AARP opposes proposed new tax on retirement income


A Chicago-based nonprofit says raising the state’s income tax and taxing retirement income will fix Illinois’ budget mess. The nation’s largest advocacy group for retirees disagrees.

The Civic Federation released a series of suggestions Friday that they say the state could use to get back on sound fiscal footing. The plan is centered around raising $51 billion from new taxes over the next five years by increasing the income tax rate to 5.25 percent and then taxing retirement income at that level as well. Retirement income currently isn’t taxed.

AARP Illinois state director Bob Gallo says retirees aren’t anchored to Illinois by a job and will just leave the state in high numbers.

“People don’t move to the Sunbelt states just for sunshine,” Gallo said. “The reason many people retire there is affordability.”

He said taxing retirement income would negatively affect not only retirees but their families.

“What organizations like the Civic Federation don’t consider is that a lot of (retirees’) income is family income as well. They’re better off using their retirement income to help the individuals who they love than the government taking the money away from them to distribute it in a different way or to solve a problem that they didn’t create in the first place.”

AARP is an outreach organization that lobbies lawmakers in Springfield on behalf of Illinoisans over 50. In terms of feasibility, Gallo says the chances of the Civic Federation’s plan passing into law are low.

“We’ll make sure that individuals of the General Assembly and the governor would be held accountable for moving in this direction,” he said.

In a Neilson survey conducted last year of Illinoisans over 50, nine out of ten opposed taxing retirement income and three-fifths say they would leave the state if such a tax were approved.