Illinois looks to raid private retirement accounts to solve its pension crisis

Jan 2019
4,718
1,768
southeast
#1
Fine mess this liberal state got into...WILFORD: Illinois Looks To Raid Private Retirement Accounts To Solve Its Pension Crisis


WILFORD: ILLINOIS LOOKS TO RAID PRIVATE RETIREMENT ACCOUNTS TO SOLVE ITS PENSION CRISIS
11:00 AM 02/23/2019 | OPINION
Andrew Wilford | National Taxpayers' Union Foundation
100
Illinois has a severe pension crisis. That’s probably an understatement — the state has over $130 billion in unfunded pension liabilities alone. Last summer, Moody’s reported that the state made the record books for the largest ever pension debt-to-revenue ratio, with pension debt equaling 601 percent of total government revenue. So what are some in the state proposing to solve the problem? Going after money in private retirement accounts, of course.
Two state policy groups, the Civic Committee of the Commercial Club of Chicago and the Civic Federation, have come out in favor of ending an exclusion in the state’s income tax for pension income and federally taxable Social Security income. Doing so, the organizations argue, would raise $2.5 billion in revenue, equivalent to a 0.5 percent income tax rate hike and a 0.85 percent corporate tax rate increase.
The problem, of course, is that Illinois does not have a revenue problem. Spending on pensions grew 663 percentbetween 2000 and 2018, and is projected to continue to grow. This isn’t surprising, given that 60 percent of state pensioners retire in their 50s and pensioners’ direct employee contributions equal only about 6 percent of the benefits they receive. The state is like a teenager with its first credit card, except it never grows up and stops thinking of its credit limit as its bank account.
 
Likes: orangecat
Nov 2018
5,787
1,740
Bel Air, MD
#2
I lived in Central Illinois for several years, before I moved to Maryland. Illinois, for the most part, is conservative. But, the huge population of Chicago, is totally in Democrats hands, and one can ask why the people living there keep voting for politicians who don't know what they are doing and don't care enough either.

Just like other Democrat controlled states, they are in financial trouble. They are desperate. The Democrats have done a very poor of addressing this crisis.

When are Americans going to learn that when Democrats are in charge, things go sour. Democrats don't know how to run things, except into the ground.
 
Feb 2011
16,657
5,887
Boise, ID
#3
Fine mess this liberal state got into...WILFORD: Illinois Looks To Raid Private Retirement Accounts To Solve Its Pension Crisis


WILFORD: ILLINOIS LOOKS TO RAID PRIVATE RETIREMENT ACCOUNTS TO SOLVE ITS PENSION CRISIS
11:00 AM 02/23/2019 | OPINION
Andrew Wilford | National Taxpayers' Union Foundation
100
Illinois has a severe pension crisis. That’s probably an understatement — the state has over $130 billion in unfunded pension liabilities alone. Last summer, Moody’s reported that the state made the record books for the largest ever pension debt-to-revenue ratio, with pension debt equaling 601 percent of total government revenue. So what are some in the state proposing to solve the problem? Going after money in private retirement accounts, of course.
Two state policy groups, the Civic Committee of the Commercial Club of Chicago and the Civic Federation, have come out in favor of ending an exclusion in the state’s income tax for pension income and federally taxable Social Security income. Doing so, the organizations argue, would raise $2.5 billion in revenue, equivalent to a 0.5 percent income tax rate hike and a 0.85 percent corporate tax rate increase.
The problem, of course, is that Illinois does not have a revenue problem. Spending on pensions grew 663 percentbetween 2000 and 2018, and is projected to continue to grow. This isn’t surprising, given that 60 percent of state pensioners retire in their 50s and pensioners’ direct employee contributions equal only about 6 percent of the benefits they receive. The state is like a teenager with its first credit card, except it never grows up and stops thinking of its credit limit as its bank account.
“Raid private retirement accounts” sounds like absolute fake news. The links don’t even indicate that. Pension income and social security are not “private retirement accounts.”

From what I can tell, this is actually not only a relatively great idea for Illinois, it’s more fair than any conceivable alternative, given that today’s retirees need to absorb a lot more of the burden of the state’s pension fiasco than future ones do.

I’ll try to read more about it, but at a glance this is an absolute must for Illinois. Does anyone have any better ideas for the state? I doubt it.
 
Jan 2019
4,718
1,768
southeast
#4
“Raid private retirement accounts” sounds like absolute fake news. The links don’t even indicate that. Pension income and social security are not “private retirement accounts.”

From what I can tell, this is actually not only a relatively great idea for Illinois, it’s more fair than any conceivable alternative, given that today’s retirees need to absorb a lot more of the burden of the state’s pension fiasco than future ones do.

I’ll try to read more about it, but at a glance this is an absolute must for Illinois. Does anyone have any better ideas for the state? I doubt it.
Yep, get rid of the democrats who run the State. Here is a litte more on the raid of private retirment accounts for the chicago trib.EXPERTS: STATE RAIDS HURT PENSION FUNDS
 
Last edited:
Likes: orangecat
Sep 2013
44,052
35,103
On a hill
#5
I lived in Central Illinois for several years, before I moved to Maryland. Illinois, for the most part, is conservative. But, the huge population of Chicago, is totally in Democrats hands, and one can ask why the people living there keep voting for politicians who don't know what they are doing and don't care enough either.

Just like other Democrat controlled states, they are in financial trouble. They are desperate. The Democrats have done a very poor of addressing this crisis.

When are Americans going to learn that when Democrats are in charge, things go sour. Democrats don't know how to run things, except into the ground.
Why waste time learning what aint true?
 
Feb 2011
16,657
5,887
Boise, ID
#7
Yep, get rid of the democrats who run the State. Here is a litte more on the raid of private retirment accounts for the chicago trib.EXPERTS: STATE RAIDS HURT PENSION FUNDS
Getting rid of the Democrats does not inherently cause the pension funds to become even a dollar more solvent. Actual legislative action is needed in order to do that. And frankly, not just legislative, but probably constitutional. The state would need to change its constitution to even allow benefits to be modified, which is beyond necessary at this point. The elimination of the pension income tax exemption looks like a decent modest workaround to having to change the state constitution.

To me it looks like this would be a small step in the right direction, and in fact I don’t think I’ve heard of a single idea that would be more equitable than this one. Every other proposal I’ve seen for Illinois basically just boils down to “eat the young and pray for a federal bail out.”

Last thing, “raiding the pension funds” is almost always an indication that a source is being dishonest. It’s usually no more true than referring to a tax hike as government “raiding private checking accounts.”
 
Last edited: