With the state’s deficit growing, Illinois lawmakers trying to establish a budget are batting around the idea of taxing retirement income.
According to news reports, no formal legislation has been put in writing. And, some state legislators and lobbying groups are trying to preempt any such legislation.
A resolution was recently introduced in the Illinois House urging the legislature not to consider taxing retirement income. “With many retirees on a fixed income and worried about how they are going to pay for healthcare, the last thing we need to do is suddenly tax their income,” says State Representative Dwight Kay, a co-sponsor of the bill.
Other state house and senate members have introduced resolutions opposing the idea. “The exclusion of taxing retirement income encourages residents to remain living throughout their retirement in Illinois and encourages newly retired Americans to relocate to the state,” State Representative David McSweeney’s resolution says.
AARP Illinois released results of a survey of 1,000 state residents age 50 and older that shows nearly nine in 10 oppose a proposal to tax retirement income. According to the survey’s results, more than 87% of Illinoisans consider a lack of cooperation among Illinois elected officials as a major problem preventing a fix to the state’s budgetary woes. And, more than two-thirds view the amount of state and local taxes residents have to pay as a major problem.
More than 92% believe a tax on retirement income would have a negative impact on their household budget, and nearly 60% would consider moving to another state if Illinois starts taxing retirement income. Nearly 70% would be forced to reduce their household spending, and one-third would have to return to the workforce.
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