Wheeler Considers Imposing Retirement Income Tax

The Northwest Herald plunged into the coming income tax hike fight in Monday’s paper.

First revealed to the public in a Pioneer Press (owned by the Chicago Tribune) article on October 21st, Republican leaders are considering taxing retirement income.

McHenry County Blog reported the possibility the next day.

David McSweeney

David McSweeney

That same day State Rep. David McSweeney, who represents parts of McHenry County into Crystal Lake, issued a “Hell, No!” statement on the idea.

McHenry County Blog then wrote all Republican legislators asking their position.

Wheeler and Andersson replied.  Andersson, who represents Sun City, was much more negative than Wheeler.

In mid-November, Crain’s Chicago Business reported that an ally of Governor Bruce Rauner was shopping around the idea of taxing retirement income.

In early December, McSweeney sought support from State Reps. for a resolution denouncing the idea of taxing retirement income, but, locally, only Jack Franks, Andersson and he signed on as sponsors.

Local representatives missing from the list are

  • Mike Tryon (815) 459-6453
  • Barb Wheeler (847) 973-0064

Now, the possibility has caught the attention of the NWH.

State Rep. Barbara Wheeler is open to taxing pension income.

State Rep. Barbara Wheeler is open to taxing pension income.

Barb Wheeler

Barb Wheeler

The front page article reports that Wheeler, a Republican, is open to supporting an income tax on public pensions of over $100,000.

There are probably not too many who would be bothered by that, but, if Wheeler believes that only public pension can be taxed, I believe she is forgetting the uniformity clause in the Illinois State Constitution:

ARTICLE IX

REVENUE

SECTION 2. NON-PROPERTY TAXES – CLASSIFICATION, EXEMPTIONS, DEDUCTIONS, ALLOWANCES AND CREDITS

In any law classifying the subjects or objects of non-property taxes or fees, the classes shall be reasonable
and the subjects and objects within each class shall be taxed uniformly. Exemptions, deductions, credits, refunds and other allowances shall be reasonable.

Maybe public pensions can be differentiated from private retirement income, but maybe not.

Most certainly, the highly compensated retired school administrators and teachers would challenge such a law and tie it up in court for a couple of years.

One should not forget that lots and lots of judges would be caught by such a new income tax as well.


Comments

Wheeler Considers Imposing Retirement Income Tax — 25 Comments

  1. Democrats, and now Republicans it would seem,
    just can’t run more people out of the state fast enough.

  2. It’s the pension funds of the state that needs to be adjusted.

    McSweeney should put forth a bill to change the state constitution so a negotiated set of changes can be made to them.

    They pensions are to generous, especially over about 75k.

    If the all state pensions were lowered 5%, that would help the pension short fall.

    It wouldn’t hurt if IMRF was modified the same way.

    After twenty years the pensions are 50%, maybe that could be 45% and top end only 70% compared to 80% now.

    Kind of minor changes they can live with to help protect their own funds.

    I’m not sure how that would effect the funds, but most likely in a good way.

    Also McSweeney needs to offer legislation to modify the balanced budget law so spending must match known in hand revenue, last years revenue.

    No more Madigan or Rauner turning in budgets that are more than know revenue.

    They want to raise spending, raise revenue first, no more borrowing Dave!

  3. All public pensions should be taxed at 100% over $50k.

    Nobody should get rich from a career in government.

  4. rawdogger: If you can agree to change your wording to: “Public pensions should be capped at $50,000 or less” I would agree.

    The reason Wheeler wants that word “tax” in there is she (like all Progressives / communists / socialists) LOVES to spend other people’s money.

    To her all tax dollars are, in her words: “Low hanging fruit”.

    No wonder the Dems have not put in a candidate to challenge her!!

    She is ‘cut from the same cloth’ as Schofield.

    People like Schofield and Wheeler completely believe in the ‘welfare society’.

    If the ‘welfare society’ was the ‘way to go’, McHenry County would not be hemorrhaging people.

  5. BTW If you live in County Board District 6 remember two things:

    1. Mary McCann has stated that ALL pensions should be taxed.

    2. Preston Rea is a business partner with Mike Tryon and Mike apparently has no problem taxing pension income.

    Do not restrict yourself when asking for any candidate’s position on any topic because ALL elected officials carry considerable political weight once elected.

    Also, remember that the U.S. Chamber of Commerce pretty well CONTROLS the Republican party at the federal level and is making great inroads to controlling State GOP parties.

    Just look at Paul Ryan.

    Unless we increase voter turnout in primaries and elect more candidates like Paul Serwatka, you will continue to have no choice in the General Election.

  6. There is another way to accomplish the same purpose.

    Taxes are the stick in social engineering, and tax abatements are the carrot.

    Property tax exemptions are selectively applied to classifications of individuals.

    Seniors, homesteaders, and veterans are example recipients of property tax exemptions.

    Grant property tax exemptions to households without residents owning public pensions.

    This would reduce the pool of money available for hiring public workers and force a contraction of the pension crisis, as the pool of entitled workers must become smaller.

  7. Illinois Policy Institute
    The top Illinois pensioners of 2015
    December 28, 2015
    By Ted Dabrowski & John Klingner
    http://www.illinoispolicy.org/the-top-illinois-pensioners-of-2015

    The article lists the top 10 2015 pensions in each of the 5 state pension funds.

    Here are is the top pension recipient in each of the five state pension funds.

    Pension Fund – Name – Approx Retirement Age – Current Pension – 2016 COLA – Estimated Lifetime Payout – Years of Service

    SURS – Leslie Heffez – 55 – $547,862 – $16,436 – $17,982,542 – 30
    TRS – Lawrence A Wyllie – 75 – $302,991 – $9,090 – $3,699,648 – 56
    SERS – Sadashiv D Parwatikar – 64 – $201,575 – $6,047 – $4,219,964 – 27
    JRS – Tobias G Barry – 83 – $204,083 – $6,122 – $1,653,704 – 24
    GARS – Arthur L Berman – 66 – $228,960 – $6,869 – $3,353,461 – 31

    SURS = State University Retirement System
    TRS = Teachers Retirement System of the State of Illinois
    SERS = State Employees Retirement System
    JRS = Judges Retirement System
    GARS = General Assembly Retirement System

    The years of service came from the Better Government Association pension database.

    Lawrence A Wyllie is an outlier for retirement age and years of service.
    Tobias G Barry is an outlier for retirement age.

  8. Taxpayers United of America

    Reboot Illinois: Top 50 Biggest Illinois Pension Payouts in TRS

    December 16, 2015

    Taxpayers United of America’s data from the most recent pension study was analyzed by Reboot Illinois.

    Here is the top pension recipient.

    Lawrence Wyllie

    Title: District Superintendent
    Employer: Lincoln-Way CHSD 210
    Annual Pension: $302,991
    Employee Contributions: $398,488
    Age at Retirement: 75 (Retired June 2013)
    Pension Paid to Date: $461,651
    *Estimated Lifetime Pension Payout: $3.16 million
    Percentage of Lifetime Estimate Paid by Employee: 12.6%

    http://www.taxpayersunitedofamerica.org/press/reboot-illinoistop-50-biggest-illinois-pension-payouts-in-trs

    ++++++++

    Note: Illinois Policy Institute & Taxpayers United of America / Reboot Illinois have different calculations for estimated lifetime payout

  9. From the Taxpayers United of America article listed above of Top 50 TRS pensions, here is a school district with a portion of its attendance boundary in McHenry County.

    18. Norman Wetzel
    Title: District Superintendent
    Employer: CUSD 300
    Annual Pension: $246,521
    Employee Contributions: $179,203
    Age at Retirement: 55 (Retired June 2002)
    Pension Paid to Date: $2.50 million
    *Estimated Lifetime Pension Payout: $7.87 million
    Percentage of Lifetime Estimate Paid by Employee: 2.3%

    http://www.taxpayersunitedofamerica.org/press/reboot-illinoistop-50-biggest-illinois-pension-payouts-in-trs

  10. The goal of all government bodies, whether Republican or Democratic majority, is to pluck the maximum amount of feathers from the goose with the least amount of hissing.

    Regarding taxing senior retirement incomes, I anticipate the hissing will be too loud for this plan to ever gain serious traction by those we have elected to do the plucking. . . .

    Ms. Wheeler and the author of this idea have failed to learn the tried and proven method time and time again from the Federal Government that generational theft from those not yet born results in the least amount of hissing . . . . . . .

    Do not tax the elderly, tax their descendants not yet born . . . .

  11. The term “paid by employee” is an error!

    Public sector employees pay nothing toward their pension!!

    Every penny is a taxpayer generated penny!

    I have heard that the mayor of Woodstock, Brian Sager, is working toward his second pension as a teacher at Rock Valley College.

    He will be ‘entitled’ to a full pension from MCC.

    When he retires from RVC he will likely run for some other state political office to work on his third pension

    How many other teachers in the State have (are) doing the same thing?

    When a veteran retires and takes another job I do not have as much of a problem because veterans receive crap pay.

    Teachers simply go on strike to get inordinately high wage / benefit increases!

    We MUST change the State Constitution and stop this madness!!

  12. “Preston Rea is a business partner with Mike Tryon”

    Cautious voter, this is the first I’ve heard of this. Care to elaborate?

  13. The Percentage of Lifetime Estimate Paid by Employee is the Employee Contributions / Estimated Lifetime Pension Payout.

    Estimated lifetime pension payout is a combination of investment returns, employer contribution, employee contribution, and for the state of Illinois pension funds, the state contribution to make up the shortfall.

    The investment returns are not paid by the taxpayer.

    The point of emphasis is employee contribution as a percentage of lifetime payout is very low for many of the public sector pensions in Illinois, typically much lower than what can be obtained in the private sector.

    The pensions are not designed to be sustainable.

    The pensions are designed so the employee can obtain the highest possible pension contributing the least amount of money.

    The salaries and benefits were hiked in exchange for campaign contributions, election assistance, and votes.

    Higher salaries and benefits result in higher pensions.

    As Bill Zettler so bluntly stated, it’s an Illinois Pension Scam.

    It really is a taxpayer scam.

    There was no excuse for state legislators and Governors over a 45 year period to repeatedly hike pension benefits while pensions were already underfunded.

    There is no excuse for the funding level of pensions to not be considered in wage negotiations, as higher salaries result in bigger pensions.

  14. Did you honestly think that when ya’ll voted for a Republican that this wasn’t truly their agenda?

    Illinois has a history of corruption in politics but they keep getting voted in time and time again.

    Pensions aren’t the problem, (at least not for those who work outside of government), people entered into an employment agreement when they are hired by a company who offers a pension.

    Allowing those to go unfunded or under-funded for years should be a crime as history shows what happens when payments are not made — the workers suffer, not the CEOs who can destroy companies and still get out rewarded for their poor performance.

    But it is the Republican agenda to make us all stupid and poor so they can steal from us and take all the wealth.

    If you don’t believe me, research it on the web using factual data (don’t listen to Fox News either).

    To tax those on fixed income in retirement should be a crime. #FEELTHEBERN

  15. @ Cautious voter : You forgot to mention that Mary McCann also supported OBAMA and Preston Rea and Tryon are just two of the weak wristed RINO’s in the so called Republican party.

  16. Team R versus Team D is an intrasquad scrimmage, mounted by players from the same team, meant to distract the screaming throng from the fact that the stadium is on fire and their cars are being stolen from the parking lot.

  17. @Conservative voter- please explain how public employees do not contribute to their retirement accounts.

    Is this b/c all are public employees, thus paid by taxes?

    If not, what do you mean?

    If so, do you believe public employees should work for free?

    Should they not be allowed retirement income?

    Please explain your reasoning.

  18. How about just taking all income from everyone and giving us each an allowance that the govt. decides as to how much we should have?

    Wake up people.

    Never trust politicians to be prudent with your money or to run anything well.

    IRS, VA, NSA, etc. those folks don’t get fired or jailed for doing the wrong things so they want to keep their jobs by taking as much money from the people as they can.

  19. Boethius

    All you need to do is check Preston Rea’s Linkedin profile.

  20. Just once, I would like to see a viable solution to close the multi billion dollars gap we face.

    I think taxing any pensions up to age 65 is completely fair.

    COMPLETELY fair.

    And that would impact my own family.

    You can not cut your way out of this BI PARTISAN fiasco.

    Both parties have been party to raiding the pension fund, buying votes with unfunded promises.

    It has to stop.

  21. The Illinois General Assembly and Governors should have frozen legislative benefits 45 years ago.

    We would not be in this pension mess.

    Plus 45 years ago, salary hikes should have been kept to a more manageable level until pensions were fully funded.

    But no, the legislative benefit hikes and many overly generous salary hikes occurred, and all we hear from pensioners is we did everything we were asked, and a Pension is a Promise.

    Those receiving the pensions and the politicians don’t talk about all the legislative benefit hikes since December 15, 1970 (the year one sentence was added to the Illinois State Constitution stating Illinois public sector pensions are contractual and cannot be diminished or impaired).

    More specifically here is the sentence added to the Illinois State Constitution on December 15, 1970:

    “Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.”

    So what happened over the next 45 years?

    Lots and lots and lots and lots and lots of legislative benefit hikes and pensionable income hikes to pensions which were already underfunded.

    What a joke.

    The Daily Herald has written about a few pension injustices present in the Reciprocal Act which applies to several but not all Illinois public sector pensions when an employee contributed to two different pension funds.

    Here is a nugget from today’s article.

    “But in another twist, both pensions are based on the highest-paying job, which helps inflate the secondary pension amount, pension administrators explained.”

    Daily Herald
    Some retired teachers get two pensions
    By Jake Griffin
    December 30, 2015

    Here is another Daily Herald article about the reciprocal act highest salary perk, this one from 2011.

    Daily Herald
    Reciprocal Act sweetens pension pot for former state legislators
    By Jake Griffin
    June 22, 2011 updated
    http://www.dailyherald.com/article/20110622/news/706229971

    And a Chicago Tribune article about the reciprocal act highest salary perk from 1994.

    Chicago Tribune
    Loophole Enriches Legislator
    Other Job Hikes State Pension
    January 13, 1994
    By Laurie Cohen and Ray Gibson
    http://articles.chicagotribune.com/1994-01-13/news/9401130074_1_month-in-pension-payments-water-district-retired

    The highest salary for both pension rule is in fact the rule.

    Here is what the Illinois Municipal Retirement Fund (IMRF) pension fund says about the reciprocal act highest salary for both pensions rule.

    Illinois Municipal Retirement Fund
    IMRF and the Reciprocal Act
    February 2015
    “When you retire under the Reciprocal Act, both/all of your systems use your highest average salary, then apply the specific plan rules when calculating your pension benefit.”
    https://www.imrf.org/cmsmedia/files/benefit%20booklets/reciprocal%20act%20brochure.pdf?la=en

    “A legislative pension benefit hike to underfunded pensions is a promise.”

    That was the legacy of the pension sentence added to the Illinois State Constitution on December 15, 1970.

    Compare benefit & contribution levels in place on December 15, 1970, to December 15, 2015.

    The taxpayer gets the short end of the stick.

    Big time.

    Thanks to 45 years of legislative pension benefit hikes.

    What is Barb Wheeler or any legislator doing to expose that?

    Not much.
    She’s been a State Representative since 2013 so was not present for the vast majority of the legislative benefit hikes.

    She is eligible to participate in the Reciprocal Act for her service as a state legislator since 2013, elected McHenry County Board member from 2002 – 2012, and teacher at Wauconda Middle School in Wauconda CUSD 118.

    She is not participating in the General Assembly Retirement System (GARS) pension fund for her service as a state legislator.
    http://www.rebootillinois.com/2015/09/04/editors-picks/kevin-hoffmanrebootillinois-com/these-40-illinois-lawmakers-are-not-taking-a-pension/45346

    But she presumably did contribute to the Illinois Municipal Retirement Fund (IMRF) pension fund and Teachers Retirement System of the State of Illinois (TRS) pension fund for her service as an elected County Board member and teacher.

    Here is her elected county board member salary history from the Open the Books widget.

    Barbara M Wheeler
    Mchenry County – Illinois
    2012 $18,975
    2011 $19,827
    2010 $19,766
    2009 $19,361
    2008 $18,658
    2007 $18,095
    2006 $17,626
    2005 $17,126
    2004 $17,298
    2003 $16,265
    2002 $625

  22. While your at it, let’s stop the continuation of paying for all the Washington Presidents / Politicians who we have to continue to be attached to our nipple of paying for them WHEN THEY LEAVE OFFICE !

    you get paid enough, if you can’t save while your in your position to bad so sad get in line with the rest of America!, Your job is Done Finished we the People should not have to carry your weight Anymore!

    We sure do need Change in this Country and I say let’s start at the top!

    with the Prez !

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