Illinois is one of just three states in the U.S. that does not tax retirement income as part of its income tax. (Not every state in the country imposes an income tax on its residents, but the vast majority – 41 – do; Illinois, Mississippi and Pennsylvania exclude all pension, Social Security and IRA income from that tax.)
The idea for a retirement income tax has bounced to and from different think tanks for years, many of them advocating for the tax to help fix broken pension systems in the city and state.
Now, the idea has a new cheerleader.
Outgoing Mayor Rahm Emanuel says the city and state should implement a tax on retirement of more than $100,000. How much money would that bring in, and could a tax like that drive away high-end earners?
Joining us in discussion are Kelly Welsh, president of the Civic Committee of the Commercial Club of Chicago; Ralph Martire, executive director of the Center for Tax and Budget Accountability; AARP Illinois State Director Bob Gallo; and Sheila Weinberg, founder and CEO of Truth in Accounting, which advocates for government entities to release financial reports that are comprehensive, clear and transparent.
Note: This story has been updated to clarify that not all states impose an income tax.