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Lawmaker Proposes Permanent Income Tax Increase
Illinois House Democrat Lou Lang is proposing making the income tax increase permanent to pay for state employee pensions. Lang says the state would pay taxpayers back over time.
Lang said the state would rebate taxpayers for any amount that's collected over the annual pension payment from the 67 percent tax increase. The hike was scheduled to expire at the end of 2014.
Once 2020 hits, the state would also pay back taxpayers another $1 billion per year from pension bonds scheduled to expire.
Lang's pension reform plan includes
- a 3 percent increase in employee contributions, phased in over six years.
- a later retirement age of 67.
- a shift in teacher pension costs from the state to colleges, universities, and school districts over 17 years.
Lang's plan requires retired employees to shift to Medicare at age 65. The Chicago-area Democrat would include a guarantee the state makes its pension payment. That would happen through a 50-year increase in payments to bring the state's five public pension systems to 80 percent funding.
We reached out to a number of people to find out what they think.
Senate President John Cullerton said the negotiating table is large enough to accommodate many of the ideas in this plan, but House Republican leader Tom Cross does not like it.
The We Are One Illinois coalition of unions is also reviewing Lang's proposal. Lang said the ramp-up of payments over 50 years will accrue interest over time. He said the money from the income tax increase will be dedicated to paying for pensions.