Three members of ‘Team Pritzker’ have backed retirement tax
Multiple members of the governor’s inner circle have publicly backed retirement taxes, even though Pritzker now denies he will use his “fair tax” on the state’s seniors.
One of Gov. J.B. Pritzker’s top advisors backed a $2 billion retirement tax in Illinois, even though the governor and some of his allies on the progressive income tax amendment loudly deny they want to tax seniors.
Ralph Martire, executive director at the Center for Tax and Budget Accountability and a former member of Pritzker’s transition team, has said he supports a retirement tax in Illinois.
In 2019, the CTBA said Illinois loses $2 billion in revenue without a retirement tax and proposed taxing retirement income over $50,000.
“In fact, including some retirement income in the income tax base will help Illinois provide significant tax relief to those who truly need it,” Martire said. “Low-income seniors and other low-income taxpayers who are struggling to get by, [while] generating significant revenue for the state’s General Fund.”
Those close to Pritzker who have pushed retirement taxes include Martire, state Treasurer Mike Frerichs and Illinois Department of Revenue Director David Harris. Pritzker has denied he wants to use the “fair tax” to get at retirement income, despite his allies making clear that progressive rates allow them to introduce retirement taxes by first going after “rich retirees.”
“They’re going to come after our retirement because they’ll have to. I can’t afford that,” said retired Chicago Police officer Don Wojtowicz, who is suing over the “fair tax” amendment’s biased ballot language. “The real damage is going to be farther down the road. How could there not be further tax hikes down the road, when you look at how deep the state is in the hole already?”
Illinois seniors don’t want their retirement to be taxed and might leave the state if it were. A 2019 poll found 73% of Illinoisans were against taxing retirement. Since 2013, those 65 and older have been the least likely to move out. Adding a retirement tax could change that, as it did in Connecticut.
Frerichs in June laid out how the progressive income tax would open the door to taxing retirement.
“One thing a progressive tax would do is make clear you can have graduated rates when you are taxing retirement income,” he said while speaking at an event hosted by the Des Plaines Chamber of Commerce. “And, I think that’s something that’s worth discussion.”
According to the Daily Herald, Frerichs said he knows people who receive annual pensions over $100,000 but pay no state income taxes. He said under the flat tax there is no way to differentiate between retirees who take home hundreds of thousands from those who get little.
Harris proposed a bill in 2017 as a state lawmaker to create a retirement tax. Former Chicago Mayor Rahm Emanuel, the Civic Committee of the Commercial Club of Chicago and the Chicago Sun-Times have all said the idea is worth consideration.
Former state senator and one of Pritzker’s Democratic primary opponents for governor, Daniel Biss, also echoed Frerichs’ thoughts. He said a retirement tax would only be worth consideration when Illinois had a progressive tax structure so higher-income retirees could be targeted.
Illinois is one of just a few states where seniors can retire with more financial certainty, but that could change with a progressive tax.
Every state with a progressive income tax structure also taxes retirement income. And there’s little reason to believe Illinois would be the exception, especially given the multiple endorsements by Illinois’ top politicians.