Retirement-tax resolution

Thirty-nine Illinois state representatives have signed on to a resolution stating their opposition to the imposition of a state tax on retirement income as revenue plans circulate ahead of state budget negotiations in 2016.

Thirty-nine Illinois state politicians from both sides of the aisle have signed on to a resolution that states that retirement income should not be taxed as income. State Rep. David McSweeney, R-Cary, filed House Resolution 890 on Dec. 2.

A resolution isn’t binding law: It serves as a strong public statement of intent for lawmakers who may see an issue arising in the future. Nonetheless, HR 890 is welcome news, since interest groups such as Illinoisans for Growth and Opportunity have proposed taxation of retirement income as a potential revenue source in upcoming budget negotiations. If politicians want to begin taxing retirement income as revenue, the Illinois General Assembly would have to amend the Illinois Income Tax Act – which HR 890 strongly opposes.

HR 890 outlines many reasons why looking to retirement income as a revenue source is a bad idea. For example, retirees often live off of fixed incomes, with few or no prospects for new wages or future income growth; additionally, current retirees have not had the opportunity to plan and save for this tax burden over time. Older Illinoisans must often spread their budgets thin, facing high health care costs and assisting younger generations of their families.

For many Illinois retirees, the additional burden of a state-level income tax – on top of what they already pay in federal income tax, sales taxes and the second-highest property taxes in the nation – could force them out of Illinois to states where they can afford to live.

Illinois already suffers from staggering out-migration of people and income, and a tax on retirement income would exacerbate this problem, likely forcing many retirees to leave their homes and families in Illinois. It is encouraging that a large and diverse contingent of representatives has taken a pre-emptive stand against this potentially devastating revenue-generating idea.