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The in box. Glen Brown responds to my comments on the White Paper.

December 19, 2012

A brief response:

An “Ironclad guarantee that the state will fulfill its funding responsibilities”: since Illinois Democrats want to shift the state’s payment for the pension systems to school districts and universities, besides reforming the “pension ramp,” I believe that a graduated income tax is the most important proposal to consider for raising revenue in Illinois.

“A Well-Designed Graduated Income Tax Rate Structure Could Reduce Taxes for 94 Percent of Illinois Taxpayers and Raise at Least $2.4 Billion more in Revenue than the Current Five Percent Flat Tax.

“If Illinois passed a constitutional amendment permitting the creation of a graduated income tax rate it could structure those rates in a number of different ways. For instance, if Illinois were to adopt the same graduated income tax rate structure as Iowa, Illinois would raise $6.3 billion more in revenue than it does from its current five percent flat rate, while 54 percent—over half—of all taxpayers would pay less in state income taxes.”41

for the complete analysis: the Center for Tax and Budget Accountability

Two questions public employees need to ask:

1) Even if legislators invited union leaders to the table, why bargain away any of the public employees’ “constitutionally-guaranteed” rights and earned benefits? “A public employee obtains ‘vested rights’ in the Pension Code provisions relevant to pension benefits when the employee becomes a member of a pension system by making his or her initial employee contribution to the system. In addition, the Pension Clause protects pension benefit rights as an enforceable contractual relationship” (Eric M. Madiar, “Is Welching on Public Pension Promises an Option for Illinois” p. 36).

2) Why modify the “constitutionally-guaranteed” Pension Clause “through contract principles” when Speaker of the House Madigan has made this quite clear: “Let the courts decide”?

2 Comments leave one →
  1. December 20, 2012 4:24 am

    Did anyone watch Chicago Tonight last night? Very scary proposals by unions and legislators. The only way to fight this is with a solid FUNDING plan. We all agree the cuts are unfair, but after listening to the discussion last night, it is very possible that they could become reality without a FUNDING proposal with real numbers that support a true fix. A $50,000 pension at 60 will be a $50,750 pension at age 85 with an uncompounded increase of 3% on $25,000. Under the 3% compounded Cola, the pensioneer would receive $104,688 at age 85. IRTA and RTAC as representatives of pensioneers should be making FUNDING proposals to the lawmakers.

  2. Anon permalink
    December 20, 2012 6:37 am

    So the State has misappropriated pension funds and now wants a deal.
    Somewhere, Jimmy Hoffa is smiling.

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