(The Center Square) – Illinois Treasurer Michael Frerichs told attendees of a recent chamber of commerce event that the state needs a progressive income tax because it would allow for the taxation of retirement income above a certain level.
Frerichs spoke at the Des Plaines Chamber of Commerce’s Mid-Year Economic Summit.
Frerichs told the group of around 100 people that passing the progressive tax ballot initiative would allow the state to tax the retirement income of wealthier Illinoisans without hitting middle-class seniors on fixed incomes, according to the Daily Herald.
“One thing a progressive tax would do is make clear you can have graduated rates when you are taxing retirement income,” he said. “And, I think that’s something that’s worth discussion.”
The head of Vote Yes for Fairness, a nonprofit advocacy group in support of the progressive tax ballot initiative, responded to Frerichs’ comments to Springfield blogger Rich Miller.
“Vote Yes For Fairness believes all seniors should have the opportunity to retire with dignity after years of hard work, and opposes any tax on retirement income. That’s why we are dedicated to passing the Fair Tax, which does not tax retirement income or make it any easier to implement a tax on retirement income. The Fair Tax is about fixing our broken tax system that allows millionaires and billionaires to pay the same rate as our working families, while updating it to the one used by a majority of states and the federal government that works for all Illinoisans.”
Illinois is one of a handful of states that does not tax retirement or pension income as taxable revenue.
Polling has shown a slight majority supporting the progressive income tax, but taxing retirement income remains unpopular. Polls from AARP show broad majorities of respondents strongly oppose taxing income.
This idea has been a hot-button issue surrounding the coming progressive income tax vote. The Chicago Sun-Times wrote an editorial last September calling on the passage of the progressive income tax so that high-earning retirees could be added to the state’s tax rolls.
“As the Baby Boomer generation ages, retirement income will grow faster than wages, forcing younger workers to shoulder an increasingly unjust tax burden,” the Sun-Times wrote. “So let’s get on with it and do right by the young people of Illinois. They didn’t create this pension mess. Those of us with a little gray in our hair did.”
There has yet to be any proposals filed in the 101st General Assembly that would include any taxation on retirement income, only resolutions opposing it from previous sessions.
Adding a tax on retirement income, no matter what income level, after a successful Fair Tax Amendment in 2020, could subject it to the same criticism as a progressive income tax.
