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CHICAGO – Illinois’ effective corporate income tax rate of 9.5% is contributing to the state’s financial woes, according to the president of Taxpayers United of America.
“Illinois has the country’s fourth highest corporate income tax rate and rather than helping the state’s crisis level financial woes with increased revenue, it is compounding the problems by chasing away businesses. Unless, of course, those businesses are large enough to hold the state hostage by threatening to move their operations to a more business-friendly state,” stated Jim Tobin.
“Illinois lawmakers don’t have the economic good sense to lower the corporate income tax rate to a level that will attract and keep businesses. Instead, they engage in a damaging corporate welfare program that rewards those very businesses that threaten to leave.”
“Large corporations like Sears and CME have already siphoned money away from small businesses and individual taxpayers with their tax discount deals that resulted from the threat of leaving Illinois. Now there is a string of corporations trying to get their turn at the corporate welfare trough.”
“Office Depot, who recently merged with OfficeMax, is threatening to move the Naperville, IL, headquarters of OfficeMax to Boca Raton, Florida, home of the former’s corporate operations. Their leverage is the 2,000 jobs that would go with them. Decatur stands to lose a major employer in Archer Daniels Midland. They are citing the state’s burdensome income tax as the reason to leave Decatur and Illinois unless they receive a tax cut.”
“It’s time to say no to these corporations and end corporate welfare and lower the 9.5% corporate tax rate for everyone. Not only would we retain the large corporations and the revenue, we would retain the thousands of small businesses and the tens of thousands of individual taxpayers who have silently protested paying the state income taxes of the larger and richer corporations by leaving the state.”
“It’s no secret that Illinois is functionally bankrupt. Illinois and its flagship city of Chicago have been spanked for their reckless spending and borrowing by having their credit ratings repeatedly downgraded. Illinois now has the worst credit rating in the country. These spankings were, effectively, punishment for not reforming the state’s sinking government pension funds; however they did nothing to force Speaker Michael Madigan (D), and Senate President John Cullerton (D), to provide the necessary leadership to finalize even minimal reforms.”
“Instead of reforming their spend lust and a bankrupt government pension system, the Illinois General Assembly is considering at least three resolutions that would pave the way for a referendum to amend the State Constitution that would allow a graduated or progressive income tax. The proposed changes would increase the income taxes of 85% of Illinois’ taxpayers. The top rate for the individual income tax could be as high as 11%. But even worse would be the estimated 12.8% corporate income tax rate.”
“And we can’t forget that Springfield Democrats passed a temporary 67% increase in the personal income tax rate along with a 30% increase in the corporate income tax rate in a structured vote, literally in the last minutes of the 97th Illinois General Assembly. This ‘temporary’ increase didn’t make a dent in the state’s indebtedness as it was supposed to.”
“Such an irresponsible increase that will be sold as a tax increase only on the rich, will force even more back-room deals for the big corporations that will be paid for by individual taxpayers and small business – that is until they quietly take their jobs and their money to tax-friendly states.”
Rae Ann McNeilly, Executive Director of Taxpayers United for America, provided commentary on San Diego pension policy for the U-T San Diego.
Last year’s pension reform measure for San Diego has not been completely implemented, but the city has fulfilled a requirement to post a list of all its pensioners and how much they are paid annually.
The city posted a list, but it’s confusing and misleading in a number of ways. For instance, it lists as its top “2012 pension” the $365,000 paid to a front line police officer.
The listing provides no further information about the officer, not even a name, but U-T Watchdog followed up and found the pensioner in question is retired Officer Robert van Wulven, whose annual pension is about $73,000.
Van Wulven’s payment for 2012, as listed by the city, included a $291,738 lump-sum payout from a special retirement account into which he received retirement benefits while still working. That supplemental money is supposed to last van Wulven, 56, for the rest of his life.
The list posted by the city on its website contains these kinds of vagaries throughout, so getting a true picture of the annual benefits collected by retired employees without additional data and records requests is impossible.
[ Download spreadsheet created by U-T from city document ]
The list was posted as required by Proposition B, the pension overhaul passed with 66 percent of the vote in June 2012. The measure mandated 401(k)-style retirement plans, instead of guaranteed pensions, for most new city workers. Not all of its provisions have been put in place by the city, including a ban on pensions for city workers who commit felonies on duty.
The pension posting includes the final job title, years of service, and a total of payments made to that person from the pension system — including regular pensions and special account payouts all in one sum. For retirees who opted to roll their special funds into an individual retirement account, those funds are broken out separately.
The numbers shown appear simple but are not.
“It’s more of a keyhole than a window, but you do get a peek, and I applaud them for presenting it,” said Bill Holder, dean of accounting at the University of Southern California, who served for 10 years on the Governmental Accounting Standards Board. “The more sunlight that’s brought to bear on it, in my view, the better.”
Important information needed to measure adequacy or generosity of a pension benefit is not provided — salary information, hire date and age at retirement. Because there are no names attached, a multiple-year analysis is also not possible based solely on what’s on the city website.
It’s also difficult to discern whether the data released by the city shows a full year for each pensioner, because many have a partial year of payments when retiring and upon dying, which is not noted in the data.
The posting does mark progress in transparency when compared to the information made available by other governments.
Rae Ann McNeilly has obtained pension data from around the country for the Chicago-based Taxpayers United of America.
“Of the 19 states that I’ve analyzed pensions for, I’ve not yet seen the city or any level of government post pensions on a website, with or without a name,” McNeilly said. “There are 17 states that I’m aware of that don’t provide names and pension amounts.”
McNeilly said including names in the San Diego posting would be preferable, allowing people to “connect the dots on who the money is attached to.” She likened the current disclosure to a database of vendor payments with no company or contractor name attached.
“Those pensions are funded with tax dollars,” McNeilly said. “Any taxpayer-funded expenditure, the taxpayers have a right to review.”
The 2012 ballot measure explicitly said names would be omitted, “in a manner that protects the privacy rights of officers and employees.”
An unnamed fire captain took home the biggest total payment in 2012 of $694,315, including a $618,684 one-time rollover payment from the special account, the data shows.
The special accounts are part of the Deferred Retirement Option Plan, available to employees hired before 2005. They can begin collecting their retirement while still working, placing the funds in a special account for up to five years while still collecting a paycheck. They also cease accruing benefits when entering the program.
Among all retirees receiving pension payments in 2012, the median years of service was 25. The median payment listed under the city’s flawed “pension payment” column was $42,568.
Officer van Wulven said he doesn’t mind the pension transparency, even though he believes it will be used by people who wish to “mislead the public based on their particular agenda.”
He served more than three decades with the Police Department and said frustration directed at public-sector workers is better placed at the feet of officials who in past years failed to make full payments to the system.
“I’m not a millionaire by any means,” van Wulven said. “I worked for a long time and earned my pension, and I contributed to it, just like the city was supposed to.”
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CHICAGO—The president of Taxpayers United of America (TUA) condemned the unresponsiveness of the legal system in Illinois, which denied an appeal by taxpayers who sued Riverside-Brookfield Sch. Dist. 208 for illegal electioneering.
“It’s mindboggling the extent to which local judges protect the status quo, even in the face of convincing evidence that a local government-school district engaged in illegal electioneering in trying to pass a property tax increase referendum,” said Jim Tobin, TUA President.
Representing homeowners, TUA had joined with Anthony J. Peraica & Associates in appealing the decision of Judge Leroy K. Martin’s July 17, 2012 ruling, in which he dismissed with prejudice their lawsuit against Riverside-Brookfield Sch. Dist. 208.
Plaintiffs Peraica and TUA had charged that the school district used illegal electioneering in its failed attempt to pass a property tax increase referendum in the April 5, 2011 election.
The appellate court affirmed Judge Martin’s dismissal of the lawsuit on Oct. 31, 2013.
“While we are disappointed in the appellate court’s decision, we were successful in defeating the April 5, 2011 property tax increase referendum despite the shady tactics of Sch. Dist. 208,” said Tobin.
“Our efforts on behalf of taxpayers against devious school districts led to the most important reform legislation in the 97th Illinois General Assembly: SB3314, introduced by St. Sen. Don Harmon (D-39 Oak Park), which was the direct result of the lawsuits filed by TUA against Oak Park D-97 and Wilmette D-39 school districts for using ballot language that purposely mislead taxpayers by understating by 300%, the property tax increase resulting from passage of a referendum. SB3314 makes this practice of duping voters illegal.”
