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Yeah, but Illinois takes it to a whole other level.
Interesting chart. Look at the annual pension amount, and then at the last column which lists the percent of the estimated lifetime pension payout that was funded by the retiree him/herself:
Why would it be so hard to amend the state constitution to reduce pension benefits? They must know that a massive tax increase would mean the end of the current state government - they need to be reducing taxes, not increasing them.
I find it galling that taxpayers are expected to pay through the nose so that retired government workers can live high on the hog, enjoying a retirement that most of us can only dream about. How is this remotely fair?
they need to raise both property and income taxes in Illinois. The people decided that when they elected the legislators that approved these pensions. Time to pay up people.
The big issue is people have planned their retirements based on what they were promised, perhaps they didn't save as much as they would of without these very generous benefits. Rightfully they should be angry if someone takes that away from them.
They should of never received them to begin. Something has to give and one route is they can substantially reduce salaries/benefits for new employees(including teachers) but that is a long term fix. Of course they can raise taxes or amend their Constitution and cut the benefits.
Ideally the retirees negotiate this for minor reduction, raise the taxes a little and cut the salaries/benefits for new hires to a sustainable amount.
and most pension plans forecast a 7-8% return on their investments (mostly govt. bonds), when interest rates are near historical lows. So the problem is worse than stated.
this won't end well and taxpayers and millennials will foot the bill.
To get the Illinois pension back up to par for state employees every person in Illinois would need to chip in $11,000. So a family of 5 would need to chip in $55,000.
Adding to the problem is that the stock market is at near highs and for several years now have had historically high p/e rations suggesting the stock market might be overvalued and due for a crash, which would make the Illinois pension on worse footing.
Illinois' state constitution says that benefits can't be lowered, so unless a difficult amendment happens, there needs to be a dramatic escalation in taxes...
One possible solution floated is that a 1% annual increase in state property taxes to prop up the pension needs to be implemented for 30 years, which would then secure the pension. So someone with a $250,000 would then owe an additional $2,500 every year for 30 years to secure the pension. Foolishly assuming that the home wouldn't increase in value, a $250,000 home owner would end up paying $75,000 to secure the pension over the course of 30 years. The problem with this plan is that Illinois already has the highest property tax average of all states and it might tempt some businesses to leave the state.
This solution would only fix the Illinois state pension and NOT the 650 local pensions in Illinois that are struggling too.
When it reaches critical mass, and is about to collapse, these states run by democrats will certianly have their hands out for the fed govt to "fix it".
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