John Cullerton: Consider taxing under-65 pensions
BY DAVE MCKINNEY, FRAN SPIELMAN AND KIM JANSSEN Staff Reporters March 7, 2011 6:42PM
Updated: September 24, 2012 6:25AM
The top Senate Democrat Monday suggested taxing retirement income for high-earning senior citizens for the first time to help lower income taxes that were raised in January.
Senate President John Cullerton (D-Chicago) said he would exclude Social Security income and avoid targeting those lower-income seniors who “don’t have much of a retirement income.”
Cullerton’s trial balloon would affect retirement income for those under 65. And in a late-afternoon committee hearing in Springfield, Cullerton suggested applying the retirement tax to those seniors making $100,000 or more.
“If the Republicans want to talk about tax reform, which will be revenue neutral, I’m all in. If they want to talk about, perhaps, taxing some of that retirement income — maybe tax retirement income up to age 65 — if we want to expand the tax base and sales taxes [as Mayor-elect Rahm Emanuel has proposed] — we can do that, then lower overall rates. I’m all in favor of that. That would be tax reform,” Cullerton said following a speech to the City Club.
Cullerton said the idea could generate as much as $1.6 billion annually, which his staff said could be used to lower the 5 percent individual income tax by up to a half percentage point and the corporate income tax of 7 percent, as well. Aides cautioned the proposal has many components yet to be fleshed out.
“The truth is we’re running various scenarios,” Cullerton spokeswoman Rikeesha Phelon said.
Asked Monday about Cullerton’s plan, Gov. Quinn did not rule out the possibility but stopped short of embracing it.
“I think it’s important that we always be open to reviewing the tax code. Matter of fact, I proposed in my budget address that we have a commission in Illinois that’s focused on fairness and economic growth, and looking at our tax code, that promotes fairness to everyday taxpayers and also economic growth for all of us, so I think everything should be looked at,” Quinn told reporters. “How we go about it is obviously something we have to work together on.”
With the state facing a multibillion dollar budget deficit, the perks afforded senior citizens have been on the chopping block — everything from ending free mass-transit rides for seniors to eliminating the state Circuit Breaker and Illinois Cares Rx programs, as Gov. Quinn proposed in his 2012 budget proposal.
“If you’re going to tax people and then cut the services they rely upon, that’s sort of a double insult,” said Bob Gallo, senior state director of AARP Illinois.