Seniors from organizations representing the interests of older Illinoisans said Wednesday that ads suggesting retirement income will be taxed under a graduated state income tax are at best misleading and at worst lies.
During a virtual news conference Wednesday, seniors from around the state were enlisted to urge fellow retirees to support the graduated income tax amendment and ignore claims that retirement income will be taxed.
"The graduated income tax would not allow the state to tax retirement income, and it does not make it easier to tax retirement income in the future," said Wendy Edington, a retiree from Rock City and a volunteer for AARP Illinois.
She said it "makes me angry when I see those millionaires and billionaires spreading rumors" about the effects of the graduated income tax.
Former Illinois Department on Aging director Charles Johnson is also an AARP Illinois volunteer. He said the organization adamantly opposes taxing retirement income but supports the graduated income tax amendment.
"I’m deeply concerned about the misinformation being spread around about the amendment," Johnson said. "Switching to a graduated tax does not allow the state to tax retirement income. Under the graduated income tax, only those who can afford to will pay more."
Johnson said that if the graduated tax doesn’t pass and provide extra income to the state, that’s when "lawmakers may be forced to consider a retirement tax."
Gov. JB Pritzker has made adoption of a graduated income tax a centerpiece of his administration. If it is adopted, the state will scrap the current system where the same tax rate applies to everyone regardless of income level.
Under the graduated system — which is used by the federal government and 32 states with an income tax — different rates are applied to different levels of income. The highest rates apply to the highest incomes. Under the rate structure approved by the General Assembly, only people making $250,000 or more a year would pay more in income taxes. That’s 3% of Illinois taxpayers.
Opponents of the graduated tax have aired ads suggesting that the amendment grants "new powers" to the state to tax retirement income or that it will be easier to tax retirement income in the future. Illinois does not currently tax retirement income, although it could even without the amendment.
Don Todd, president of the Illinois Alliance for Retired Americans, said opponents have "spread lies about the fair tax." He cited an ad featuring a woman who says she is a grandmother who says she won’t be able to afford to live in Illinois if the amendment passes because it will tax her retirement income.
Opposition groups have cited comments made by Treasurer Michael W. Frerichs last summer to justify their ads suggesting retirement income could be taxed if the amendment is approved. Frerichs told a chamber of commerce that a graduated tax would allow taxation of very high pension incomes. However, he has emphasized he does not support taxing retirement income and Pritzker also opposes it.
Carmen Batances of Chicago, a member of Jane Addams Seniors in Action, said the flat tax "disproportionately harms low income communities of color in Illinois."
"Many of our children are overtaxed with the flat tax," she said. "I demand the false advertisements made to scare seniors be taken down immediately."
The graduated income tax is estimated to bring in an additional $3.4 billion a year if it is approved. Todd and others said that will help pay for programs used by seniors like Meals on Wheels and home services that help keep seniors out of nursing homes.
The Coalition to Stop the Proposed Tax Hike Amendment dismissed the idea of misinformation being spread.
"Now that Springfield politicians have been exposed for pushing plans to tax retirement income, those same politicians are attempting to rewrite history and this is exactly why voters can’t trust the Illinois politicians with their tax hike amendment," the organization said in a statement.
Contact Doug Finke: firstname.lastname@example.org, 788-1527, twitter.com/dougfinkesjr