OT: Illinois fair tax: yes or no?

[dougthonus]

I understand all of that. However to me this kind of stuff is putting a bandaid on a broken bone. Yes it provides some structural support/improvement from doing nothing but it doesn't address the core problem (the increasing wealth inequality) and it causes some complacency. "We already addressed the broken bone with a bandaid do we really need to do more?"


I completely agree that the wealth inequality is getting out of hand but that's not going to be solved by a graduated tax. The time is better used addressing the loopholes people with capital take advantage of to gain that wealth.

Also as other people have said, the rich can much more easily get up and leave, leaving the working class to deal with a negative feedback loop

Fundamentally I want lower taxes for all, better tax revenue management, and hopefully ( probably too idealistic) the wealthy investing their money back into society to help humanity advance for the better. Unfortunately the natural state of the world is greed and hoarding as much as possible which causes forced redistribution of wealth but at that point again the game becomes loopholes and dodges that only the wealthy have access to

Graduated tax is the only tool in our toolbox right now to solve wealth inequality. The problem is when people get uberwealthy, the capital gains tax law supercedes all graduated tax laws and we know from things like the panama papers that the really, really wealth are basically lying and cheating on their taxes and not remotely paying what they should.

If you removed the capital gains exception and were able to keep the existing graduated rates and actually collect them legitimately and stop all off-shoring of money and close all the other loop holes so that the rich actually had to pay their graduated tax rates, then I think that might actually be enough to solve the problem, if not, it'd sure make it a lot closer than currently.

Of course no one in Washington is even looking at removing the capital gains rate, and we don't remotely collect all the taxes we should from the uber wealthy (say top .1% or maybe even .01%, we probably get more than our fair share for the top 1% excluding those super wealthy individuals).

[PaKii94]

I understand all of that. However to me this kind of stuff is putting a bandaid on a broken bone. Yes it provides some structural support/improvement from doing nothing but it doesn't address the core problem (the increasing wealth inequality) and it causes some complacency. "We already addressed the broken bone with a bandaid do we really need to do more?"


I completely agree that the wealth inequality is getting out of hand but that's not going to be solved by a graduated tax. The time is better used addressing the loopholes people with capital take advantage of to gain that wealth.

Also as other people have said, the rich can much more easily get up and leave, leaving the working class to deal with a negative feedback loop

Fundamentally I want lower taxes for all, better tax revenue management, and hopefully ( probably too idealistic) the wealthy investing their money back into society to help humanity advance for the better. Unfortunately the natural state of the world is greed and hoarding as much as possible which causes forced redistribution of wealth but at that point again the game becomes loopholes and dodges that only the wealthy have access to

Graduated tax is the only tool in our toolbox right now to solve wealth inequality. The problem is when people get uberwealthy, the capital gains tax law supercedes all graduated tax laws and we know from things like the panama papers that the really, really wealth are basically lying and cheating on their taxes and not remotely paying what they should.

If you removed the capital gains exception and were able to keep the existing graduated rates and actually collect them legitimately and stop all off-shoring of money and close all the other loop holes so that the rich actually had to pay their graduated tax rates, then I think that might actually be enough to solve the problem, if not, it'd sure make it a lot closer than currently.

Of course no one in Washington is even looking at removing the capital gains rate, and we don't remotely collect all the taxes we should from the uber wealthy (say top .1% or maybe even .01%, we probably get more than our fair share for the top 1% excluding those super wealthy individuals).

exactly. I would rather the effort be put towards the capital gains taxing that's where the real bulk of the money moves. But that's outside of income tax. For straight income taxing I feel like it should be fair regardless of wealth level.

[Almost Retired]

The premise of the question is wrong. The question should be which of the two choices will result in the most revenue generated? And remember that it is no guarantee that a graduated tax structure will result in more revenue. The wealthy are mobile, and Illinois is not some Shangri-La that most people would regret leaving if it saved them $10 Million over a decade. Most of the high wealth/high income people have 2nd and 3rd residences already, whether it's a Florida condo or an Aspen ski chalet. The truth is that if you raise the tax rate high enough people will leave. You can see it in places like Connecticut, New York and New Jersey where Hedge Fund managers are flocking to Florida which has no income tax. And when they move they usually move their businesses and their employees. It is resulting in huge tax revenue shortfalls. Remember Governor Cuomo of New York a few weeks ago begging the rich New Yorkers to come back...he even jokingly said he'd make dinner for them.

It's hard for middle and low income people to look at the big picture. Illinois isn't in financial problem because it taxes too little. It is in financial trouble because it spends too much. It has too many layers of state and local government who all dip their beak in the money trough. They adopted pension systems that allowed for egregious gaming of benefits, then they underfunded the pension plans for decades. Now the day of reckoning is coming and they want a few rich people to make up the shortfall, or they want the whole country to share the burden. The rest of the country has their own state burdens to bear. Illinois needs to dig itself out. Step one would be a constitutional amendment that would allow pension adjustments based on financial ability of government to meet. Then a top down reorganization of all the thousands of little government fiefdoms. Far too many people in Illinois have government jobs. You need more private sector employment and less government employment. And you are not going to be a state that retains or draws large and medium businesses by raising taxes on the owners of such businesses.

I fled Chicago 15 years ago, for winterless Texas. All the time we've been down here a succession of our Governors have been able to entice businesses of all sizes to relocate down here where we have streamline regulations and no income tax. Just this year we've added a Tesla mega-factory that's going to employ at least 5,000 people. We also added Charles Schwab which is moving from San Francisco after 45 years. Schwab is merging with TD Ameritrade and the combined company will have a huge Corporate footprint in the Dallas area. We have no personal income tax in Texas. None. Not a fixed rate. Not a graduated rate. And we seem to be able to pay our bills. Perhaps we have fewer government workers retiring with 3 or 4 different government pensions. We go out and get private employers to come down here. That drives prosperity. Not higher taxes. My advice would be to vote the tax down and insist on reducing government spending. Rauner could have done some really good things for Illinois from a financial perspective if the state wasn't run by Mike Madigan. (I am of the view that Madigan has done more financial harm to the State of Illinois than any other individual in the state's history. I am not proud that we graduated from the same high school, albeit in different years. I love John Kass who calls Illinois: Madiganistan.)

[dougthonus]

For straight income taxing I feel like it should be fair regardless of wealth level.

I'm not sure what you view as fair, there are many ways to look at fair.

If you look at the percentage of your disposable income, after reasonable living expenses, that your tax makes up, a flat tax hits poor and middle class people dramatically harder than wealthy people, and this is even after accounting for the fact that living expenses decline with wealth, so we aren't even starting at an even point there.

It inhibits people from saving money and building capital, saving for college, saving for retirement etc. The wealth generates wealth problem in our nation (and in the world, and throughout all time in the world) is really a bad societal problem that no one has figured out how to solve. Flat tax absolutely massively impacts this and makes this situation worse and continues the wealth building wealth rather than merit building wealth problem.

[Truebiscuit]

I know this is a little OT, but most of us here still reside in Illinois so this will effect most of us here. Personally, i'm on the fence with this one. Now between both my jobs, i gross roughly 60 grand a year before taxes. So supposedly this new proposal wouldn't effect me. But why do I think that there is more to this than meets the eye? 97% of everybody will pay the same or less, yet this is supposed to bring in billions of dollars? Im not really buying it. Im sure alot of you here are much more educated on this stuff than me though. So what are your guys thoughts?

Not a fan of the tax. I apprecaite the concept but I do not care for the open-ended language which would allow taxes to increase again in the future without specifics as to which bracket will be impacted.

They can do better.

[ATRAIN53]

yes or no - just make sure you VOTE!

[MrSparkle]

I am so glad I left Illinois years ago.

After living in TN for the last 11 years, it has been very rewarding to not deal with an incompetent state government. We do not have a state income tax and only a 9.25% sales tax. It's amazing how you can manage to run a state without taxing the hell out of the populace.

You're joking right? Tennessee is living off other states' prosperity, you leeches get the third most federal money in the country, only behind Mississippi and Louisiana, two other cesspools of financial dishonesty.

https://ballotpedia.org/Tennessee_state_budget_and_finances

https://ballotpedia.org/Illinois_state_budget_and_finances

This is true.

[League Circles]

For straight income taxing I feel like it should be fair regardless of wealth level.

I'm not sure what you view as fair, there are many ways to look at fair.

If you look at the percentage of your disposable income, after reasonable living expenses, that your tax makes up, a flat tax hits poor and middle class people dramatically harder than wealthy people, and this is even after accounting for the fact that living expenses decline with wealth, so we aren't even starting at an even point there.

It inhibits people from saving money and building capital, saving for college, saving for retirement etc. The wealth generates wealth problem in our nation (and in the world, and throughout all time in the world) is really a bad societal problem that no one has figured out how to solve. Flat tax absolutely massively impacts this and makes this situation worse and continues the wealth building wealth rather than merit building wealth problem.

The wealth building wealth problem is IMO primarily a debt-based problem. We could and should reduce or eliminate the role that debt plays in our financial markets IMO.

People want the rich to pay "their fair share" while either not knowing or not caring that those who hold government debt (mostly the Japanese and Chinese governments and the rich I believe) finance about 1/3 of all the gross (over)spending that the government does to begin with. It amounts to a plea to "increase (income) taxes on the rich so that we can pay them the interest on the third of our spending that we feel we must borrow from them".

Even if you can eliminate the debt factor from the wealth produces wealth problem, you'd still be left with it to some degree because that's how all biological systems work.

Another thing to note, I don't think spending can be neatly divided into disposable and essential, nor is there such a thing as "reasonable" living expenses. Was the way people lived a few decades ago unreasonably depraved?

Last note, the capital gains issue seems unfair until you consider that income taxes were already paid at some point on the money used to buy stocks.

It might be tricky to enforce, but IMO we should transition to taxing wealth, not income. That's the only way back IMO, along with drastically decreased consumption (spending) and debt (public and private).

[Almost Retired]

For straight income taxing I feel like it should be fair regardless of wealth level.

I'm not sure what you view as fair, there are many ways to look at fair.

If you look at the percentage of your disposable income, after reasonable living expenses, that your tax makes up, a flat tax hits poor and middle class people dramatically harder than wealthy people, and this is even after accounting for the fact that living expenses decline with wealth, so we aren't even starting at an even point there.

It inhibits people from saving money and building capital, saving for college, saving for retirement etc. The wealth generates wealth problem in our nation (and in the world, and throughout all time in the world) is really a bad societal problem that no one has figured out how to solve. Flat tax absolutely massively impacts this and makes this situation worse and continues the wealth building wealth rather than merit building wealth problem.

The wealth building wealth problem is IMO primarily a debt-based problem. We could and should reduce or eliminate the role that debt plays in our financial markets IMO.

People want the rich to pay "their fair share" while either not knowing or not caring that those who hold government debt (mostly the Japanese and Chinese governments and the rich I believe) finance about 1/3 of all the gross (over)spending that the government does to begin with. It amounts to a plea to "increase (income) taxes on the rich so that we can pay them the interest on the third of our spending that we feel we must borrow from them".

Even if you can eliminate the debt factor from the wealth produces wealth problem, you'd still be left with it to some degree because that's how all biological systems work.

Another thing to note, I don't think spending can be neatly divided into disposable and essential, nor is there such a thing as "reasonable" living expenses. Was the way people lived a few decades ago unreasonably depraved?

Last note, the capital gains issue seems unfair until you consider that income taxes were already paid at some point on the money used to buy stocks.

It might be tricky to enforce, but IMO we should transition to taxing wealth, not income. That's the only way back IMO, along with drastically decreased consumption (spending) and debt (public and private).

Too difficult to administer, and it has been proven not to raise the revenue projected. Illinois needs to reduce spending by reorganizing the thousands of fiefdoms under the umbrella of "government". They need to be able to scale back their pension obligations. Even if that needs a Constitutional Amendment. Force feeding a 10 or 20% "haircut" might be preferable to total insolvency, the appointment of an administrator like in Detroit, and a cram down of 40-60%. Illinois has had to dip into emergency Federal funds for the second time because they can't borrow any more money thru normal channels. No other state has had to tap into those funds. Again, Illinois has tapped it twice now. Spending caps are needed. Failure to take the necessary steps will result in an ever increasing exodus of the middle, upper middle, and wealthy classes. That's just reality. I look at my own extended family. Two thirds of them relocated elsewhere, some to North Carolina, some to Florida, some to Colorado, and us to Texas. Another nephew is in the process of moving from Frankfort to South Dakota. He's fleeing property taxes just as much as his income tax burden. And as more and more people will be able to work from home in the future more personal mobility will be the norm, not the exception. A work from home employee working for a downtown Chicago firm could easily locate to NW Indiana, pay less for housing, pay less in taxes, encounter less traffic, enjoy less crime....The clock is ticking Illinois. Higher taxes are not the answer. You have never demonstrated the ability to prudently spend the money you have already extracted over the past decades. Only a fool would give you even more to squander and waste.

[dougthonus]

The wealth building wealth problem is IMO primarily a debt-based problem. We could and should reduce or eliminate the role that debt plays in our financial markets IMO.

People want the rich to pay "their fair share" while either not knowing or not caring that those who hold government debt (mostly the Japanese and Chinese governments and the rich I believe) finance about 1/3 of all the gross (over)spending that the government does to begin with. It amounts to a plea to "increase (income) taxes on the rich so that we can pay them the interest on the third of our spending that we feel we must borrow from them".

Even if you can eliminate the debt factor from the wealth produces wealth problem, you'd still be left with it to some degree because that's how all biological systems work.

These is such a radical idea that I can't even imagine what the impact on society would be if you implemented it. You'd shrink the economy by probably 30% immediately if you did that, which would have catastrophic consequences. Overall, growing via debt has been allowed our economy to flourish in numerous ways, and I'd be hesitant to call that bad, nor to suggest that its massively benefiting the wealthy because they are getting interest. It probably benefits the wealthy more because of their ability to pay interest and grow equity faster.

Another thing to note, I don't think spending can be neatly divided into disposable and essential, nor is there such a thing as "reasonable" living expenses. Was the way people lived a few decades ago unreasonably depraved?

Sure, but you can definitely see what disposable income is left at various groups, the wealthy are spending way more on living expenses and still have way more left, and thus are still paying a much lower percentage of leftover money. I mean you don't need to define these things even remotely exactly to see that this is true.

Last note, the capital gains issue seems unfair until you consider that income taxes were already paid at some point on the money used to buy stocks.

If you buy 1000 worth of stocks and sell them for 2000, you aren't being taxed again on the 1000 you paid to buy the stocks, you are only being taxed on teh 1000 of profit which has not been taxed previously.

It might be tricky to enforce, but IMO we should transition to taxing wealth, not income. That's the only way back IMO, along with drastically decreased consumption (spending) and debt (public and private).

We can't even successfully tax income, I think wealth would be virtually impossible to tax, but I agree it would be a great scenario if you could pull it off.

[Mech Engineer]

Everyone I know complains about Illinois taxes. I moved out of Illinois a few years back after getting frustrated with the taxes, weather, opportunities etc... I moved to Texas and I don't pay taxes on my income. From my observation and speaking to business owners, businesses have an easier time in Texas compared to Illinois whether small or big. There are a lot of bad things in Texas but Illinois literally sucks a lot of one's income.

But, the rich need to be taxed appropriately. It is very unfair to not tax the rich. How do the rich get rich in the first place? Most of them get rich due to the tax breaks, other breaks they get by the money funded by the poor/middle classes(who are a lot more). The millionaires have a big percentage of their money owed because of the tax breaks.

Unless you are a complete moron, once you get rich, it is very difficult to lose your money because of the tax breaks.

What I don't understand is why don't the rich realize they can get richer the more ethical way if the poor/middle class get better and spend money.

[Jcool0]

I am so glad I left Illinois years ago.

After living in TN for the last 11 years, it has been very rewarding to not deal with an incompetent state government. We do not have a state income tax and only a 9.25% sales tax. It's amazing how you can manage to run a state without taxing the hell out of the populace.

And yet:

With the fifth-highest violent-crime rate in the nation, the Volunteer State could still use some people to step up and start a neighborhood watch program. They might also want to volunteer for a smoking cessation program to help address the state’s alarmingly high rate of premature deaths. According to the Centers for Disease Control and Prevention, for every 100,000 people in Tennessee, nearly 9,500 people die before the age of 75. That is more than 30 percent higher than the national rate. And with no statewide antidiscrimination protections based on marital status, sexual orientation or gender identity, the state could stand to be more welcoming.

2018 Quality of Life score: 96 out of 300 points (Grade: F)

Weaknesses: Crime, health, lack of inclusiveness

Strengths: Attractions, air quality

2017 Quality of Life rank: 9th worst

https://www.cnbc.com/2018/06/28/americas-worst-states-to-live-in-2018.html

[CashConsider]

I have a couple of problems with the "fair tax" vote:

1. They keep telling us that millionaires and billionaires get an unfair benefit. So the tax increase starts at those making...250k? I'm not a math major, but I'm pretty confident that 250k is not $1 million or more. I dunno. I get wanting to tax the rich more, there's a massive difference between those at 250k and those at 1m or more. Even those making 400k or more. It sounds like splitting hairs, but making 250k while having mortgage/property tax/car payments/student loan payoffs/etc. it is not as much money as a lot of folks think (I get it, first world issue).

2. 97% of people will see a tax decrease. Except as shown, it's really not a tax decrease of any significance. And this decrease does not make up for the 2 year ago "temporary" salary tax increase or this years gas/car registration tax increases that have been passed. "Temporary" is the biggest BS word in Illinois politics. Just like our temporary tollbooths

3. None of this does anything to reign in spending. This is just another tax and spend initiative from our state government. BTW from most reports this means we will still have a 5% budget deficit, so what else do you think is going to get taxed?

Also, to everyone saying you can't trust your politicians so vote them out, I can't. I can't vote out Madigan because he's not in my district (along with others). The problem is so systemic and been so long running and there is so much money from those in power that we are screwed. And as many others have said, until they start to focus on cutting spending I don't want to hear anything about more money. Especially when the "savings" aren't anything major.

[TheSuzerain]

I have a couple of problems with the "fair tax" vote:

1. They keep telling us that millionaires and billionaires get an unfair benefit. So the tax increase starts at those making...250k? I'm not a math major, but I'm pretty confident that 250k is not $1 million or more. I dunno. I get wanting to tax the rich more, there's a massive difference between those at 250k and those at 1m or more. Even those making 400k or more. It sounds like splitting hairs, but making 250k while having mortgage/property tax/car payments/student loan payoffs/etc. it is not as much money as a lot of folks think (I get it, first world issue).

2. 97% of people will see a tax decrease. Except as shown, it's really not a tax decrease of any significance. And this decrease does not make up for the 2 year ago "temporary" salary tax increase or this years gas/car registration tax increases that have been passed. "Temporary" is the biggest BS word in Illinois politics. Just like our temporary tollbooths

3. None of this does anything to reign in spending. This is just another tax and spend initiative from our state government. BTW from most reports this means we will still have a 5% budget deficit, so what else do you think is going to get taxed?

Also, to everyone saying you can't trust your politicians so vote them out, I can't. I can't vote out Madigan because he's not in my district (along with others). The problem is so systemic and been so long running and there is so much money from those in power that we are screwed. And as many others have said, until they start to focus on cutting spending I don't want to hear anything about more money. Especially when the "savings" aren't anything major.

These are separate issues from the amendment though which is simply saying that that income tax % shouldn't have to be flat.

I kind of disagree with them already having this plan ready should the amendment pass. Would have been less muddled if they just passed the amendment first and then decided how to adjust the income tax rates.

[CashConsider]

I kind of disagree with them already having this plan ready should the amendment pass. Would have been less muddled if they just passed the amendment first and then decided how to adjust the income tax rates.

Completely. That really kills this whole cost savings (mostly because the state can't actually give money back because we will still have a 5% budget deficit with this in place)

[dougthonus]

Nothing changes in Illinois until they fix the pension problem. The fact that we won't focus on that is the problem. Pension is ~25% of our budget. You are probably going to have to suck up what you agreed to, but you need to as soon as possible, like tomorrow, stop all future pension obligations and switch to 401k. You have now solved the entire long term funding problem for the state and can actually afford to lower taxes and create a business friendly environment.

[CashConsider]

Nothing changes in Illinois until they fix the pension problem. The fact that we won't focus on that is the problem. Pension is ~25% of our budget. You are probably going to have to suck up what you agreed to, but you need to as soon as possible, like tomorrow, stop all future pension obligations and switch to 401k. You have now solved the entire long term funding problem for the state and can actually afford to lower taxes and create a business friendly environment.

The pensions hold us hostage. And with teacher pay not being the detriment it used to be...it just doesn't make sense.

[Dominator83]

There are countless things that are different about the states. In many ways Minnesota has much more to offer. Comparing one factor doesn't tell us much. The bottom line is that the state is trying to increase taxes notably, and particularly on people that have the easiest time relocating (whether on paper or altogether), while already losing people at a concerning rate.

California, Illinois and New York have all experienced bigger per capita personal income gains than the nation as a whole since the beginning of 2010, and all saw taxpayers with incomes below $50,000 overrepresented among the leavers from 2011 through 2018. These departures may indicate failures of governance as well, but it’s a different set of governance failures, presumably related more to housing costs, commutes and job opportunities than taxes per se.

There also isn’t much evidence in the IRS data — yet — of an exodus of high-income taxpayers hit by the state-and-local-tax-deduction limits imposed by the 2017 tax bill. That is, the number of taxpayers with adjusted gross incomes of $200,000 or more leaving for other states actually fell in high-tax California, Connecticut, Illinois, New Jersey and New York from 2017 to 2018, the year the cap went into effect. Those who ended up with higher tax bills due to the change generally didn’t find out exactly how much higher until 2019, though, so it may just be too early to tell.

https://www.bloomberg.com/opinion/articles/2020-01-09/where-people-leaving-new-york-california-and-illinois-are-going

the "rich people will leave the state if their taxes are raised too much" argument against the fair tax is a dumb one. will SOME rich people leave? of course. that's common sense. every tax hike will motivate some people to leave. but every tax hike also...wait for it...RAISES REVENUES! that's why they are enacted!

refraining from tax hikes is almost ALWAYS a political consideration rather than a broad economic one. liberals want higher taxes (skewed toward the wealthy) to fund more social services. conservatives don't. that's the push and pull

if liberals raise taxes too high they will not get elected. if conservatives take away too many social services they will not get elected. it's as simple as that

if democrats were advocating for tax hikes that, when enacted, didn't accomplish the revenue objective, it would be political suicide. you can bet your ass that they're as confident as they can be that the "fair tax" would result in substantially more revenue as opposed to causing enough people to leave the state so as to mostly/entirely offset the revenue increase. and on the off chance that there were ("oh ****") unforeseen circumstances arising from a tax hike, you can also bet your ass that that tax increase would be rescinded

california's recent history of changes in their top tax rate and impact on revenues:

-fiscal '04-'05 revenue 82 bil
-2006 top bracket hike from 9.3% to 10.3%
-'05-'06 revenue 93 bil
-'06-'07 revenue 95 bil
-'07-'08 revenue 103 bil
-"great recession"
-'08-'09 revenue 83 bil
-'09-'10 revenue 87 bil
-10-'11 revenue 93 bil
-'11-12 revenue 87 bil
-2013 top bracket hike from 10.3% to 13.3%

subsequent revenue:

'12-'13 100 bil
'13-'14 103 bil
'14-'15 112 bil
'15-'16 116 bil
'16-'17 120 bil
'17-'18 131 bil
'18-'19 139 bil
'19-'20 146 bil

did millionaires throw their arms in the air exasperated and flee the state en masse when an already very high tax rate was significantly increased? no they did not

California is a hell of alot more attractive than Illinois

[Dominator83]

what personal benefit does pritzker get from raising taxes on himself? it could even hurt him politically

taxes are just surface level stuff, pritzker could easily raise taxes and still be profiting from being governor in other unforeseen ways, even legal ways.

In fact I would be surprised if he isn't profiting off of being governor in some manner, not dogging him or even really criticizing him thats just kinda how politics works.

So you have anything rooted in reality? This is vague, boogeyman kind of stuff, talking points that the anti-government rich republicans push onto the middle class.

I’m kind of surprised at the anti Pritzker rhetoric. I know people didn’t like him before he was elected. Legalizing marijuana quickly, a strong and effective Covid-19 response, raising the minimum wage, and now a tax on the rich, what is actually happening that has many people speaking this way? Like, actual facts? I’m not a political savant, so am more curious as to the thought process of many in this board.

You mean like putting Illinois out of work and out of business for months on end? Much of which will have permanent effects ?effective. right.

I can maybe get behind a 2 week shutdown. But beyond that, we need our jobs. Its our rights as americans to go eat at a restaurant, hangout at a bar, etc, if we choose to do so. Did this pandemic stop people form protesting/looting/rioting by the thousands? it did not, because people are gonna do what they're gonna do one way or the other. So why ruin our economy over it? Everybody knows the risks, but its up to the individual to take or not to take them. Indiana and wisconsin have been reopened for months now. While here we're still beating around the bush, and bleeding money because of it.

[Almost Retired]

Nothing changes in Illinois until they fix the pension problem. The fact that we won't focus on that is the problem. Pension is ~25% of our budget. You are probably going to have to suck up what you agreed to, but you need to as soon as possible, like tomorrow, stop all future pension obligations and switch to 401k. You have now solved the entire long term funding problem for the state and can actually afford to lower taxes and create a business friendly environment.

You are absolutely right. For anyone interested in reading more in depth discussions about government finances and the pension funding issue I recommend 2 websites: Pensiontsunami.com and Wirepoints.org . It's a complex problem, made more difficult to solve because it's been left to fester for decades. The politicians of one era make the promises to garner political support from the government workers while knowing full well that the funding problem won't come to a head until long after they are out of office. And when the politicians are negotiating with the public employee unions both sides of the table are on the same side in terms of being recipients of government pensions. Nobody at the table is representing the future tax donkeys.

We are a year or two away from an epic bear market in stocks. Government bonds pay next to nothing in interest. So Pension administrators have had to rely on overweighting their portfolios with stocks in order to strive for the projected yearly returns the actuaries predict in their models. The end result of this is going to be massive pension fund losses which is going to turn a huge financial problem into an insurmountable one. Future government retirees are not going to get all the benefits they were promised. The math will never work out. The hole is too deep. If they're lucky they might get 60-70 cents on the Dollar with no COLA. Under a worse case scenario...virtual insolvency...they might be reduced to 30-40 cents on the Dollar. So much for enjoying their "golden years."