Illinois $5 Billion Tax Hike Will Be Eaten Up By This Year's Pension Payment (Springfield: credit, how much)

[Manterro]

If the money from new tax hike is used for the state's enormous pension debt, how will the other bills get paid?

http://illin.is/2wdBrZc

[dtcbnd03]

Other bills will get paid by more borrowing and making the problem worse. This is why we need to tax pensions or declare bankruptcy...only two options. The tax hike has not solved any problems at all.

[BaptistFundie]

Of course it won't solve anything. Spending and taxation in our state, and our country, are completely unrelated. Government does not operate like the rest of the world, in that it doesn't matter how much money they have..they spend what they want to spend.

[Manterro]

If Illinois taxed pensions, you would see people flee the state faster than a burning house. There would be a mass departure of citizens intent on protecting their money. Currently bankruptcy is prohibited by law but Congress could pass special legislation allowing it to happen in Illinois.


"Previously there were no laws that allowed Puerto Rico to declare any form of bankruptcy but in 2016 Congress was pressured to pass special legislation that allowed the island to do so. With that precedent, it’s a possibility that Congress could treat Illinois similarly."

https://www.illinoispolicy.org/puert...g-to-illinois/

[PerseusVeil]

Originally Posted by Manterro

If Illinois taxed pensions, you would see people flee the state faster than a burning house. There would be a mass departure of citizens intent on protecting their money. Currently bankruptcy is prohibited by law but Congress could pass special legislation allowing it to happen in Illinois.

"Previously there were no laws that allowed Puerto Rico to declare any form of bankruptcy but in 2016 Congress was pressured to pass special legislation that allowed the island to do so. With that precedent, it’s a possibility that Congress could treat Illinois similarly."

https://www.illinoispolicy.org/puert...g-to-illinois/

You're more likely to see the feds allow states to tax pensions that come from their own states regardless of where the pension holder lives once again. That's how states like California used to be able to tax pensions of people who moved out of state up until the 90s.

The feds aren't going to allow for the fifth most populace state to declare bankruptcy. Even if they did though, it would come to whether or not Springfield wants to pull the trigger. Springfield currently lets virtually none of its municipalities declare bankruptcy at the moment. If Illinois won't allow any of its cities to declare, how far do you think the state will have to be pushed before it would even consider declaring bankruptcy itself were such an option to even exist?

[dtcbnd03]

Originally Posted by PerseusVeil

You're more likely to see the feds allow states to tax pensions that come from their own states regardless of where the pension holder lives once again. That's how states like California used to be able to tax pensions of people who moved out of state up until the 90s.

The feds aren't going to allow for the fifth most populace state to declare bankruptcy. Even if they did though, it would come to whether or not Springfield wants to pull the trigger. Springfield currently lets virtually none of its municipalities declare bankruptcy at the moment. If Illinois won't allow any of its cities to declare, how far do you think the state will have to be pushed before it would even consider declaring bankruptcy itself were such an option to even exist?

If every major airline can declare bankruptcy I can assure you a state can. Remember bankruptcy halts the debt and creditors...it's not the end of the state. This is why bankruptcy laws for corporations and municipalities exist. I hope Illinois does this.

As for taxing pensions I agree pensioners would flee the state at which point you declare it a "maintenance fee" or "account fee" and then apply it to everyone. After all...Illinois holds the money. Then simply route 100% of the proceeds into future benefits creating a compounding reduction effect. Problem solved.

[Manterro]

It's my understanding that the state's general assembly isn't required to fully fund pensions, which means tax money is spent on other things such as schools or infrastructure. The result? Growing unfunded liabilities or basically money promised to workers in their pensions when they retire that the state doesn't have. Make it a damn "LAW" that the pensions have to be fully funded or at least 80 to 90% fully funded. Then hold the politicians accountable and throw them in jail if they can't follow the laws. No slap on the wrist, no fines, just good old fashioned jail time. I guarantee this nonsense would stop real quick. Putting these bailouts and monetary burdens on the backs of taxpayers who are already overburdened is a terrible way to run a city or state.

[PerseusVeil]

Originally Posted by dtcbnd03

If every major airline can declare bankruptcy I can assure you a state can. Remember bankruptcy halts the debt and creditors...it's not the end of the state. This is why bankruptcy laws for corporations and municipalities exist. I hope Illinois does this.

As for taxing pensions I agree pensioners would flee the state at which point you declare it a "maintenance fee" or "account fee" and then apply it to everyone. After all...Illinois holds the money. Then simply route 100% of the proceeds into future benefits creating a compounding reduction effect. Problem solved.

Until federal law is changed, I assure that a state can't. There's also a long line of states currently in economic pain, Illinois just happens to be in the worst shape thanks to the pensions. Congress wouldn't dare set the precedent of allowing states to go bankrupt again unless it becomes absolutely necessary. PR also isn't an apples to apples comparison due to its status as a territory. Changing the law for a state would be a huge step, and considering that Illinois is a blue state, a highly unlikely one that the Republican controlled Congress would be willing to take.

Additionally, Illinois itself is adverse to bankruptcy. It won't let its cities go bankrupt. There's no political stomach for it.

[Fta23457]

Paying higher and higher taxes for Inferior services?
Screw that.
So glad we left Illinois. Our quality of life has Improved dramatically since leaving the state.

[CGab]

Originally Posted by Fta23457

Paying higher and higher taxes for Inferior services?
Screw that.
So glad we left Illinois. Our quality of life has Improved dramatically since leaving the state.

+1