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Public pension solutions must include fairness, tax reform

Updated: February 12, 2013 2:29PM

Public pension solutions must include fairness, tax reform

This is an open letter to the self-appointed “pension reform” legislators in Springfield.

How do you expect any meaningful, agreed-upon pension reform bill to be passed when you did not allow the unions at the table? How can we solve financial problems mostly caused by irresponsible legislators when you charged ahead with a bill that is both illegal and immoral? The fact that you didn’t want the unions at the table shows you do not care about fairness and constitutionality.

If guaranteed, earned benefits and rights can be ignored, how can we BELIEVE in any legislator’s word ever again? How can we TRUST any legislator or legal document? You have taken an oath of office to uphold the state and U.S. constitutions.

Fairness entails improving the state’s revenue base to pay debts; passing a graduated income tax (94 percent of all taxpayers would pay no additional taxes, according to the Center for Tax and Budget Accountability); establishing a financial transaction tax ($1 on every $100 of transacting); closing corporate tax loopholes; increasing taxation on the wealthy; and re-amortizing the state’s debt, to name just a few.

These solutions address the state’s revenue and pension debt problems. There needs to be a modernization of state and local budgets and their revenue systems. “The structural problems that have built up over time in these systems need to be addressed,” according to the Center on Budget and Policy Priorities.

“Moreover, at the core of the budget crisis facing Illinois is its regressive state tax structure … that is, low- and middle-income families pay a greater share of their income in taxes than the wealthy,” according to United for a Fair Economy. “ … A regressive tax disproportionately impacts low-income people because, unlike the wealthy, low-income people are forced to spend a majority of their income purchasing basic needs that are subject to sales taxes.”

“Since the rich are able to save a much larger share of their incomes than middle-income families — and since the poor can rarely save at all — the taxes are inherently regressive,” according to the Institute on Taxation and Economic Policy. Illinois income tax uses a single-rate structure that results in low-income wage earners paying more taxes than the wealthy. Illinois is among 10 states in the nation with the highest taxes paid by its poorest citizens at 13 percent.

Finally, address the pension debt problem. The current “pension ramp” does not work for the five public pension systems. The “pension ramp” entails larger payments today as a result of the 1995 funding law (Public Act 88-593) to pay the pensions systems what the state owes.

Joni Lindgren


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