Star of misleading ‘fair tax’ ad set to draw $1.1M in pension payments for 1 year of state work
‘Fair tax’ backers funded by Gov. J.B. Pritzker created the illusion of bipartisanship by using a former public employee union staffer who collects a generous taxpayer-funded pension due to a loophole in state law.
Ty Petersen is sitting in a red chair next to a red cooler and says he is a Republican in TV ads funded by Gov. J.B. Pritzker’s Vote Yes for Fairness group. The point is that both Democrats and Republicans can support the $3 billion tax hike.
What the ad doesn’t say is Petersen worked for Illinois’ largest public employee union, which is strongly supporting the tax hike. Because of that work, he now benefits from a controversial pension sweetener provision that allowed him to take a taxpayer-funded retirement despite working for the state for just one year.
Petersen, 58, of Vienna is labeled a Republican in the ads broadcast in southern and central Illinois. Unmentioned is his work as a staffer for the American Federation of State, County and Municipal Employees Council 31, where he earned $95,122 in 2015 and was still listed as an employee in July 2019. AFSCME Council 31 put over $6.8 million into political campaigns from 2013 to 2017, with nearly three-fourths going to Democrats.
Petersen in 2017 began collecting a state pension now worth $27,500 a year, according to Illinois State Employees’ Retirement System records. A loophole in state law allowed him to work for the state for a year and buy $42,655 in state pension credits for his years as a union worker. He lists himself as a former employee of AFSCME and the Illinois Department of Corrections on Facebook.
Less than two years after retiring at age 55, Peterson recouped his entire investment.
In fact, due to automatic, compounding 3% raises each year, Peterson will draw pension benefits totaling more than $1.1 million if he lives to age 85.
Youthful retirees, light employee contributions and pension system loopholes are among the problems driving Illinois’ $140 billion pension crisis. Only $200 million of the $3 billion from the “fair tax” is intended to address the pension crisis, with Pritzker using the rest for new spending.
Vote Yes for Fairness is almost entirely funded by a $56.5 million donation from Pritzker. The group recently came under fire for spending between $10,000 and $15,000 to push a fake tweet out on Facebook that tried to paint a corporation’s president as rich and insensitive to working people.
Pritzker’s efforts to get his “fair tax” passed have included accusations he muzzled state Treasurer Mike Frerichs after an admission in June that progressive state income tax rates would open the door to retirement taxes. “And, I think that’s something that’s worth discussion,” Frerichs said.
State leaders also put a biased and deceptive description on the Nov. 3 ballot and in a pamphlet explaining the amendment voters are being asked to approve that enables the “fair tax.” Three retirees and the Illinois Policy Institute are suing in an effort to get voters a neutral description in plain language.
Then there are five key backers of the “fair tax” from the Illinois General Assembly who have been implicated, indicted or convicted by federal prosecutors for corruption. Pritzker himself is the subject of a federal probe into a $331,000 property tax dodge on his Gold Coast mansion in Chicago.
If passed, the progressive income tax amendment could open the door to new forms of taxation in Illinois. The progressive tax would make a retirement tax, city income tax and double taxation much more likely. It would impose a marriage penalty on 4 million Illinoisans and because it is not tied to inflation, would grow the state’s definition of “rich” each year.
In addition, tax rates passed separate from the amendment would hit Illinois job creators as they struggle to recover from COVID-19. Small businesses, which create 60% of Illinois’ jobs, will see up to a 47% income tax hike. When combined with existing federal taxes, small businesses could see as much as a 50.3% marginal income tax rate. Some small businesses would face a state income tax hike five times larger than big businesses.
When state lawmakers are asking voters to trust them with much greater power to determine who is taxed at what rate, it would help if fabrication and partial truths were not part of the effort to sell the “fair tax.”