Daily Debunk: Fair tax won't touch retirement income
AARP Illinois turns tables on ‘fearmongers’ pushing ‘misinformation’
Illinois retirees can rest easy in that the Fair Tax Amendment will have no effect at all on the state’s refusal to tax retirement income. (Shutterstock)
By Ted Cox
With the official start of fall Monday and 42 days to the election Nov. 3, One Illinois is going to see if it can’t stretch out a series of “daily debunks” involving the Fair Tax Amendment.
The graduated income tax backed by Gov. Pritzker and approved by the General Assembly last year would cut income taxes or leave them the same for 97 percent of Illinois taxpayers, those making $250,000 a year or less. The well-to-do other 3 percent would pay more, up to a top tax rate of just under 8 percent for those making more than $1 million a year. That’s lower than the top tax rate in Iowa and Minnesota, and just slightly above the 4.95 percent all Illinoisans pay under the current flat tax.
Seems pretty clear, right? But with the amendment needing a 60 percent supermajority to pass and alter the state constitution, opponents haven’t been shy about spreading disinformation and propaganda in an attempt to peel off 41 percent of the vote.
Can we run a story a day on such tactics? Sadly, that may not be as difficult as a believer in democracy might hope.
Monday, what caught our eye is the way AARP Illinois recently felt compelled to point out that the progressive income tax would have no effect on retirement income, which is not taxed in Illinois — a top concern for members of the organization formerly known as the American Association of Retired Persons
“No matter who has said it or how they have said it, the simple truth is that switching to a graduated income tax does not allow the state to tax retirement income,” AARP Illinois stated last week in an online post under the heading “Facts & Fallacy.” “And, it does not make it easier to tax retirement income in the future. AARP Illinois adamantly opposes taxation of retirement income, and we would not support the graduated income tax if it did.”
It lashed out at “fearmongers” spreading “misinformation” on the Fair Tax Amendment. The post repeated the same facts on the tax rates repeated above, going on to clarify: “A small business does not pay income tax in Illinois. Instead, the income tax is paid by the small-business owner who will be paying the same new graduated tax rates as all other Illinois taxpayers. Under the graduated income tax, tax rates would only be higher for those with incomes over $250,000. Those making less than $250,000 will see no increase in their state income taxes, and some will see a small decrease.”
But that didn’t keep AARP Illinois from employing some scare tactics of its own — tactics based soundly on facts. Pointing out that the state needs additional funding — something everyone already knows — it added: “If Illinois doesn’t find a way to fix its budget crisis, that’s when state lawmakers may be forced to consider adding a retirement income tax or more-drastic spending cuts that will especially hurt those 50+ and their families. We need a plan to get out of this budget mess, without shifting the burden to our older and middle-class residents. The graduated income tax is a step in the right direction.”
So rest easy (if at all possible these days) Illinois retirees. The Fair Tax Amendment will have no effect on retirement income, and it will not make it any easier to tax retirement income in the future.
We’ve said it before, and it’s likely we’ll be saying it every day through Nov. 3: weigh the fair tax on its merits, not on the nightmare scenarios and disinformation being spread by its opponents because they have no real facts to argue.