Cullerton Floats Retirement Tax Proposal

By Kevin Robinson in News on Mar 8, 2011 2:00PM

Illinois Senate President John Cullerton floated the idea of taxing retirement income yesterday while addressing a City Club of Chicago luncheon. "It would just be a matter of fairness," Cullerton said, according to the Tribune. Although he says details are still being worked out, Cullerton suggested that taxing retirement income at the current five percent rate that Illinois taxes other income could yield the state around $1.6 billion.

Cullerton said that he wants to exempt "modest pensions." "For example, (former) Gov. (Jim) Edgar's pension is $130,000 a year, and he pays no tax," Cullerton told the Tribune. "Someone like him would probably be willing to pay a state income tax on a portion of that." He says that the funds wouldn't be used to pay for more programs or increased spending in the state, but would rather be used to lower the income tax rate or give tax relief to lower income taxpayers.

Gov. Quinn says that he hasn't seen the details of Cullerton's proposal, but that "it's important that we always be open to reviewing the tax code," adding that "how we go about it is obviously something we have to work together on." Cullerton says he won't move forward without the support of some Republicans in the General Assembly. Republican Senators Matt Murphy of Palatine and Kirk Dillard of Hinsdale said that they're concerned that taxing retirement income could encourage seniors to flee to states like Florida, which have no income tax. Murphy added that "the concept of raising taxes on anybody doesn't really appeal to me."