Lawmaker takes aim at business group's proposal to tax retirement income

Rep. David McSweeney wants the state to keeps its hands off retirement income.

The Barrington Hills Republican on Monday announced a House resolution opposing any moves to put a state tax on retirement income.

McSweeney's resolution is a response to the economic plan recently laid out by the Civic Committee of the Commercial Club of Chicago, one of the state's leading business groups.

The Commercial Club says taxing retirement income would contribute up to $1.9 billion as part of a package of revenue and cutbacks it said is needed to restore financial stability. The plan also calls for increasing the state income and corporate tax rate by 1 percentage point and putting sales taxes on more consumer services.

Illinois is one of three states that exempt all pension income from taxes, according to the Civic Federation, a budget watchdog group. Twenty-seven states exclude federally taxed Social Security income.

"One of the few tax benefits we have in Illinois is protection for retirement income," McSweeney said in a news release. "We do not need to hold retirees accountable for the (state's) out-of-control spending."

But with massive pension debt and a backlog of unpaid bills nearing $7.8 billion, the state might be able to use an extra $6 billion in new revenue per year, which is how much the Commercial Club claims its plan could bring in.

McSweeney's resolution, nonbinding House Resolution 32, has not yet been assigned to a committee.