TAX THE OLD PEOPLE

When Illinois Senate President John Cullerton (D, 6th District) announced that he was thinking about imposing a state income tax on retirement income (excluding Social Security) for high-earning senior citizens, loyal blog reader Cheryl Jacobs Lewin e-mailed me the story, expressed her outrage and asked if I were going to write about it. I responded that I was thinking about it, but since I agreed with Cullerton she probably would not be pleased with the result. Her reply was, “Anytime the state wants to tax me more instead of cutting wasteful spending and looking to figure out other sources of revenue pushes me to look to move elsewhere.” What Cheryl said makes sense, so I will examine both sides of the story.


According to an editorial in the Chicago Tribune, taxing pensions is commonplace. Ronald Snell, a tax specialist at the Denver-based National Conference of State Legislatures, said, “Of the 41 states that tax personal income, 36 tax some or all retirement income, including government, private and military pensions and Social Security. Only five don't: Alabama, Hawaii, Illinois, Mississippi and Pennsylvania. And even in the first three of those, you can find a fistful of retirement dollars that are taxed.”


Governor Pat Quinn’s reaction to the proposal, “I think it’s important that we always be open to reviewing the tax code. Matter of fact, I proposed in my budget address that we have a commission in Illinois that’s focused on fairness and economic growth, and looking at our tax code, that promotes fairness to everyday taxpayers and also economic growth for all of us, so I think everything should be looked at. How we go about it is obviously something we have to work together on.”


So if 41 states currently tax pensions, what would be so wrong about Illinois doing it? I have no problem with taxing senior citizens who are receiving pension in excess of $100,000. The rest of us are paying state income tax; what your age is should not matter when it comes to taxes.


Now to the other side of the story. Where can Illinois cut the budget? The Illinois Policy Institute (http://www.illinoispolicy.org/) has issued a 108 page report, ”Budget Solutions 2012: A Sustainable Path for Illinois.” In the report they include examples of wasteful and unnecessary spending by Illinois government provided by IllinoisOpenGov.org. I have listed some large questionable expenses below. I use the word “questionable” because they merit further analysis.
 State Spending Examples Found via IllinoisOpenGov.org


In 2009, the Illinois Policy Institute launched IllinoisOpenGov.org, which gives Illinois taxpayers a clear look into how state government spends their hard-earned tax dollars, down to the agency, person and penny. The site contains information on state employee payroll, checks to businesses and people and state retiree pensions. The following spending examples come directly from IllinoisOpenGov.org and highlight spending choices that should receive extra scrutiny before being repeated in the future. The expenses below were incurred between July 1, 2009 and April 16, 2010.

Statewide: $19,803,867 for In-State Travel Expenses:

Eighty-eight state agencies had in-state travel expenses, with the expenses for twenty-six agencies exceeding $100,000.

Statewide: $7,073,923 for Passenger Automobiles:

Twelve state agencies had passenger automobile expenditures, including the General Assembly ($48,390), the Supreme Court ($39,052) and Governors State University ($17,799).

Statewide: $6,927,825 on Advertising:
Fifty state agencies incurred nearly $7 million in advertising expenditures. Almost three-quarters of the expenditures came from the Department of Transportation ($5,082,930), and six agencies spent more than $150,000 on advertising.



Statewide: $2,885,766 on Prizes, Premiums and Awards:

Seven state agencies spent a combined total of $2,885,766 on prizes, premiums and awards. The Department of Agriculture was responsible for over 98 percent of the expenditures, spending $2,837,019 on this category of spending. The Department of Natural Resources spent the second highest amount at $30,994.

Statewide: $1,406,623 on Subscriptions

Various state agencies spent $1.4 million on subscriptions to vendors such as Gatehouse Media IL Holdings II ($11,090), Ahead of Our Time Publishing ($9,450) and XM Satellite Radio Inc. ($6,958).

 And more from the Institute’s Piglet Book:


Highlights include:


• $6,500 for a tub of live bass. The state paid for fishing seminars and demonstrations using a 4,000 gallon, 40-foot long tank filled with live fish.


• $353,165 for car racing. The state is funding Raceway Associates, which partners with big-time races like the Indianapolis 500 and the Daytona 500, as well as a massive construction grant for Atkinson 
Motorsports Park in northwestern Illinois.


• $10,000 for a Batman gala. Your tax 
dollars funded a star-studded party for “Dark Knight” director Christopher Nolan.


• $1,100 for Hawaiian party props. Your 
money made its way to Island Enterprises, a company providing “everything for luaus and Hawaiian themed events from dancers to music to props and apparel.”


• $78,066 for quail promotion. The state is funding Quail Unlimited, which is “dedicated to the wise use and management of America’s wild quail, doves, upland game birds and other forms of wildlife.”


So the State of Illinois has funds to pay for XM Satellite radio (I don’t even have satellite radio) and bass demonstrations. Maybe we should be fishing for money elsewhere than from the seniors, but still not let them totally off the hook.