[Illinois] Illinois Supreme Court Declares Pension Law Unconstitutional

good luck Illinois...the court is basically tying the governments hands to increasing taxes

ya'll pay 3.75% in individual income taxes... surely you can afford much more..5%?.. 8%?....your state sales tax is 6.75... surely y'all can live with 8 or 9%


you have to pay for the government you elected... so .. open those wallets and get to paying your bills.
..and don't think about moving out of Illinois... stay there and clean up your own mess... you own it.

Thrilla said:

good luck Illinois...the court is basically tying the governments hands to increasing taxes

ya'll pay 3.75% in individual income taxes... surely you can afford much more..5%?.. 8%?....your state sales tax is 6.75... surely y'all can live with 8 or 9%


you have to pay for the government you elected... so .. open those wallets and get to paying your bills.
..and don't think about moving out of Illinois... stay there and clean up your own mess... you own it.

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Whatsa matter, skeered all them overtaxed Illinoisians will be inundating Texas and/or Nevada? :lamo
Actually looks like Illinois taxes are pretty much in line with surrounding states – even a bit lower income tax

Illinois:
3.75% income tax (down from 5% the past four years)
6.25%, not 6.75%, sales tax (1% on food, drugs and medical appliances)
local sales taxes can raise the total to 10.5%

Indiana:
3.4% income tax
local income taxes can raise the total to over 5%
7% sales tax (food and drugs exempt)

Iowa:
0.36% to 8.98% income tax
6% sales tax (food and drugs exempt)
local sales taxes can raise the total to 8%

Kentucky:
2% to 6% income tax
6% sales tax (food, drugs, medical supplies, and utilities exempt)

Missouri:
1.5% to 6% income tax
4.225% sales tax (1.225% on food; drugs exempt)
local sales taxes can raise the total to 6.225%

Wisconsin:
4.4% to 7.65% income tax
5% sales tax (food and drugs exempt)
local sales taxes can raise the total to 6.5%

Taxes by State

CHuDWah said:

Whatsa matter, skeered all them overtaxed Illinoisians will be inundating Texas and/or Nevada? :lamo
Actually looks like Illinois taxes are pretty much in line with surrounding states – even a bit lower income tax

Illinois:
3.75% income tax (down from 5% the past four years)
6.25%, not 6.75%, sales tax (1% on food, drugs and medical appliances)
local sales taxes can raise the total to 10.5%

Indiana:
3.4% income tax
local income taxes can raise the total to over 5%
7% sales tax (food and drugs exempt)

Iowa:
0.36% to 8.98% income tax
6% sales tax (food and drugs exempt)
local sales taxes can raise the total to 8%

Kentucky:
2% to 6% income tax
6% sales tax (food, drugs, medical supplies, and utilities exempt)

Missouri:
1.5% to 6% income tax
4.225% sales tax (1.225% on food; drugs exempt)
local sales taxes can raise the total to 6.225%

Wisconsin:
4.4% to 7.65% income tax
5% sales tax (food and drugs exempt)
local sales taxes can raise the total to 6.5%

Taxes by State

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they are in line with other states... but they will need to be increased to cover their responsibilities... bills don't magically disappear.

i'm not scared of them.. I just think they should take responsibility for the messes they make.
(being a native Nevadan, I'm used to seeing Californians bail out of California just to land somewhere and create the same messes they left behind... like locusts going from crop to crop, destroying all that is good in their path.)

Thrilla said:

they are in line with other states... but they will need to be increased to cover their responsibilities... bills don't magically disappear.

Click to expand...

True. Illinois temporarily increased its income tax to 5% for 2011 through 2014. That expired this year. It should have been made permanent. Nobody likes taxes but 5% still is in line with surrounding states. Cutting taxes in the face of massive deficit doesn’t make sense.

Thrilla said:

i'm not scared of them.. I just think they should take responsibility for the messes they make.
(being a native Nevadan, I'm used to seeing Californians bail out of California just to land somewhere and create the same messes they left behind... like locusts going from crop to crop, destroying all that is good in their path.)

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Yeah, my crack about Illinoisians inundating Texas and Nevada was just a bit of smartassery – the point is, I don’t think a tax increase will cause the mass exodus from Illinois that some say it will.

I agree with you about taking responsibility. I have no patience with those who say taxpayers have no input on retirement provisions in public employment contracts. Yes, employee unions exert political influence to get what they want, as do anti-union groups. But taxpayers are also voters and ultimately the buck stops with them. They elect the executive and legislative representatives who negotiate the contracts. Those representatives also spend money on goods and services that taxpayer/voters want (not to mention plain old pork) instead of fulfilling their legal obligation to fund the retirement systems. If taxpayer/voters object to any of that, they should elect representatives who will better adhere to their wishes.

And yes, public employees/retirees bear some of the responsibility because they also are taxpayer/voters. But they are not solely responsible as many have tried to paint them.

MMC said:

Illinois harbors hundreds of hidden pension crises.....

Illinois’ severely underfunded pension liability for the five state-run pension funds has earned national media attention. But Illinois is home to many other pension crises that too often fly under the radar. There are 675 public pension funds in Illinois. In addition to the five state-run funds, there are 359 suburban and downstate police pension funds, 301 suburban and downstate fire pension funds, a pension fund for suburban and downstate municipal workers, six pension funds in Chicago and three pension funds in Cook County, which overlaps with the city of Chicago.

These pension funds cover more than 1 million people, or 8 percent of the state’s total population, when active workers, retirees and other beneficiaries are accounted for.

Collectively, pension funds in Illinois had an unfunded liability exceeding $144 billion and an aggregate funding ratio of less than 50 percent in 2012, according the biennial pension report published by the Department of Insurance, or DOI.....snip~

https://www.illinoispolicy.org/illinois-harbors-hundreds-of-hidden-pension-crises/

According to these guys.....the report they release later this year. It will be worse.

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So who's creating these unfunded liabilities? Is it just inflation, or is it borrowing to pay for state expenses and leaving an IOU? Or maybe they're not fulfilling their obligation to set aside the funds?

American said:

So who's creating these unfunded liabilities? Is it just inflation, or is it borrowing to pay for state expenses and leaving an IOU? Or maybe they're not fulfilling their obligation to set aside the funds?

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The State financed systems are funded by (1) employee contributions, (2) state contributions, and (3) earnings from investment of (1) and (2). Employee contributions are mandatory and are deducted from paychecks. System administrators have done a pretty good job of investing, even in economic downturns and in spite of legislative meddling (e.g., systems were mandated to divest themselves of lucrative South African investments during apartheid).

The state is supposed to more-or-less match employee contributions (there are formulas to determine the exact amounts). For the last 100 years, it has consistently failed to make its full contribution. It is not fulfilling its obligation to set aside the funds.

American said:

So who's creating these unfunded liabilities? Is it just inflation, or is it borrowing to pay for state expenses and leaving an IOU? Or maybe they're not fulfilling their obligation to set aside the funds?

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Pension fund balances are a function of contributions (individual and/or employer), returns on plan assets, and payments to retirees. A big reason behind underfunded plans is that pension assumptions were unrealistic. To minimize contributions, entities (governments and firms) often assumed exaggerated returns on assets (sometimes double-digit figures) and lower payments. The result was that plans were consistently underfunded and the underfunded liability (present value basis) grew enormously over time. For governments, the temptation to underfund plans is great, as it frees up resources for other priorities (expenditure and/or tax side). For companies, the temptation is great, as it allows companies to report higher net income than would otherwise be the case. Those are very strong temptations and they are amplified by the human tendency to focus on the short-term while worrying about the longer-term when it arrives so to speak.