Illinois Pensions: Rob the Poor and Give it to the Rich

By Bill Zettler

Help the needy or help the greedy?

Illinois Dept. of Human Services (DHS) recently announced some planned cuts:

  • DHS to cut $150 million, expected to affect 178,000 children and adults
  • Dept. on Aging to cut $40.8 million

That’s $190 million in cuts to the most needy among us. Where could we possibly find $190 million to replace those cuts?

Easy. Just eliminate the pension COLA (Cost Of Living Adjustment) and you have $190 million. As every Social Security recipient knows there was no COLA this year anyway.

And here is another way to get $190 million. Just require Illinois pensions to be taxed. Right now Illinois pensions, including the 3,700 pensions in excess of $100,000 are not taxed at the state level. Do you think these multi-multi millionaires can afford to pay taxes like you and I do? I think so.

What do public employees think about their pensions?

The highest pension in Illinois currently is Dr. Alon Winnie, at $460,000 +. He has collected more than $3 million since retiring but doesn’t think that’s excessive: “If you were with a good company, you’d have a helluva lot better benefits.”

Excuse me, better benefits than $460,000/yr pension? Exactly where could you get a better deal than that? That is a typical comment from a public employee; he has sacrificed for us and now, in his dotage, must eat dog food three days a week to make ends meet on his paltry $460,000. Mother Teresa without the vow of poverty I guess.

Three examples of robbing the poor and giving it to the rich.

Thirty-seven public school employees received raises of more than $35,000 last year. Why did I choose $35,000 as a comparison? Because $35,000 is the median full-time wage in Illinois. In other words, 37 school employees received raises greater than the annual wages of half of Illinois full-time workers. These poor working stiffs are paying property taxes for outrageous salaries and $1,000 year in income tax to fund $400,000 pensions for people who pay no income tax. Rob the poor and give it to the rich.

Last year the average annual Social Security pension payment was $12,800. Our $460,000 Illinois pensioner received a tax-free $13,800 annual increase. Rob the poor and give it to the rich.

An unemployed construction worker pulling in $400 a week in unemployment compensation will earn about $20,000 on which he will pay about $500 in state income tax. Our other $400,000 pensioner, Tapas Gupta, will pay zero, nothing, nada on his $404,000 pension. So the unemployed guy making $20,000 pays income tax to fund the $404,000 pensioner’s pension but the pensioner pays zero income tax. Rob the poor and give it to the rich.

What the next governor should do:

Institute an immediate cancellation of COLA and apply that to the $190 million in DHS cuts. Also institute an immediate 3% income tax on state pensions and use it to give a $20,000 deduction per tax return thus removing our unemployed construction worker and pensioners with total income less than $20,000 from the tax rolls.

These would be two very popular options with the 95% of Illinois workers (and voters) that are not part of the lucrative state pension system. Not so popular with the 5%.

Up next: If Public Employees Received Raises Equal to Yours There Would Be No Pension Deficit.

Bill Zettler is a free-lance writer and consultant specializing in public sector compensation. He can be contacted at this email address. Click here to read more by Mr. Zettler.