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Letter: Retired Teacher's Solutions for Illinois Pension Crisis

Fix the unfair income tax structure, increase the number of services taxed.

I am a retired teacher with a vested interest in protecting the integrity of all publicly funded pensions. I am also extremely frustrated that there has been so little consideration of the real underlying problems our state faces: an unfair state income tax structure, an unwillingness to accept reality with regard to a sales tax on services, and an unrealistic repayment schedule for our pension debt.

Illinois is one of only seven states in the nation that employs a flat tax and, until the recently enacted temporary increase at 3 percent for individuals, was dead last in the rate imposed. Even now, at 5 percent (until 2015), we are not the most highly taxed of this group. A flat tax is inherently unfair: 83 percent of states with an income tax and even the federal government have chosen a graduated income tax as the most fair way to tax.

As quoted by Joe Cahill in Crain’s this past July, “former Federal Reserve Chairman Paul Volcker blamed Illinois’ staggering deficits in part on a ‘narrow tax base.’ As the service sector grew during the past several decades, most states extended sales taxes to a range of consumer services … . Illinois taxes just 17 services, fewer than all but three other states … well below the national average of 56. Neighboring Iowa, by contrast, taxes 94 services. It is estimated that taxing consumer services could provide an additional $4 billion annually, enough to nearly cover our current $5 billion-plus backlog of unpaid bills.”

And, finally, let’s consider the repayment schedule. This is a self-imposed, overly ambitious, unrealistic schedule. Once we address the revenue side of the equation, it would make sense to refinance our debt into a manageable and reasonable program of debt repayment.

Pension crisis solved!

—Dianne McGuire

Dan January 08, 2013 at 03:33 AM
If Illinois is to take steps towards a "fairer" income tax I'm sure the letter writer would understand the first step should be to follow lead of the many other states that tax pension income. I'm yet to have someone explain to me why it is "fair" to tax a person that is currently working but not tax a person that has the same level of pension income? In many cases the person that is currently working to earn say $50,000 has less disposable income than the individual that is retired and receiving $50,000 in pension income. By the time one is retired it is likely thier house is payed off , the kids are out of the house,there is the ability to downsize and work related expenses like commuting are in the past. Closing the tax loop hole that is allowing individuals to bypass paying taxes on millions of dollars of income should be the first change to bring about a "fairer" state income tax.
NancyC January 09, 2013 at 05:41 PM
The retirement age for public employees, including teachers is too way to low as are their contributions to it. They should pay more and work till later in life like the private sector-who are held to a much higher standard of accountability. We in this household are self-employed. There is no one but us to provide for our retirement income and we pray that more individuals will take responsibility for their own future too - no matter how that has to happen for them-working more years, and contributing more from their own earnings.
Mary Ann Erbach January 10, 2013 at 02:07 AM
I would suggest you home school.
rick gerali January 31, 2013 at 09:42 PM
What teachers, politicians and other public pension receipients need to realize is it's better to get a piece of something as opposed to a promise which turns out to be nothing. Public employees have worked for a benefit and hopefully they receive that benefit. But a defined benefit that isn't capable of being funded is not a defined benefit, it is an illusion. The system is broken and needs a permanent fix that does not saddle future generatiions with debt or take more from those currently on fixed incomes.
Sgt Patterson February 05, 2013 at 05:53 PM
This person is not realistic. I just researched the average pay for an Illinois State Trooper; It is 70,000 dollars. I am in Law Enforcement in Virginia and I am A patrol supervisor (Sergeant) and I don't make anything close to that. With overtime I made 59,800 & that is with thirteen years experience. 70 grand for an average cop? That is why we are going to be forced to bail out the state of Illinois. Sgt Patterson

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