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Group recommends state tax hike

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In a Sun-Times story running in Wednesday's Naperville Sun, a nonpartisan government watchdog group called the Civic Federation claims the state of Illinois must enact the largest tax increase in state history to help pay the bills.

The state faces a $12.8 billion budget deficit for next year. The group also recommends cutting another $2 billion from government programs and to wrest major concessions from the state's unionized workforce.

Specifically, the group's study recommends that the state income tax be increased from 3 percent to 5 percent for individuals, that retirees' pension and Social Security checks be taxed for the first time at the same rate as workers' paychecks, and the tax on cigarettes be raised by another $1 per pack. The group also favors getting rid of $181 million in corporate tax breaks.

Gov. Pat Quinn has brought up the idea of tax increases before, but the proposal never got anywhere. Even legislators who think we need a tax increase know they will be seriously hurting their chances at re-election if they come out in support of a tax increase, especially during a period of high unemployment and falling salaries.

Still, while no one likes paying taxes, something must be done. It seems unlikely enough cuts could be found to save the state almost $13 billion a year, so new revenue must be found even under the most optimistic scenarios. Is it time for a tax increase, and if not, what can we do instead?

Here is a link to the story: http://www.suburbanchicagonews.com/napervillesun/news/2062132,CST-NWS-doomsday22.article

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34 Comments

Here's the deal. Pension reform will come. It will grandfather current government/school/legislative/judicial employees that are currently covered. That's only fair. Remember the legislature and City Councilmen get these pensions too! However, many of them probably didn't get into the game solely for the pensions. Those employees worked for good benefits and stability. Both of those are gone, and now only the pensions remain. Future employees will have 401k plans like everyone else, and that's fair going forward.

One interesting point that I read over and over... I should be, or should have been a government employee or school teacher. Most of those people made conscious decisions to get into those fields during school, or early in their careers. Many have Masters degrees in teaching or public admin. In short, many of you that do not have these degrees and have no experience could not do what these people do. Could some of you do it after some education and experience? Sure. Get the degrees, get the experience and you too could get $100k/yr. for teaching or running a government agency. I imagine that neither of those jobs would be very fun if you just did it for the money and benefits.

"T"

When you say eliminate pensions to these people (cops, fireman, elected officials) how do you propose this. You need to realize that these public employees specifically cops and fireman, do not get social security and that cannot change so easily. Also, they would not benefit from a 401-K or equivalent since some have as many as 30 years, 20 years or 10 years on the job and will not recover money lost in that time span of investing. SO by saying just eliminate pensions is not an answer that can be turned on like a switch. Make your point a little more clear and just because you see a published salary of a teacher don't use that info in your argument. Look at starting pay for a teacher in 203 or 204 and then consider that all of the non-tenured teachers will not be returning in the Fall because of the budget crisis. Just like the rest of the working world except our politicians and corporate they will be looking for work too so think through your argument more before jumping in.

Why do people comment about REDUCING pensions by x%?? They need to be eliminated and replaced with 401(k)s or their equivalent. With the salaries that these government employees make, I know personally of several high school teachers making over $125,000/yr, they can more than afford to completely fund their own retirement just like the rest of us. If they don't like that, then they can look for work elsewhere, I'm sure there might be a few unemployed individuals willing to step in and take their place. And maybe the next time we have a chance as a state to hold a Constitutional Convention, people will wake up and understand that that is our one opportunity to bring about reform. Until then, whining on comment boards isn't going to accomplish jack.

To Anonymous on March 4,2010 9:18PM,

It always amazes me what people CAN afford when they want something bad enough and what they CAN'T afford if they can get someone else to foot the bill.

I'm by no means denying that there are some who are truly needy. In all fairness to the needy we have to balance true need against those who are just too cheap to take care of their own family responsibilities.

Don't get me started about the outrage of providing any tax payer supported health care to anyone who is in this country illegally.

ALways Right - If people could afford insurance, we wouldn't need programs like All Kids. I personally know people using this program and they just cannot afford anything else. And by the way, they do pay for All Kids based on their income, so it's not a free program by any means.

Good grief! I hope this is not business as usual, but it usually is right?

1) Propose tax increase because of huge deficits - "the sky is falling, you will lose this or that poor citizen"
2) People cry out NO!
3) Hire study group
4) Study group recommends raising taxes, and making other cuts
5) Editors chime in and provide free coverage delivering the message
6) Taxes get raised, but surprise surprise...what - no cuts?

Do not fall for this trap good citizens of Illinois. Some politicians feel they can manage their way through this with cutting some "show" fat, like not filling positions that were never filled, freezing salaries for 6 months, then giving it all back and more later; and many other tricks of the trade - yes the trade of "government gone wild".

Some - particularly at the very top - may even look at this as an opportunity to increase the money flow - period. I think Naperville is one of the best run, safest communities in the country by the way - when I say these things, but they even struggle some times.

What can we do? We can tell our leaders to change or lose their jobs and their pensions. Do not support a single tax increase until drastic cuts are already made to government.

Unfortunately, the "stimulus" plan only stimulated inaction on the part of leaders, because fatty budget holes were simply filled. On top of that, money was "borrowed"(?) from fed funds earmarked for critical services, like children's special needs, etc., to use for general purposes.

In Illinois, general purposes often means politcal pay-backs and self-dealing to family/friends. I saw one note going around that said the best return on investment is donating to a political campaign. Why? Because it is not their money, but your money, and some pols do not care about where your money goes, just that it keeps flowing.

Let worker replacement to fix the problem of entrenchment. If workers/educators do not have the ethical and fiscal responsibility to compromise, then let the workers strike, and replace them with more affordable, equally skilled, eager, talented service workers and educators from other municipalities.

Also, use bankruptcy - which forces all parties to negotiate before an authority who will make the changes needed for solvency. The smartest pols in the room, should not fear the fiscal black eye, but should be revered as a hero for taking the needed steps to fiscal stability!

Have some guts for once. I have great respect for police, fire and teachers (but less for bureaucratic administrators), but to go down a road that will bankrupt your own municipality or state, looks very bad for these usually fair citizens.

What I would like to know who where the parties (ie. traitors) that engineered the changes to our state constitution - transferring the risk to all citizens for a self-dealing windfall for the ethically corrupt pols, service unions and the financial services lobby - (yes people, there they are again - always around - to turn what little wealth you have into their year-end bonus, and then say they are delivering great value to American families when many should be in jail for theft).

This approach is literally destroying our economy, and eventually your lives, but still many leaders HAVE NO INTENTIONS of losing one dime from the public skimming now going on for 50+ years and counting.

An comment regarding pensions in the Sun recently rolled out the standard response why cops and fire fighters need big pensions - "to aid families of those who die in the line of duty"! Give me a break. The only time Naperville police draw their guns is to clean it!

And there is in-the-line-of-duty insurance for that low probability outcome. Thanks to the very stellar safety and security record in Naperville, any insurance company would take the bet and provide handsome coverage should any public service worker unfortunately die on the job.

Pensions are for the workers and their families, but they need to be benchmarked with the rest of society where most companies do not have pensions, and have replaced them with 401k plans or the ilk.

Finally, could someone see if the state and local constitution/laws have been violated by politicians who effectively are not allowing a vote on taxation, by selling assets for front-end loaded money used in the running of government (a la Daley) and in changing local pension plans to state pension plans. Local government need to be managed locally.

Stop the fiscal insanity of paying ludicrous benefits like annual escalations for people already retired, paying 100% medical premiums for government workers in many cases, - to name only a couple stupid benefits -and that has even well-run Naperville paying $2 for every $1 worker contribution. Other communities are not paying none of their obligations in some cases - building the psunami coming in the future for your children.

Here's hoping that wiser heads prevail, but start paying attention this time, to what is going on with your family's wealth - being systematically stolen! DO NOT STAND FOR IT! VIVA L' PEOPLE!

To Chris - it was meant to be an anology in reference to Southeast Side to Thom Higgin's because the message is the same. I understand they are not the same persom but they have the same general message "Its OK because taxes are higher elsewhere."

The main point is that argument is BS, we are already taxed too much and don't care what it is elsewhere. Just read the tribune piece and it apears to make a lot of sense. Freezing spending or cutting also has to trickle down to the towns, cities, schools, park districts and so on.

La Cucaracha,

Public Safety employees are hardly getting screwed. Market corrections and the global economy are a fact of life that government workers can not expect to escape. Much of what we have seen change in terms of a global economy is the direct result of government workers anyway so don't expect much sympathy from the private sector on that subject.

It is a shame to read you have so little compassion for the military families and selfishly only want to keep your own little bubble from bursting.

You can't have it both ways. Life doesn't work like that. You seem to have a short memory in that way back when public safety salaries were not on par with the private sector that benefits were used to make up the difference. Today public safety salaries are not only on par but in some cases even higher than private sector salaries (which have contracted due to global market pressure) and the public safety benefits are now 2 to 3 times the private sector. Maybe the public safety positions would like to compete on a salary and benefit basis with third world countries as well?

Like it or not, as long as all of us private sector employees are footing the bill for public safety salaries and benefits you can be darn sure we will do something about it when public safety salaries and benefits stop making rationale economic sense. This has nothing to do about punishment, just the realization that private sector salaries always will be the driving force and not the other way around. Maybe you should have been an accountant.

To Anonymous on 3/1/10 in regards to my Spell Check and the use of Caps. It is evident that you are the ignorant one in this matter. If the best you can do is pick apart my spell check and the use of caps you must be in favor of another tax.

You are the one missing the point ---------- We are in a Depression and not a recession, but you may have missed all of this as you are too busy worrying about the way someone spells and uses caps.

While the private sector people were making two or three times more than the public folks, everything was fine.

Can you please explain this in more detail. Were similarly trained and skilled private sector workers with similar output having that large of a difference in benefits/pay?

Anon,

What does voluntary have to do with anything? The fact that the Federal government screws the military does not mean we have to screw Police and Fire employees, or other city employees for that matter. Let's get to the heart of this. While the private sector people were making two or three times more than the public folks, everything was fine. That difference subsidized a lot of heath care premium difference as well! Then the private stuff crapped out and now the public employees need to be punished. You're the one who needs to understand that life isn't fair. You should have been a Firefighter.

La Cucaracha,

Public Safety workers put their lives on the line VOLUNTARILY. No one put a gun to their head and made them choose their career path. If there was any logic to that argument then how do we explain the low death benefit paid to members of the military and sometimes they do not have a choice, like during times when there is a draft?

If someone gets killed or disabled in the line of duty their are much lower cost insurance programs that will take care of them and their dependents on top of social security and other benefits. Instead of going that route which will allow them to still live a comfortable life they want instead to go the route of medical retired and collect an even larger benefit.

Life isn't always fair. There are lots of people who get killed or disabled while working for private companies due to no fault of their own or even their employer and they have to learn to live within the workers comp benefits. Bottom line is if someone is disabled and no longer able to work the amount they or their beneficiaries collect shouldn't vary significantly just because they were a public safety public servant.

In a recent Sun article, I read that the City Council is going to join the Pension Fairness for Illinois Communities Coalition for some $30k. Looking at their website, the group seems to be after Public Safety pensions only, not all pensions, which is unfair to Public Safety employees that put their lives on the line every day. It's not the same as working the the Lucent purchasing department.

Kind of ironic, the Mayor double dips, and I'm guessing that some Councilman get pensions from their former employers, like BP or Lucent. If they are getting a pension they should give up their Council pay and health insurance benefits. The salary and bennies for 9 elected officials could have saved jobs of people that serve the public directly, as opposed to blowing smoke at meetings. I'd like to hear what they have to say about that.

Mr. 77- Ever hear of spell check? And we have all been asked to play nice by skipping the ALL CAPS. Your point is lost when your ignorance shows.

NO MORE TAXES. WE ARE BEING TAXED TO DEATH. WHEN WILL YOU PEOPLE WAKE US AND CUT SEVICES OR SALERIES AS REQURIRED. NO MORE TAXES.

ALL WE ARE MISSING IS A BOAT LOAD OF TEA THAT WE CAN THROW OVERBOARD. YOU PEOPLE ARE DISGUSTING. LIVE WITHIN YOU MEANS !!!


I GUESS THAT YOU CAN'T UNDERSTAND THIS KIND OF LOGIC.

I would like to suggest everyone including our elected officials read the Tribune Editorial today.

http://www.chicagotribune.com/news/opinion/editorials/ct-edit-budget0228-20100227,0,836997.story

I think these are reasonable points given the trouble The State is in. I would also like the Governor specifically state why these points would not work in prior to any tax increase.

I wonder who the Civic Federation really is. Not what they say on their webpage but WHO they are. It seems to me this is just more of the tired out and failed theory that big government is best and huge expenditures are necessary. These people are buying into the failed logic that got Illinois in trouble in the first place.
And incidently, comparing Illinois' state and payroll taxes to other states (like Wisconsin) is naive at best. When did you last pay a toll in Wisconsin.

Note that many of the states with higher income taxes have
significantly lower propoerty taxes --- biggest reason is that the State takes control of the entire school system.


How about it --- does anyone out there want to increase our income taxes, decrease our property taxes, than trust the idiots in Springfiled to equitably fund our school system?

I'm not sure I can agree with a figure of 20-30% either.

Government pension reform is going to have to happen there is no other solution to the current mess. Citizens want it and government workers are going to have to get their head wrapped around it just like private sector employees have for the last couple of decades. If the government workers can't get their head around pension reform then their is a real simple solution... we just let the government plans go bankrupt and they can get nothing instead of something.

Once government pensions are brought into line with private sector pensions I have a strong belief that we are going to find that they were out of whack by a lot more than just 30%.


By Exodus on February 25, 2010 4:33 PM

By Always-Right on February 25, 2010 10:05 AM
Taxes in Illinois are already too high and ever since Quinn got in they have risen via increased taxes on license plates, driver license renew, alcohol, candy, soft drinks and personal hygiene products as will as the .5 % sales tax increase. Enough is enough! Taxes must be reduced and out of control spending stopped before all the taxpayers move out of state or overthrow our government.
Look to Ireland and Iceland, Greece is headed the same way.

I believe I read that Ireland cut all civil service salaries by 50%, no one left their job.

Iceland has also taken drastic measures.

The Greek civil servants are trying to shut the country down to force the Germans to keep their bloated salaries and pensions going. The latest one is accusing Germany of racism if they don't back Greek bonds, yes racism.


xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Implement the following ASAP.

4. Reduce all pensions by 20 to 30 percent.

=======

Are you kidding....20 to 30% will not begin to solve the problem. Naperville alone according to a recent article in the Naperville Sun has a 126 million pension deficit. Michigan abolished pensions. Illinois needs to blow up the Constitution and also abolish pensions. As you said enough is enough. It has gotten too far.

It may be hard to overthrow the government but I am certainly leaving the state as soon as I retire. Let the pension recipients pay these taxes and let us see how they feel after we all leave.

By Always-Right on February 25, 2010 10:05 AM
Taxes in Illinois are already too high and ever since Quinn got in they have risen via increased taxes on license plates, driver license renew, alcohol, candy, soft drinks and personal hygiene products as will as the .5 % sales tax increase. Enough is enough! Taxes must be reduced and out of control spending stopped before all the taxpayers move out of state or overthrow our government.

Implement the following ASAP.

4. Reduce all pensions by 20 to 30 percent.

=======

Are you kidding....20 to 30% will not begin to solve the problem. Naperville alone according to a recent article in the Naperville Sun has a 126 million pension deficit. Michigan abolished pensions. Illinois needs to blow up the Constitution and also abolish pensions. As you said enough is enough. It has gotten too far.

It may be hard to overthrow the government but I am certainly leaving the state as soon as I retire. Let the pension recipients pay these taxes and let us see how they feel after we all leave.

The whole idea is a joke and the second comming of Thom Higgins i.e. Southeast Side saying that it is fine because everywhere else the state rates are higher. Quite simply - everyone cannot go to their boss and demand a raise because their taxes are being raised, we must cut our spending. All government bodies must start cutting spending. The list of taxes below might make more think about how much we are taxed.

1) Income Taxes
2) Property Taxes
3) Sales Tax with every county and essentially every community adding an additional sales tax on top of the state
4) Telephone taxes
5) Natural Gas Taxes
6) Electric Taxes (the utility taxes include federal, state and community money grabs)
7) Gasoline Taxes
8) 911 Monthly fees
9) Airline security fees on top of taxes in the fees
10) Rental Car Taxes
11) Hotel Room Taxes

Anyone else want to add to the list. But in short we are all overtaxed. Cut the spending!

Blindly supporting the cry for tax increases in not only insane, it has proven to be a primary driver of businesses and people out of a state.

Wasn't it Einstein who said insanoity is defined by doing the same thing over and over and exopecting a different result? Well, we have more than enough data & history to show what the resul will be of tax rate hikes by themselves, so how can any sane individual support them?

Our state has failed us miserably. Do not start an argument with me on one party or another --- it is essentially ALL politicians. They are greedy, not all that freaking smart, and as we know oh so well here in Illinois, they are criminals.

Whether is is selling crack or their lies to the citizens of teh state, a criminal is a criminal and our politicians in Illinois are at the bottom of both the ethics and the gene pools.

As citizens and taxpayers, we should stand up and outright revolt at ANY tax hikes that are not accompanied by massive spending cuts --- I wouls start with a ratio of $3 dollars cut for every $1 in tax hikes.

Yes, it will mean layofss.

Yes, it will mean changes to education funding.

Yes, it will mean pain and suffering.

But, the long range creation of jobs, companies,productivity, etc., will overshadom these short term issues.

Want proof? Just look at the history. I am suggesting repeated behavior and expecting the same, great result.

Giving more tax money to the crooked politicians is like giving an alcoholic another drink

bad bad bad idea.

They need to admit they have a problem and go cold turkey on the spending.

Taxes in Illinois are already too high and ever since Quinn got in they have risen via increased taxes on license plates, driver license renew, alcohol, candy, soft drinks and personal hygiene products as will as the .5 % sales tax increase. Enough is enough! Taxes must be reduce and out of control spending stopped before all the taxpayers move out of state or overthrow our government.

Implement the following ASAP.


1.Immediately stop all benefits to illegal aliens. This would save the state over 4 billions dollars a year.

2. Enact cross the board cuts in wasteful spending throughout all areas of government.

3.Stop the costly free All Kids insurance give away. Parents are responsible for their children, not the taxpayers.

4. Reduce all pensions by 20 to 30 percent.

5. Cut staffing in every department of government.

Unreal!!!!!!

Anyone look at their "non-partisan" website? They have written numerous "research" papers. First of all, they are based in Chicago. I think we have learned our lesson dearly not only in this past year but since this Daley and his father have been mayor, since pretty much every govenor in this state goes to jail, about Chicago/Illinois and taxes, politicians, etc. Second, unfunded obligations or not, we need no tax increases of any kind - local, state or federal during this great recession or at anytime. Bush kept taxes low and reaped the highest level of federal receipts ever. I'm not saying he was the best president, but he did do some things right. And keeping taxes low, and incentivizing commerce so governments can collect more tax dollars was one of them.

I'd sure like to know more about this so-called non-partisan group, who they are, and where they receive their funding. From what has been reported in general I would tend to believe that they are most certainly not representative of the average taxpayer.

Instead of tax hikes and since the legislature has not taken any responsible action to address or manage the situation and for years has acted irresponsibly and in many ways took decisive action that led us to this crisis that it is time we simply start demanding that government be treated like a business who acts irresponsibly.

It is time to simply let the State of Illinois go bankrupt. Let a federal judge step in and oversee the dismantling of everything that is broken and doesn't work right. Throw every elected official in state government out of office, make them ineligible to ever again hold another elected office... in other words treat them the same as corporate officers in the private sector... then hold special elections and bring in an entire new load of talent with no ties to the old establishment that screwed this thing up so badly in the first place.

Forget about concessions from all of the unionized workforce. That incestuous mess isn't going to give in to anything. Instead simply cut the jobs and outsource the work to the private sector on a competitive bid basis. Once the work is done in the private sector the pay scale will automatically go to whatever the market demands as will benefit and retirement costs.

Do away with the whole concept of pensions by simply enacting term limits and do away with the concept of professional bureaucrats. Provide elected officials with health benefits while they hold elected office, but without a retirement program they will not be encouraged to linger more than a term or two... which really is consistent with the vision of our founding fathers.

With term limits there will not be any ability for any one person to accumulate more power than any elected official is really entitled. These so-called Springfield power brokers are the majority of the reason we have the problems we are facing. If the entire legislature and the entire senate was comprised of lawmakers all playing on a level playing field the outcome of legislation would be far different.

Illinios will see an expediated exodus in coming years

5% tax on 150k is 7,500.

Many residents and especially retirees will move in larger numbers to states that actually have NO INOME TAX.

So will CORPS.

Bye Bye Illinois.

The Unions are Nuts.

Let them have the State of Illinois and with it comes paying all the taxes.

Illinoisans must say no to any new taxes and let all state and local elected officials understand - we are watching you.

Illinois flat 3% rate is VERY low.

For Example:
Indiana is 3.4% with lower exemptions than Illinois.
Michigan - 4.35%
Iowa is progressive - going to almost 9%!
Wisconsin is prgressive also - from 4.6 to 7.75% for income over 225K.
Minnesota starts at 5.3% and goes up to 7.8%

I'd personally like to see Illinois get several brackets where the middle bracket ( up to $150K joint filer ) stays around 3.5 - 4% so the increase for most folks is pretty small - and 6% or so for the olks who can afford it.

something like:

0-50K 2.5%
50-150 - 4%
150-250 - 5.5%
250+ 7%.

Progressive taxation is the only way.


Unfortunately our corrupt and self serving Illinois officials have gotten us in a tremendous hole. We likely have no real choice other than raising taxes. The money has already been spent, what choice to we have other than to pay the bills?

I do have a proposal though. I would suggest that in return for having to shoulder this tax hike, EVERY state legislator sign an agreement that they will not run for reelection when their current term expires. I know that this would likely throw out some good people with the bad ones, but I believe this is the only way to get rid of the entrenched, powerful politicians that got us into this mess.

If we don't hit the reset button and get rid of the corruption, all we will be doing is giving the crooks more of our money. With anything less than an agreement to entirely clean house, I will fight the tax increase. Trick me once shame on you, trick me twice shame on me.

The USA balance sheet is only slightly better than that of Greece, which is widely recognized as headed into bankruptcy.

The only thing tax hikes will achieve in Illinois is more layoffs to pay the taxes, more companies leaving IL and leaving the US, and more profitable companies being made unprofitable.

If Quinn doesn't have the stomach to make the necessary changes to keep the state from bankruptcy, he should step aside for someone that has the spine to make tough decisions. The State is heading into a death spiral.


Raising taxes again is just another band aid on the problem. Government has become a grab bag for every special interest group imaginable.

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