US - A Chicago think tank has called on Illinois politicians to increase income tax and introduce tax on services to tackle its US$42.4bn pensions hole.
The Center for Tax and Budget Accountability (CTBA) said Illinois pension debt was the largest in the nation, totalling a projected $42.2bn and a funded ratio of 58.7% which was the second worst in all of the states.
According to research carried out by the CTBA, switching to a defined contribution system would do nothing to eliminate the unfunded liability. On the contrary, it suggested a switch would cost more than maintaining the current defined benefit plans.
The proposed solution was a modernisation and comprehensive reform of the Illinois tax system. Although a bill to this effect has already been, the CTBA said there was need for the political will to actually implement the reform.
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