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Illinois needs to fix state pensions, tax retirees to avoid the abyss

Belleville News Democrat

Monday, April 9, 2018  |  Editorial  |  By The Editorial Board

Budget--State (8) , Education Funding (36a) , Pensions (70) , Taxes, income (86)
Billionaire governor candidate "Corrupt Insider," also known as J.B. Pritzker, wants to hike Illinois state income taxes and then offer credits to some lower-income folks to create a simulated progressive tax.

Pritzker said he can't offer details, because everything depends on negotiating with state lawmakers (Hmmmm, what does Illinois House Speaker Mike Madigan want?). Pritzker wants a temporary increase to serve as a bridge because Illinois must vote to change its constitution to allow a progressive tax.

Billionaire Governor "Failure," also known as Bruce Rauner, failed to keep his party members in line and so they helped Democrats last year override his tax increase veto. Rauner wants Pritzker to offer details on his progressive tax as well as the temporary tax hike that would be a bridge to a true progressive tax.

Illinois was more than $16 billion behind in paying its bills in November. The backlog's now $8 billion after we borrowed $6 billion and state income taxes were hiked to 4.95 percent — lawmakers were channeling their inner used car salesmen and couldn't even be honest that it was 5 percent.

We're still facing a $130 billion pension deficit. What are your solutions for that, governor candidates? No one in Illinois government seems too worried, but that little issue was the main focus of the folks who dropped Illinois' credit rating to a click above junk bond status.

We keep hearing about property tax relief, but then in the next breath Rauner is planning to make school districts responsible for their own pensions. They should be because the separation of creating pension demands from responsibility for fulfilling them created abuses. But you can't place a major cost on local schools and expect the major funding source for schools — property taxes — to do anything but go up more.

Illinois residents have the highest state and local tax burden in the nation. Has anyone in Springfield noticed the lack of economic recovery here and the population losses here. Think there might be a link?

More is not the answer. Soak the rich taxation hasn't worked since the first federal income tax to finance the Civil War. A government will not be able to avoid going after the little guy unless spending is modified and the number of taxpayers and wealth is increased.

High-tax states tend to do well economically because they are using that money for education. Illinois is the highest-tax state, but it was ranked dead last with 24.8 percent of education funding coming from state taxes in 2016.

High taxes, but not for our kids. Our priority in Illinois is the ever-increasing demands of our public employees and the greater demands of their retired peers.

Which brings us to this: Tax those retirement incomes.

There is $2.7 billion in potential state income tax that Illinois leaves on the table each year, according to The Civic Federation's Institute for Illinois' Fiscal Sustainability. Illinois is one of three states that exclude all retirement income from taxation, and the only one that excludes all Social Security income.

Illinois is in trouble because it was too generous with public employee pensions. Let the retirees help solve the problem, and maybe their kids and grandkids will stop moving away.

In the problem is solution.