How bad does the ‘Illinois Exodus’ have to get? (Chicago: crime, middle school)

[Jon998877]

Originally Posted by dtcbnd03

100% agree. That's been my solution to the pension mess all along. Tax public pensions say 10% and then roll all of that revenue into future pension benefits creating a compounding reduction effect. For people living out of state call it an "administrative fee". Then switch all future pensioners to a 401k. Problem solved.

Tax pension income at a HIGHER rate than other income? Do that with with Social Security as well?

[Mathguy]

Putting more taxes on pension and SS income would create more financial incentive to leave for a no-tax state like FL.

I guess the state would have to hope that most folks just would be forced to suck it up because they don't want to move away from family or cannot afford to move, poor health etc.

[dtcbnd03]

Originally Posted by Jon998877

Tax pension income at a HIGHER rate than other income? Do that with with Social Security as well?

Yes. Because remember its actually a REDUCTION that's phrased as a tax / admin fee only cause the constitution forbids reduction of pension benefits. If people heard "We're reducing pension benefits 10% to shore up the system" then it sounds reasonable but if people hear "we're taxing pensions 10%" it sounds unfair...really its the same thing. I would guess at least 10% is required to offset the rising debt and built in 3% COLAs but an actuary could provide the exact % to right the ship in 20 years. Remember compounding interest is the 8th wonder of the world!

A common misconception about social security is that it will go broke and run out of money. While it will run out of cash reserves in about 15 years future workers will continue to pay into it allowing it to pay out about 75% of future benefits for the next 100 years. The same is somewhat true about IL pensions but I don't know what % it could pay out and the fact that we keep losing population shows its unsustainable. Workers can escape IL but not federal taxes. And if social security is failing...the biggest pension/ponzi scheme in the world...why in the hell do people want to save a failed system??? 401k all the way.

[dtcbnd03]

Originally Posted by Mathguy

Putting more taxes on pension and SS income would create more financial incentive to leave for a no-tax state like FL.

I guess the state would have to hope that most folks just would be forced to suck it up because they don't want to move away from family or cannot afford to move, poor health etc.

Just limit the state tax to ILLINOIS public pensions. And for those that move out of state call it an ADMINISTRATIVE FEE. Remember, IL holds the money so it can charge whatever it wants for administering it people who don't live in the state. Problem solved.

[flyonpa]

Originally Posted by dtcbnd03

Just limit the state tax to ILLINOIS public pensions. And for those that move out of state call it an ADMINISTRATIVE FEE. Remember, IL holds the money so it can charge whatever it wants for administering it people who don't live in the state. Problem solved.

The Federal Courts, would strike down an out of state Administrative Fee (percent) (Tax) .

The US Supreme courts have made the ruling years ago that States can not Tax that type of income from non/residents.

[MSchemist80]

Originally Posted by dtcbnd03

Yes. Because remember its actually a REDUCTION that's phrased as a tax / admin fee only cause the constitution forbids reduction of pension benefits. If people heard "We're reducing pension benefits 10% to shore up the system" then it sounds reasonable but if people hear "we're taxing pensions 10%" it sounds unfair...really its the same thing. I would guess at least 10% is required to offset the rising debt and built in 3% COLAs but an actuary could provide the exact % to right the ship in 20 years. Remember compounding interest is the 8th wonder of the world!

A common misconception about social security is that it will go broke and run out of money. While it will run out of cash reserves in about 15 years future workers will continue to pay into it allowing it to pay out about 75% of future benefits for the next 100 years. The same is somewhat true about IL pensions but I don't know what % it could pay out and the fact that we keep losing population shows its unsustainable. Workers can escape IL but not federal taxes. And if social security is failing...the biggest pension/ponzi scheme in the world...why in the hell do people want to save a failed system??? 401k all the way.

Some of the funds such as Chicago Police and Fire Department are only 20% funded. I don't see how they can even pay half of what was promised.

[Nodpete]

If IL. ever taxes pensions, it won't be 'public pensions' it will be on personal pensions. Those politicians aren't going to tax the folks that keep them in office. Not in this State.

[dtcbnd03]

Originally Posted by flyonpa

The Federal Courts, would strike down an out of state Administrative Fee (percent) (Tax) .

The US Supreme courts have made the ruling years ago that States can not Tax that type of income from non/residents.

Are you talking about Comptroller of the Treasury of Maryland v. Wynne? If so...great post...this ruling states that you can not tax the same income twice and can not discriminate against interstate commerce. Well that sucks. We have to think of a way to get around this. What about when hedge fund managers charge 2% on all assets they manage regardless of where resident lives? It reduces assets and distributions. Can we do something similar or would that get struck down by IL supreme court for reducing pension benefits? I'm just brainstorming here...

https://www.cpajournal.com/2017/10/2...ot-tax-income/

Otherwise we're stuck with a constitutional amendment which is next to impossible.

[PerseusVeil]

Originally Posted by flyonpa

The Federal Courts, would strike down an out of state Administrative Fee (percent) (Tax) .

The US Supreme courts have made the ruling years ago that States can not Tax that type of income from non/residents.

I'm fairly certain Congress already handled this in the 90s. States can't tax pensions for pensioners who move out of state. It's settled.

Additionally, even if the IL constitution is ever amended, they're never going to tax pensions at a higher rate than the standard income tax. It would be political suicide, not to mention it would probably face a court challenge. Their tax range would likely have to be in the same bracket as other similarly situated individuals in terms of income.

[pvande55]

Originally Posted by Grlzrl

He wanted to tax pensions to get us out of the mess that those that handed out the HUGE, GOVERNMENT PENSIONS created. Why shouldn't pensioners have to pay taxes like everyone else?

Presently Social Security under $25000 is tax exempt. I heard he wanted to start taxing at a much lower level. Doesn't matter now since the voters of IL gave him the boot.