Crain's Chicago Business: AARP Op-Ed - Elite business group's tax plan unfairly hits average Illinoisans

There’s no doubt Illinois is in a financial mess. But the proposal to fix it offered up this week by the Civic Committee of the Commercial Club of Chicago—senior executives from the Chicago area’s leading employers—shows little regard for Illinois residents who would be hit hard by this plan.


 As a nonprofit, nonpartisan organization dedicated to improving the lives of people over the age of 50 and their families, AARP Illinois is compelled to point out what the Civic Committee’s plan would mean for the  hard-working Illinois residents we know.

 Income tax: The committee has proposed increasing the state’s individual income tax rate to 5.95 percent from 4.95 percent.

For the majority of middle class Illinoisans, this increase would cut income needed to pay for everyday things, such as rent, mortgage, health care, prescription drugs or items in the grocery store cart. In a survey AARP Illinois conducted last year as part of its “Enough is Enough” campaign calling for solutions to Illinois’ budget crisis, 73 percent of registered voters age 25 and older reported that they or someone they know have considered leaving Illinois to live elsewhere. Their top two reasons? They wanted lower taxes and a lower cost of living.




Taxing retirement income: The Civic Committee has proposed taxing retirement income; another tax shift onto middle-income Illinoisans, and another idea that concerns AARP Illinois on behalf of its 1.7 million members.

Retirees did not create the current state fiscal crisis, nor did they anticipate in their lifetime of planning for their retirement years that their retirement income would be fully taxed by the state. It is no wonder that AARP’s survey further revealed that 71 percent of Illinois residents opposed taxing retirement income as a way to help solve the state’s fiscal problems. They know, as we do, that it is unfair and shortsighted to propose balancing the state’s budget on the backs of Illinois’ retirees.


Retired seniors pay more than their fair share of other taxes, including high property taxes, and a combined sales tax rate nearing as much as 10 percent. Moreover, Illinois’ older residents contribute to the state’s economy to the tune of $358.8 billion, or 46 percent of Illinois’ GDP, despite only making up 34 percent of the state’s population. Illinois would be smart to consider maintaining and adopting programs and policies that keep this important economic engine in our state, rather than considering policies that drive retirees, and their contributions to our state’s economy and workforce, elsewhere.

Fortunately, Illinois has a governor who understands the contributions of its older residents. AARP Illinois is thankful that Gov. J.B. Pritzker has maintained his commitment to not taxing retirement income—a promise he made repeatedly while on the campaign trail, and even during a stop at AARP Illinois’ Chicago office.

We agree that tough choices must be made in order to build a long-term blueprint for Illinois’ financial stability. But legislators must find a comprehensive plan that is equitable for all Illinoisans. The Civic Committee’s proposal falls far short of this goal.

Bob Gallo is state director of AARP Illinois, the state office for the national AARP.


 

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