When it comes to finding ways to separate you from your money, the insatiable public sector will leave no stone unturned. Take the high-tax haven of Illinois.
Progressives have become more aggressive recently in advocating for massive tax hikes on “the rich.” Their stenographers in the left-leaning media eat it up. Never mind that if the federal government took every dollar from every millionaire and billionaire in the United States, it would barely cover one year of federal spending.
That’s why proposals to soak the wealthy always end up raining on the middle class. As infamous bank robber Willie Sutton Jr. reportedly once said, “Because that’s where the money is.”
Illinois is running a massive pension deficit among its public employees, with an eye-popping $250 billion in unfunded liabilities, according to an August analysis from Moody’s. To combat the utter impossibility of meeting those massive obligations, there is now a proposal in Illinois to tax private retirement accounts, as Jeff Flock of Fox Business reported last week.
As Mr. Flock noted, Illinois — which has the third-worst pension shortfall in the nation, behind only Connecticut and Ohio — is hardly alone in this pursuit. Sixteen states are already employing such measures.
Try to wrap your head around that: taxing private 401(k) and individual retirement accounts to fund public pensions.
These massive unfunded liabilities are the result of politicians — primarily Democrats — overpromising benefits in return for the support of powerful government unions. Throw in the fact that most systems make overly optimistic assumptions on investment returns in order to disguise shortfalls, and you’ve got a recipe for fiscal calamity.
The only responsible plan of action — for Nevada and other states — is to transition government pensions from defined-benefit systems to defined-contribution plans. Instead, Illinois wants to come after your 401(k).
Illinois is a fiscal basket case primarily because it’s a one-party progressive state where public-sector labor bosses run unchecked. The gall of raiding the nest eggs of private citizens to help cover the costs of exorbitant government pensions that far outstrip what the average taxpayer can ever expect is astonishing, if unsurprising.