Pension Crisis Solution Isn’t a New State Income Tax

View as PDF  As the government pension problem becomes more evident in an increasing number of large cities and small villages across Illinois, the public must be aware of a number of interests pushing proposals to vastly increase the financial burden placed on taxpayers. The most recent call for a new state income tax on retirement income is an effort to once again tinker on the margins instead of solving the crisis caused by lavish, unsustainable government pensions.

The Civic Federation is one such interest group calling for a new state income tax on retirement income. The Chicago-based group, which consistently lobbies for increased taxes and spending, describes itself as, “an independent, non-partisan government research organization.” The Civic Federation is often and erroneously identified by the compliant media as “a nonpartisan budget watchdog,” or more laughably, “a tax watchdog group.”

Remember, the Civic Federation called for $23 billion in tax increases and another $11 billion in spending increases as recently as February of this year.

Together, the Civic Federation and the sympathetic echo chambers in the Chicago media are demanding that taxpayers further shoulder the bankrupt policies of bureaucrats with a new state income tax on retirement income. This new tax will disproportionately affect the poorest among those who are dependent upon their fixed retirement income. Instead of whipping up support for a new tax on retirement income to fund the enormous government pension obligations in Illinois, taxpayers must push back against the government unions and interest groups by demanding that government employees pay more into their own pensions. Solving the government pension debacle by creating new income taxes or raising current rates is an economic impossibility.

As it stands, 80% of local taxes go to fund government employee pay, pensions, and benefits. The 2011 67%, temporary  Illinois state income tax hike, which finally began to sunset in January of 2015, did absolutely nothing to solve the escalating government pension fiasco, although nearly 90% of those taxpayer dollars went to fund the astronomical government pension obligations.

In fact, all of the excuses used to demand that more tax revenue flow into the government coffers have been proven to be not only wrong, but also counterproductive. Illinois has continued to slide toward insolvency as government debt and deficits increase, state and local credit ratings continue to plunge, and a growing number of taxpayers are becoming ex-Illinois residents.

A new state income tax on retirement income will do nothing to solve the broader government pension epidemic because these tax increase proposals are merely targeting the symptoms of what ails Illinois, not the sickness itself: the unsustainable and exponentially growing unfunded government pensions.