A WATCHDOG GROUP OUT OF CHICAGO, WANTS RETIREES TO PAY STATE INCOME TAX, FOR THE FIRST TIME IN YEARS. WANTING TO DEMINISH OUR PENSIONS AGAIN BY MORE TAXES... An influential government watchdog group says Illinois should keep its temporary income tax increase in place for a year longer than initially promised and begin taxing retirement income to dig the state out of a massive budget hole — a solution that’s both being praised for its even-handed approach and digested with a strong dose of skepticism over its prospects in an election year. The Chicago-based Civic Federation says its five-year plan would allow the state to pay off its $5.4 billion backlog of unpaid bills and avoid budget cuts precipitated by a drop in revenue. The 47-page report, released Monday — two weeks before the primary and three weeks before Democratic Gov. Pat Quinn’s scheduled budget address — is a far more detailed plan than has emerged so far from legislative leaders and gubernatorial candidates as the state’s budgeting process has gotten underway in recent weeks. “This is exactly the sort of cure Illinois has to take,” David Yepsen, director of Southern Illinois University’s Paul Simon Public Policy Institute, said. “It’s a little pain for everyone but will get us out of our problems in a few years.” However, he added, “this is the sort of thing we can expect to see get debated after the elections in the lame-duck session late this year.” Individual income tax rates in Illinois are scheduled to roll back from the current 5 percent to 3.75 percent next January, with corporate rates dropping from 7 percent to 5.25 percent. The expiration will cause the state to lose more than $1.7 billion in tax revenues next year and more than $4 billion in fiscal year 2016, the Civic Federation predicts. The federation says the state should “eliminate the pending revenue cliff” by keeping current tax rates in place for one more year, before allowing them to drop gradually. By fiscal year 2019, the individual income tax rate would be 4 percent, and the corporate rate would be 5.6 percent. At the same time, the proposal suggests that the state broaden the income tax base to include taxing retirement income for the first time. Illinois, the report notes, is one of just three states across the country that exempts pension income from income tax. It is one of 27 states that doesn’t tax Social Security income. Civic Federation President Laurence Msall said the plan, combined with the recent pension reform proposal passed by the legislature, “would finally allow the state to move beyond what has become a perpetual fiscal crisis.” “Revenue enhancements alone are not enough to provide long-term sustainability for the state’s finances, while overreliance on expenditure reductions could cripple essential services,” he said. Read more: sj-r/article/20140303/News/140309887#ixzz2v07Kvrlr
Posted on: Tue, 04 Mar 2014 13:34:47 +0000
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