Wednesday, January 21, 2015

Another Form of Pension Theft or Taxing Only Public Employees’ Retirement Income




“… [Recently], Carol Marin had a panel that consisted of Democratic Representative Elaine Nekritz and Senator Kwame Raoul. And some Republicans. Carol asked if Elaine has considered alternative revenue sources. Elaine responded by sharing the fact that almost half of retirement income in the state goes to those under 65, suggesting they would tax that.

“No suggestion of a graduated income tax. Or a tax on millionaires. An increase in corporate taxes or a stock transaction tax. The first and only thing that popped out of Elaine’s mouth was a tax on retirement income. 

Watch the video. 

“Carol Marin looks somewhat shocked. Carol asked, ‘Isn’t that Democratic Party heresy?’ Silly Carol. Avoiding taxing the rich and going after retirement benefits isn’t Democratic Party heresy. It’s Democratic Party policy…” (Fred Klonsky).  


“…On changing the current tax structure, an issue proposed by Carol Marin with some suggestion toward a ‘progressive’ plan, Nekritz jumped right in: ‘Yes, I hope we would look at that.  For example, about half 46% of all retirement income that is not taxed in Illinois goes to people under the age of 65.  That's one of the things I think we should be considering and looking at.’ When asked if this idea were ‘Democratic heresy?’ Nekritz replied that it wasn't ‘when you consider we always want to broaden the base to lower the rate, which is always the goal of tax policy…” (John Dillon).  

“In whose world view of fairness is there taxing retirees ahead of billionaires?” (Klonsky).

Commentary:

“There can be no doubt that behind [any attempt to tax retirees (who were public employees)]…, there is [a dissolute] organization at work. An organization which not only [perpetuates] corrupt [dealings via politicians (like Madigan, Nekritz, Biss, et al.)]…, of whom the best that can be said is that they recognize their own limitations, but also have at [their] disposal [bureaucratic alternatives in addition to subornative corporatists, lobbyists and officious reporters]. .. And the significance of this… [maleficent] organization…? It consists in this, that innocent persons [are victimized by prejudicial] senseless [rulings that] are put in motion against them… How is it possible… to prevent gross corruption [in Illinois]…?” (With apologies to Franz Kafka, The Trial). 

Re-amortize the pension debt.
Expand Illinois’ sales tax base.
Enact a graduated rate income tax (CTBA).
Establish a financial transaction tax: a .50 cent tax on every $100 of transacting. “We used to have a financial transaction tax in this country from 1914 to 1966” (Bill Moyers).



As stated by David Madland, Director of the American Worker Project at the Center for American Progress Action Fund and Nick Bunker, Special Assistant with the Economic Policy team at that Center a few years ago: “The costs of public-sector pensions are often implicated in the conservative budget critique... [Most pension systems across the country are] underfunded…  [A] pension funding shortfall is a not an immediate crisis but rather a problem with a long-time horizon. Pension plans have sufficient funds to pay all benefits for years to come… The extent of the shortfall is often overblown. Claims that public-sector pensions face shortfalls… assume pension funds will only earn the so-called riskless rate of return, which economists calculate in the range of about 4 percent to 5 percent. This ignores that pension funds have actually earned returns well above that riskless rate for many decades—above 9 percent since 1984—and are likely to continue to do so.” 

What’s more, add to this data that “government employees and public-sector unions are the folks conservatives love to ‘tar’ for the unpleasant fiscal situation in state and local governments. But there is little evidence that government workers or public-sector unions are responsible for budget deficits. Employee compensation has remained a constant share of state expenditures, and state and local workers are actually underpaid relative to comparable private-sector workers. Instead, the short-term deficits [were] primarily the result of the Great Recession [and a lack of proper funding to the public pension systems for decades]” (Madland, Bunker).  

Conclusively, “claims that public-sector pensions will bankrupt state and local governments are exaggerated… Policymakers [who] attempt to reduce their budget deficit by cutting solely public employee compensation [through healthcare/pension theft and unfair taxation]—rather than by considering a balanced approach of appropriate cuts in several areas of the budget and revenue increases—[will create] large-scale job losses among public-sector workers, [jeopardize the subsistence of thousands of retirees and their families] and [generate] more pain for the overall [state’s] economy” (Madland, Bunker).


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