Tax on trading would cost Illinoisans' retirement funds tens of thousands, report says
Added 10-22-20 05:23:02pm EST - “Taxing retirement income, something Illinois doesn't currently do, has become a political talking point in the argument over the progressive tax ballot initiative. But, a financial industry advocate warns about the hit to Illinois…” - Washingtonexaminer.com
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Taxing retirement income, something Illinois doesn’t currently do, has become a political talking point in the argument over the progressive tax ballot initiative. But, a financial industry advocate warns about the hit to Illinois residents’ 401(k) plans that would stem from a different proposal.
Taxing financial transactions has found its way back into the conversation in a number of cities and states as a way to shore up budgets battered by COVID-19 shutdowns. While the amounts are different, the premise of placing a fee on each trade conducted in a city or state, remains the same.
The Modern Markets Initiative, an industry group representing financial trading institutions, estimates that a financial transaction tax would cost the average Illinoisan up to $$22,452.01 from their retirement fund over 40 years. The group said the tax would cost the average retirement account $144.90 per year.
“There have been, for many years, competing legislation to tax financial transactions at various levels as a way to raise revenue,” said Kirsten Wegner, CEO of Modern Markets Initiative. “Illinois has been looking at a financial transaction tax for many, many, years. That is nothing new there. I think Illinois has faced the same pressures that many states are facing right now. Whether it’s people saving through their [Bright Start] 529 plan, their 401(k) plan, or their pension fund, these taxes are ultimately passed on to the end-user.”
Taxpayers would also take a hit in the publicly-funded pensions they’re responsible for funding. MMI estimates a financial transaction tax in Illinois would cost the Illinois Municipal Retirement Fund, a taxpayer-funded pension system responsible for paying thousands of municipal employees, $12.20 billion over 3 decades if the tax was 50 basis points per trade.
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