ that the retirees should pay a *higher* rate because of that fact. Don’t think that’s the right answer, but there’s a decent basis to argue for it.
Anyway, “this mess” is well over 20 years in the making. I’m willing to exempt any Illinoisan over the age of 85, who hasn’t voted since retiring.
Comment by Chris Wednesday, May 18, 16 @ 3:56 pm
Personally I am indifferent to taxing retirement benefits, however, I guarantee whatever they estimate it will bring in, you can halve it. People are fleeing Illinois now, many are retirees. If we start taxing their retirement income the flight will increase.
Comment by Tone Wednesday, May 18, 16 @ 3:57 pm
Most retirees I know, including myself, have been saying for a longtime that retirement income above a certain amount should be taxed, maybe $50,000. It should be part of a general income tax increase and implementation of a sales tax on services.
Comment by Redeft Wednesday, May 18, 16 @ 3:59 pm
Collecting taxes now on money that was earned in the past seems totally illegal, so I hope that isn’t what is being talked about.
I could see taxing current and future income returns on savings and investments of retired folks being legal, but that is a nasty hit for them this late in their lives. It’s certainly an incentive to shift to 51% residency in a wintering state or to move out altogether.
Taxing existing state pensions (which are benefits that were earned years ago) is certainly as much a diminishment of benefits as a cut would have been, and would wind up in court again.
Comment by peanut Wednesday, May 18, 16 @ 3:59 pm
As a retiree I’ll look at it.
However, I think the logic that seniors benefitted from the gov services and somehow participated in the current fiscal debacle is misplaced. The pols skipped pension payments, used slippery actuarial numbers, sold debt and otherwise did what they could to shield the true cost of government pensions from voters for decades.
If the pols had acted responsibly and honestly and sought to increase taxes long, long ago in amounts that would have resulted today in bond debt free, fully funded employee pensions, do you think there may have been some push way back when ?
Now we are in a world with private sector seniors living on fixed incomes with economic opportunities in dismal disarray. And you want to tax our fixed income?
The pols acted to protect themselves and now I think it is likely that seniors will do the same, unless the tax increases are accompanied with some major changes as to how Illinois state and local governance does business. And they are the most likely to vote next to government employees. Should be interesting.
Comment by Cook County Commoner Wednesday, May 18, 16 @ 4:07 pm
A bit concerned about tax on retirement earnings now that the real health bills have started. Back when my premiums were microscopic compared to what they are now, and there were no health issues, I saved the amount necessary for retirement. Now, to think of losing what I thought I’d need with high bills……
Comment by Anonymous Wednesday, May 18, 16 @ 4:07 pm
Yes, Rich, that is my point. Iowa does tax some retirement income, which is why some border retirees are fine paying higher property tax in Illinois. But if Illinois loses that advantage, when it comes time to find an empty nester home, how many more are going to look toward Bettendorf, Davenport, etc. The Iowa side already looks more attractive as it is despite some great local efforts on the Illinois side. Same applies to the Wis/Il border areas.
It may be worthy of consideration, but beware the unintended consequences.
Comment by Shemp Wednesday, May 18, 16 @ 4:13 pm
As with everything else. We all want the benefits but not the bill
Comment by Sue Wednesday, May 18, 16 @ 4:14 pm
There are several resolutions opposing taxes on retirement incomes. They have sufficient co-sponsors that if they maintained their positions it kill any measure to implement such a tax.
Comment by Norseman Wednesday, May 18, 16 @ 4:16 pm
“That just isn’t right or fair.”, says AARP.
Seems a bit hypocritical to consider raising the income taxes of some poor schmuck mopping floors for ten bucks an hour, and exempt the thousands of retired pensioners pulling in over $100K per year. I’d tax it, and make the exemption $25K.
Comment by Tom K. Wednesday, May 18, 16 @ 4:16 pm
=I am already saving you money by not needing your services.=
What services don’t you need anymore?
Police, fire, roads, snow clearing, infrastructure? Pick one.
=Precisely the reason we are moving to FL later this year. =
Right, you are doing that for..tax reasons? Not the weather, right?
You would spend $10,000-$20,000 (conservatively) to move your life to earn a tax break of what, $500-$5000? If your state tax burden is another $5000 then your taxable retirement income is pretty good. And services here are generally better than in the Southern US.
You might make out ok if you consider early bird discounts at the buffet though…
Comment by JS Mill Wednesday, May 18, 16 @ 4:18 pm
As a soon to be retired person with a defined benefit plan, I think we should consider taxing retirement income above a certain level and protect lower income retirees. I would also like to see Illinois use the income to pay their bills and fund schools and social services as an adequate level as a condition for the tax………
Comment by nobody Wednesday, May 18, 16 @ 4:22 pm
The Ad is a B. Nothing spectacular.
Let’s institute a tax on retirement benefits above a given threshold. Why not set it at the same percentage as the state income tax?
Comment by Jake From Elwood Wednesday, May 18, 16 @ 4:24 pm
Pulling In A 6 Figure Retirement? They Can Afford The Small Tax…
Comment by Shake Wednesday, May 18, 16 @ 4:27 pm
@nobody +1
I am not far from retirement and have no problem with my income being taxed when I retire.
Comment by JS Mill Wednesday, May 18, 16 @ 4:35 pm
OW typing in the 3rd person….odd. You ok, dude?
Comment by L.A. Wednesday, May 18, 16 @ 4:37 pm
I had contacted AARP and suggested they push for a no tax on retirement income in Illinois. Glad they followed through. Tax my hard earned retirement income, and I leave Illinois, for my Florida home and residency there!
Comment by Anonymous Wednesday, May 18, 16 @ 4:37 pm
Start the tax at $75,000. And stop pretending that we all haven’t benefited for years from artificially low tax rates.
Comment by Soccermom Wednesday, May 18, 16 @ 4:40 pm
Am I missing something or wouldn’t this have to be a flat tax? It’d be great if we could tax rich people’s retirement income but not at the expense of a lower earner on a fixed income.
Could the state do this for public pension recipients? Wouldn’t that be reducing their benefits?
There’s a reason they say social security is the third rail of politics. These geezers don’t just type comments on blogs - they turn out to vote rain/shine, on-year/off-year. Threaten them at your own peril!
Comment by lake county democrat Wednesday, May 18, 16 @ 4:41 pm
I’m okay with taxing retirement income above a certain threshold. this would be retirement income such as non-Roth IRAs, 401ks, or pensions. If you already paid taxes on it, such as a Roth… then you pay taxes on the earnings.
Why? Because every Illinois citizen of a certain means needs to pay for the services provided by the state. If you want to move to avoid it, go ahead. You will be paying in your new location, whether it is sales taxes, income taxes, property taxes, registration fees, etc. We don’t even need to discuss whether you were part of the problem, if you are living here now, you pay now. Not charging well off retirees is sort of like telling people they only need to pay taxes to the school district the years that they have kids there.
Comment by thoughts matter Wednesday, May 18, 16 @ 5:02 pm
Rate it:
The newspaper ad is: A newspaper ad.
The radio ad is: 60 seconds.
I hope the consultant who put this plan together wasn’t at my wedding. If so, apologies in advance.
Scrap the newspaper ads: I know you are trying to “send a message” to lawmakers, but unless you are running an ad in their hometown paper and printing their name and district phone number in the ad…waste. Of. Money.
Radio? 15 seconds. Four times the ad.
Springfield and Decatur, sure. Rockford, Peoria and Chicago? No.
Try Charleston, Bloomington, Quincy.
Comment by Yellow Dog Democrat Wednesday, May 18, 16 @ 5:21 pm
== Could the state do this for public pension recipients? Wouldn’t that be reducing their benefits? ==
As long as the tax was on ALL pensions, both public and private, it would pass constitutional muster. Target only public pensions and your head will be spinning from how fast it gets tossed out.
And that also brings up Social Security; it’s just another kind of pension. If you exempt SS, you have a potential legal problem because a whole class of government employees (teachers and some others) were not allowed to participate in SS.
Best to tax all types of retirement income the same if you want to avoid a legal challenge.
Comment by RNUG Wednesday, May 18, 16 @ 5:29 pm
There already is a tax on retirement income.
It’s called ZIRP, which has been a huge transfer of wealth from those who must rely on interest earned on savings (retirees) to borrowers and big banks.
Comment by TinyDancer(FKA Sue) Wednesday, May 18, 16 @ 5:30 pm
== The pols skipped pension payments, used slippery actuarial numbers, sold debt and otherwise did what they could to shield the true cost of government pensions from voters for decades. ==
More accurately, The pols skipped pension payments, used slippery actuarial numbers, sold debt and otherwise did what they could to shield the true cost of government OPERATIONS from voters for decades.
Comment by RNUG Wednesday, May 18, 16 @ 5:34 pm
== As with everything else. We all want the benefits but not the bill ==
Sue, I actually agree with you on that.
Comment by RNUG Wednesday, May 18, 16 @ 5:36 pm
== Not charging well off retirees is sort of like telling people they only need to pay taxes to the school district the years that they have kids there ==
Actually, some counties in Georgia do exactly that; reach senior age and you no longer pay the school portion of your property taxes.
Comment by RNUG Wednesday, May 18, 16 @ 5:40 pm
You know what … give me that school property tax exemption and I’ll gladly pay the full income rate on all my retirement income including SS … I would save money.
Comment by RNUG Wednesday, May 18, 16 @ 5:44 pm
I am a twenty-some year State retire who did pay Illinois income taxes for about 30 years. I have always thought that the “fairest” income tax would be one that would collect the least amount necessary from the greatest number of citizen. I have also believed that a tax on income should have some element of progresivity. (My assumption is that higher income individuals, in general, probably have been bigger beneficiaries of our society than their lower income brethren.)
Anyway, I would much appreciate it if somebody would present the rationale for taxing income based on its source rather than its amount.
Comment by JohnTwig Wednesday, May 18, 16 @ 5:46 pm
YDD, the AARP media plan is reasonable. They’re pretty good at reaching their peeps, obviously.
Retirees are still likely to get home-delivery of their local newspapers, as they have their whole lives.
And if you’re going to have a call-to-action with both a phone number and a website in a radio spot, you have to pop them twice, slowly, and that requires a :60.
Comment by wordslinger Wednesday, May 18, 16 @ 6:08 pm
long overdue - and I’m a retired geezer on state and other pensions.
Stop pandering to seniors who vote. I pay no state income tax, yet there is a Dept. of Aging for seniors, there are programs at DCFS for grandparents raising grandchildren, and IDPH has services for seniors. Why are we entitled to the free ride?
Apply the standard state tax to retirement incomes and annuities over $75-100,000. I’ll be paying some, and I should.
Comment by Capitol View Wednesday, May 18, 16 @ 6:08 pm
What services are good in Illinois? We get virtually nothing but a coddled class of public workers.
Comment by Tone Wednesday, May 18, 16 @ 6:08 pm
When anyone mentions a graduated income tax, or a millionaire’s tax, naysayers insist the wealthy would simply leave the state. Why wouldn’t the same be true of retirees?
Comment by anon Wednesday, May 18, 16 @ 6:22 pm
Just tax it like regular income except exempt the first $35k for those over 65. Done.
Comment by Robert the 1st Wednesday, May 18, 16 @ 6:25 pm
Be happy to pay when they start taxing political campaign funds.
Comment by SamHall Wednesday, May 18, 16 @ 6:25 pm
== Why wouldn’t the same be true of retirees? ==
A lot of retirees move when they retire. The ones that don’t stay around for family reasons, either helping parents or for the grand-kids. A modest tax ( and let’s be honest, 5% of only part of retirement income is modest) won’t change that many minds.
Comment by RNUG Wednesday, May 18, 16 @ 6:41 pm
Given the economic difficulties of the current generation of young job seekers with mountains of student debt and few benefits or steady jobs, this AARP ad is tone deaf and wrong. What is wrong with a tax on retirement income so long as there is protection for low income retirees.
Comment by peon Wednesday, May 18, 16 @ 7:10 pm
==What services are good in Illinois?==
Don’t be silly, we’ve got the best red-light cameras, radar guns, and tollway transponders money can buy. And have you seen the quality of the license plate and city stickers? First rate. And how about those 7000 different taxing bodies? We have redundant redundencies. No servies, indeed.
Comment by Tom K. Wednesday, May 18, 16 @ 7:12 pm
—Anyway, I would much appreciate it if somebody would present the rationale for taxing income based on its source rather than its amount.—
I agree with you.
But I do have a rational for capital gains being taxed at lower rates. The Idea is that, people who have capital gains have already paid taxes on their earnings because the corporation that they own is paying taxes. So they shouldn’t be taxed twice.
When it comes down to retirement earnings, I guess its cause old people vote in higher numbers?
Comment by A modest proposal Wednesday, May 18, 16 @ 7:31 pm
Looked at the Iowa taxation on retirement income. It appears that Social Security is exempt and on other pensions you get a $5,000 exemption and are taxed as regular income on the rest. Except if you are a public service employee then you get no exemption. This is from their tax code:
Retirement pay received from other sources, including the Office of Personnel Management (OPM), does not qualify for the exemption. In particular, retirement pay resulting from participation in the Civil Service Retirement System (CSRS) or the Federal Employees Retirement System (FERS) does not qualify for the exemption.
There’s a military pension clause in there as well but if I’m reading it right there won’t be any folks moving to Iowa…
Comment by Mouthy Wednesday, May 18, 16 @ 7:32 pm
“But I do have a rational for capital gains being taxed at lower rates. The Idea is that, people who have capital gains have already paid taxes on their earnings because the corporation that they own is paying taxes. So they shouldn’t be taxed twice.”
I just read a recent article on 27 profitable S&P 500 companies that paid no taxes. Would your theory mean that if you invested in those 27 companies, made a profit, you’d be able to skip paying taxes on capitol gains just like the companies?
Comment by Mouthy Wednesday, May 18, 16 @ 7:38 pm
==What services are good in Illinois?==
We have the best Governor you can buy for $1 …
Comment by RNUG Wednesday, May 18, 16 @ 7:41 pm
RNUG is correct. Exempt the retired
From the school district tax, then tax the pension. Don’t forget taxing retirement would also mean a tax on early distribution on IRA, inherited
IRA, 401 k and any other distribution.
Comment by William Jennings Bryan Wednesday, May 18, 16 @ 7:51 pm
- William Jennings Bryan -
If I was structuring it, I would exempt Roth IRA’s because, as others have pointed out, unlike regular IRA’s, you did pay State (and Federal) taxes on the money before it went it.
Comment by RNUG Wednesday, May 18, 16 @ 8:04 pm
What’s really indefensible is that retirement contributions in Illinois are tax-deductible, but the income from those contributions is not taxable. Talk about double-dipping.
Comment by Angry Chicagoan Wednesday, May 18, 16 @ 8:06 pm
Interesting how people start divvying up whose retirement income should be taxed. Retirement income is retirement income. Not every retiree has tons of money to live on. Not every retiree has carefree health and vacation retreats on golf courses–the vast majority do not. Income is income. If retirement income is taxed, wherever the line is drawn on exemptions—-every penny over, no matter what kind of income it is should be taxed. Let’s watch social security recipients support that.
Comment by Anonymous Wednesday, May 18, 16 @ 9:19 pm
Unless their is a federal restriction. Perhaps a change in the inheritance tax reducing the threshold from 4 million back down to 2 million.
Comment by William Jennings Bryan Wednesday, May 18, 16 @ 9:26 pm
- L.A. -
Sorry, I was channeling my inner “Andy Shaw”…
Comment by Oswego Willy Wednesday, May 18, 16 @ 9:36 pm
I’m wondering what I said in another post that had me banned.
Comment by upstater Wednesday, May 18, 16 @ 11:30 pm
Never mind. My first comment on this post didn’t go through - Boo, and I was fired up!
Comment by upstater Wednesday, May 18, 16 @ 11:32 pm
they wont pass a law to tax millionaires but they want to tax senior citizens on their retirement savings
Madigans next mailer
Comment by ex state worker Thursday, May 19, 16 @ 7:28 am
=they won’t pass a law to tax millionaires but they want to tax senior citizens=
Next up: Unemployed and homeless. Got to hurt em when they’re down
Comment by Anonymous Thursday, May 19, 16 @ 7:53 am