Seniors' Group Takes Early Stab Against Retirement Tax
State leaders aren't discussing how Illinois can bring in more tax money; not yet anyway. Given the state's growing deficit they'll get there one day. The state's leading group for retirees is on the offensive over one particular tax break.
Illinois is one of only a handful of states with an income tax that doesn't tax retirement income. No politician has filed legislation to reverse that, but it's an option. The nonpartisan Civic Federation recommends it as a way to stabilize the state's finances, especially as the number of senior citizens living in Illinois is projected to grow.
That also means the number of elderly voters will rise. The A-A-R-P says it polled people 50 and older and -- no surprise -- found seniors don't want their pensions and social security taxed.
"They know it would have a major detrimental impact on their household budgets, on their ability to prepare for and enjoy a secure retirement, or even on their ability to stay retired," Gallo said. "While legislators are considering creating a new tax on retirement income as part of a retirement package, they seem to be ignoring some harsh realities: millions of Illinoisans - especially older and retired individuals - are living on fixed incomes, or struggling with the rising cost of essential necessities."
Gallo says Illinois needs a comprehensive overhaul of its tax system, instead of singling out a single population and instituting a regressive tax only on seniors.
Illinois could opt to tax only retirement income above a certain level, say $50,000; advocates of that route argue seniors who don't have enough money to retire still have to pay income taxes, while those who are well off enough to stop working, don't.
Heading into an election year, a couple of lawmakers have introduced resolutions against a retirement tax.