{"id":2506,"date":"2015-08-06T07:38:46","date_gmt":"2015-08-06T13:38:46","guid":{"rendered":"http:\/\/admin.patheos.com\/blogs\/janetheactuary\/?p=2506"},"modified":"2016-08-16T09:48:18","modified_gmt":"2016-08-16T15:48:18","slug":"update-from-illinois-a-sensible-and-sure-to-be-ignored-idea","status":"publish","type":"post","link":"https:\/\/www.patheos.com\/blogs\/janetheactuary\/2015\/08\/update-from-illinois-a-sensible-and-sure-to-be-ignored-idea.html","title":{"rendered":"Update from Illinois: a sensible — and sure to be ignored — idea"},"content":{"rendered":"\n<\/head>

Illinois is, as I\u2019ve said before, in terrible shape as far as state and local government finances are concerned. \u00a0And Tribune contributor Dennis Byrne <\/a>(who has plenty of right-wing bona fides<\/em>)\u00a0has an answer. \u00a0A politically-unpopular answer, but an answer nonetheless. \u00a0Rather than raising taxes yet higher on the general taxpaying population, or cutting social services<\/a>, such as child care support for the working poor, why not eliminate the largest loophole in our tax code?<\/p>\n

He writes, of course, of the fact that retirement income is wholly exempt from Illinois state tax.<\/p>\n

Of course,\u00a0retirement savings already produces tax breaks,\u00a0insofar as 401(k)s, 403(b)s, and IRAs allow us to save for retirement in a tax-deferred manner, and pension accruals at our employers are also a form of tax break \u2014 we earn the benefit while we work but don\u2019t pay tax on the money that our employers contribute to Defined Contribution accounts or to pension funds on our behalf. \u00a0But this doubling-up of tax breaks to exempt the retirement income from tax, too, is well beyond reasonable retirement policy prescriptions. \u00a0And this is what I didn\u2019t know: \u00a0it has a massive effect on our state\u2019s bottom line.<\/p>\n

In 2012, 1 in 4 Illinois tax returns claimed a retirement income exemption to avoid paying taxes. Altogether, those exemptions cost the state $2.3 billion \u2014 money that could pay down Illinois\u2019 pension debt, or help it catch up on the billions in unpaid bills, or fund those human and other services that are getting squeezed out of the budget by the cost of paying interest and principal on the state\u2019s crushing indebtedness.<\/p>\n

While the number of residents filing returns overall has actually declined slightly from 2007 to 2012, the number of people claiming a retirement income exemption has increased by 9 percent. While declared income of all residents grew during that time in the single digits, the value of retirement exemptions grew by 36 percent. In other words, the retirement exemption is eating an ever-increasing chunk of the state budget.<\/p>\n

As for the \u201cgranny tax,\u201d the amazing fact is that most people claiming the retirement income exemption are younger than 65. . . .<\/p>\n

As for \u201cpoor\u201d seniors, consider this: The poverty rate for seniors (65-plus) is declining while for the general population it is increasing. In 2013, the poverty rate for Illinois seniors was 9 percent; for children, 18 percent; for adults, 12 percent (according to the Kaiser Family Foundation).<\/p>\n

Yes, imposing a tax on those seniors who actually are in poverty isn\u2019t right. But if a retirement income tax is imposed, there are ways \u2014 e.g., tax credits or exemptions \u2014 to provide relief for impoverished seniors.<\/p><\/blockquote>\n

He also notes that only two other states, Mississippi and Pennsylvania, have similarly generous policies.<\/p>\n

So Byrne is right. \u00a0But it\u2019s also the case that no politician will touch this, and, indeed, the comments to his article are uniformly negative, treating the elimination of this tax break as a \u201cpenalty on savings\u201d or the like. \u00a0Fills you with confidence for the future of Illinois, doesn\u2019t it?<\/p>\n<\/body><\/html>\n","protected":false},"excerpt":{"rendered":"

Illinois is, as I\u2019ve said before, in terrible shape as far as state and local government finances are concerned. \u00a0And Tribune contributor Dennis Byrne (who has plenty of right-wing bona fides)\u00a0has an answer. \u00a0A politically-unpopular answer, but an answer nonetheless. \u00a0Rather than raising taxes yet higher on the general taxpaying population, or cutting social services, […]<\/p>\n","protected":false},"author":2209,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[450],"tags":[],"class_list":["post-2506","post","type-post","status-publish","format-standard","hentry","category-actuarial"],"yoast_head":"\nUpdate from Illinois: a sensible -- and sure to be ignored -- idea<\/title>\n<meta name=\"description\" content=\"Illinois is, as I've said before, in terrible shape as far as state and local government finances are concerned. \u00a0And Tribune contributor 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