personal income taxes

Amended Illinois Tax Hike Plan To Hit Taxpayers, Businesses, And Employment?

Back on January 16 I published a post on Survival And Prosperity entitled “Illinois ‘Grand Bargain’ Legislation Includes 32 Percent Personal Income Tax Hike.” I started the piece with:

Illinois taxpayers may get hit with a significant income tax hike pretty soon…

Yesterday morning, I learned the potential “hit” could be a “combination of punches” directred at taxpayers, businesses, and employment.

From the Greg Hinz On Politics blog on the website of Crain’s Chicago Business:

There’s still no word on when lawmakers are going to vote on it, but an amended tax-hike plan has been introduced in the state capital.

It’s a doozy, with an even higher income tax, a limited service tax and a sort of minimum tax on business. But the soda pop levy is gone, as are a couple of those corporate loophole closings that business groups didn’t like…

The highlights:

The Individual income tax would go to 4.99 percent from the current 3.75 percent, and the corporate income tax to 7 percent from 5.25 percent. Combined, that would pull in about an additional $5 billion a year.

A new “business opportunity tax” ranging from a fee of $225 to $15,000 a year would be imposed, based on payroll. The intent is to make sure that all companies pay something, whether they are profitable or not. The state’s net on this is an estimated $750 million a year.

However, the research and development tax credit would be made permanent and the manufacturers purchase and graphics arts credits would be combined, as some businesses wanted.

A service tax—extension of the sales tax—would be imposed on certain items including repair and maintenance of personal property, use of amusement services including gyms, landscaping, laundry and dry-cleaning, and storage of personal goods such as cars and property. This would pull in a projected $400 million a year.

The telecom excise tax would be extended to cable and satellite services.

Both Radogno and Cullerton are said to have negotiated and support the above, pending action on the rest of the package…

Hinz does a good job summarizing the proposed expanded revenue grab. At this point, I want to go back to that bit about a new “business opportunity tax.” From the actual legislation for the so-called “Business Opportunity Tax Act”:

Section 1-10. Tax imposed.
(a) Beginning on July 1, 2017, a tax is hereby imposed upon each qualified business for the privilege of doing business in the State.
(b) The tax under subsection (a) shall be imposed in the following amounts:
(1) if the taxpayer’s total Illinois payroll for the taxable year is less than $100,000, then then annual tax is $225;
(2) if the taxpayer’s total Illinois payroll for the taxable year is $100,000 or more but less than $250,000, then the annual tax is $750;
(3) if the taxpayer’s total Illinois payroll for the taxable year is $250,000 or more but less than $500,000, then the annual tax is $3,750;
(4) if the taxpayer’s total Illinois payroll for the taxable year is $500,000 or more but less than $1,500,000, then the annual tax is $7,500; and
(5) if the taxpayer’s total Illinois payroll for the taxable year is $1,500,000 or more, then the annual tax is $15,000…

I can see a number of existing and prospective Illinois business owners having concerns with the proposed “Business Opportunity Tax Act.”

First, Illinois already has poor business reputation. For example, early last year Chief Executive magazine asked 513 CEOs to rank states they are familiar with on the friendliness of their tax and regulatory regime, workforce quality, and living environment. The “Land of Lincoln” came in as the 48th worst state in this annual survey, beaten only by New York and California in that order. The “Business Opportunity Tax Act” has the real potential of increasing the perception that Illinois is business-unfriendly.

Second, if my understanding of the legislation is correct, the larger the payroll an Illinois business has, the more taxes they will pay. Consider the following. If I’m an Illinois business owner with a payroll just shy of $250K who would like to bring on more staff, I may be dissuaded from doing so to avoid forking over an additional $3,000 to the state (unless I’m convinced the hiring would offset the $3K hit). And how might employee raises be impacted once payrolls start approaching a higher tax bracket? The proposed “Business Opportunity Tax Act” may not be too terrific for Illinois employment.

Third, readers of this blog may know that I am in the process of rolling out a research business focusing on specialized asset protection. It’s been my intention to launch in the Chicago area. Lately, however, I’ve been thninking of opening up shop in southeast Wisconsin (where my family has a residence) due to the direction Illinois looks to be heading with taxes and its treatment of the business community. The passage of the “Business Opportunity Tax Act” could be the straw that breaks the camel’s back. I wonder how many other prospective Illinois business owners might be in the same boat?

Stay tuned…

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Hinz, Greg. “New, wider tax plan rolls out in Springfield.” Greg Hinz On Politics. 24 Jan. 2017. (http://www.chicagobusiness.com/article/20170124/BLOGS02/170129931/springfield-lawmakers-roll-out-new-wider-tax-hike-plan). 26 Jan. 2017.

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Thursday, January 26th, 2017 Business, Employment, Fiscal Policy, Government, Political Parties, Taxes Comments Off on Amended Illinois Tax Hike Plan To Hit Taxpayers, Businesses, And Employment?

Illinois ‘Grand Bargain’ Legislation Includes 32 Percent Personal Income Tax Hike

Illinois taxpayers may get hit with a significant income tax hike pretty soon. John O’Connor of the Associated Press reported Sunday on The State Journal-Register website:

If last week’s action is any indication, the Democratic and Republican leaders of the Illinois Senate are serious about attempting to bust the state’s 18-month budget deadlock – quickly…

Promising to act on a package by month’s end, they introduced 13 measures Wednesday that included non-budget-related sweeteners for both sides. By Thursday, they had been rapidly assigned public committee hearings…

Here’s a look at other major pieces of the legislation some in the Capitol have nicknamed the “grand bargain”:

* Income tax increase: The personal income tax would jump from 3.75 percent to 4.95 percent, a plan to generate $4.1 billion a year. With spending cuts, Democrats argue, that could eliminate what the governor’s office estimates will be a $5.3 billion deficit on the June 30 end of the fiscal year…

(Editor’s note: Bold added for emphasis)

The proposed 32 percent income tax hike is not a sure thing, as O’Connor noted:

The outstanding question is if a Senate-approved deal would ultimately pass muster with Democratic House Speaker Michael Madigan, who has refused to entertain Rauner’s pro-business agenda as part of budget talks…

Six years ago, the 3 percent personal income tax rate jumped to 5 percent until 2015, when the rate rolled back to the current 3.75 percent.

Like I just suggested to Chicago taxpayers in the previous post, Illinois taxpayers might want to take heed of what’s potentially coming down the pipeline.

Other pieces of legislation include $7 billion more borrowing to pay off overdue bills (now at $10.7 billion), which you can read about on the The State Journal-Register site here.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Monday, January 16th, 2017 Borrowing, Debt Crisis, Fiscal Policy, Government, Income, Political Parties, Taxes Comments Off on Illinois ‘Grand Bargain’ Legislation Includes 32 Percent Personal Income Tax Hike

Illinois Graduated Income Tax Plan To Be Voted On Tuesday

Next week, the Illinois Senate looks to be taking up the issue of income taxes. Rick Pearson reported on the Chicago Tribune website this morning:

A key Democratic state senator said Thursday he will seek a vote Tuesday on his controversial plan to ask voters to amend the state constitution to replace Illinois’ flat-rate income tax with a graduated tax based on the amount of income earned.

“We understand it is a difficult choice, but we’re simply asking that the voters be allowed to weigh in and make a decision about tax policy and how Illinois should tax income,” Sen. Don Harmon of Oak Park said during an appearance between proponents and opponents of the plan before the Tribune editorial board…

(Editor’s note: Bold added for emphasis)

Opponents claim a graduated income tax would just be a substitute for the expiring temporary income tax hike Illinois Democrats pushed through at the beginning of 2011. I blogged back on January 13, 2011:

The legislation that was pushed through by Democratic lawmakers, who have controlled Illinois state government since 2003, hikes the 3 percent personal income tax rate to 5 percent until 2015, when the rate is supposed to drop to 3.75 percent…

As for the chances of the graduated income tax becoming reality? Pearson added:

Prospects for achieving a three-fifths vote of senators in the Democratic-controlled chamber are considered good, getting the same super-majority in the Democratic-led House is believed questionable at best…

Still- any Illinois readers out there not liking the proposed changes should contact their state legislators ASAP.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Pearson, Rick. “Illinois graduated income tax vote next week.” Chicago Tribune. 25 Apr. 2015. (http://www.chicagotribune.com/news/politics/clout/chi-illinois-graduated-income-tax-vote-next-week-20140424,0,3929251.story). 25 Apr. 2015.income tax

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Chicago Wakes To Proposed Property Tax Hike On April Fool’s Day

Many Chicagoans probably wish what’s being widely-reported in the local news this morning about a proposed property tax hike is just a silly April Fool’s joke.

It’s not.

Fran Spielman wrote on the Chicago Sun-Times website last night:

Chicago property owners will face $250 million in property tax increases over five years while city employees make increased pension contributions that will cost them at least $300 more a year, under landmark reforms unveiled Monday…

The new revenue the mayor had promised only after pension reform will come in the form of $50 million property tax increases for five straight years, beginning next year and continuing through 2019.

Top mayoral aides estimate that would cost the owner of a home valued at $250,000 with an annual property tax bill of $4,000 roughly $58 more or $290 over the five-year period. That’s on top of expected increases for the Chicago Board of Education and Chicago Park District…

(Editor’s note: Bold added for emphasis)

A couple of thoughts here:

First off, is anyone really surprised this is happening?

Regular readers of this blog shouldn’t be.

Higher fees, fines, and taxes. Less government services.

I’ve been squawking this for quite some time now.


“Black Dynamite- Who saw that coming?”
YouTube Video

Second, a $250,000 home? When discussing a Chicago Board of Education property tax hike last August, I blogged:

$230,000? You’d be hard-pressed to find a home for that little money in my former stomping grounds on the Northwest Side.

The same holds true for a $250,000 one (especially if it’s a property big enough for a family and doesn’t require a ton of work).

Which means many of my old neighbors will be coughing up significantly more than just $58 annually/$290 over five years as a result of this proposed hike.

And they already pay a big chunk of change to the City’s coffers.

Third, Spielman added last night:

The bottom line, according to Emanuel, is a plan that spreads the burden between employees, retirees and homeowners without raising property taxes so high that it triggers a mass exodus to the suburbs…

“Mass” being the key word here, because an exodus has already started. Former Chicago residents who have awakened to the “writing on the wall” are moving to the suburbs (yours truly included), leaving Cook County, and departing the state.

The push to make “temporary” personal and corporate income tax hikes permanent and the pursuit of class warfare in the form of a proposed millionaire tax hike by the ruling political party in the city, county, and state certainly don’t help the situation either.

Fourth, I can’t stand when tax hikes are proposed despite the lack of significant belt-tightening. Think the City of Chicago is as lean-and-mean as it possibly can be with its operations and set-up?

As long as 50 aldermanic wards exist, I’d argue no.

Fifth, as it stands right now, there’s still a state-required $600 million contribution due next year from the City to stabilize police and fire pension funds that this proposed property tax hike doesn’t address and has to be dealt with. Hal Dardick an Bill Ruthhart reported on the Chicago Tribune website this morning:

But the proposal the mayor and his top aides outlined late Monday would not address huge pension shortfalls for Chicago police, firefighters and teachers. Nor would it deal with the city’s most immediate, pressing financial problem: a state requirement to pay a whopping $600 million more toward police and fire pensions next year, a provision that could lead to a combination of tax increases, service cuts and borrowing

(Editor’s note: Bold added for emphasis)

You read right. Possibly more “tax increases, service cuts and borrowing” coming down the line shortly for Chicago residents.

Stay tuned…

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Spielman, Fran. “Pension deal pinches city workers and taxpayers.” Chicago Sun-Times. 31 Mar. 2014. (http://politics.suntimes.com/article/chicago/exclusive-pension-deal-pinches-city-workers-and-taxpayers/mon-03312014-821pm). 1 Apr. 2014.

Dardick, Hal and Ruthhart, Bill. “Emanuel’s pension fix: Shrink benefits, raise taxes.” Chicago Tribune. 1 Apr. 2014. (http://www.chicagotribune.com/news/local/ct-rahm-emanuel-pension-property-tax-increase-met–20140401,0,1662095,full.story). 1 Apr. 2014.

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Tuesday, April 1st, 2014 Borrowing, Class Warfare, Debt Crisis, Education, Entitlements, Fiscal Policy, Government, Political Parties, Public Safety, Spending, Taxes, Wealth Comments Off on Chicago Wakes To Proposed Property Tax Hike On April Fool’s Day

Misled: Illinois Governor Pat Quinn Wants 2011 ‘Temporary’ Income Tax Hikes Made Permanent

“He said he would, and now that the election is over, Governor Quinn is ready to raise the state income tax.

The governor says he intends to propose increasing the state income tax by 33 percent

The governor said he views his defeat of Republican Bill Brady, who opposed a tax hike as a vote to deal with the state budget and raise taxes.”

-FOX 32 (Chicago) website, November 8, 2010

“Gov. Pat Quinn said today he will sign a major income tax increase as soon as it hits his desk and rejected criticism that he had misled taxpayers by saying during his campaign he would only sign a smaller increase…

Quinn said ‘no’ when asked if he had been dishonest with taxpayers for campaigning during the 2010 election on a 1 percentage point increase in the income tax rate but now agreeing to sign the 2 percentage point hike.

The governor sought to justify the larger increase in part by saying fiscal experts had told leaders the state’s financial problems were escalating in the last two months.

‘Our house was burning,’ Quinn said. ‘Our fiscal house was burning.’”

Chicago Tribune website, January 12, 2011

“Gov. Pat Quinn today signed a major income tax increase the Legislature passed earlier this week.

The Democratic governor’s signature on the legislation means the 67 percent increase in the personal income tax increase takes effect immediately. Corporate income taxes also rose 46 percent…”

Chicago Tribune website, January 13, 2011

“The legislation that was pushed through by Democratic lawmakers, who have controlled Illinois state government since 2003, hikes the 3 percent personal income tax rate to 5 percent until 2015, when the rate is supposed to drop to 3.75 percent. However, the last time income tax rates in the ‘Land of Lincoln’ went up in 1989, politicians also claimed it was as a temporary increase to combat a financial ‘rough patch.’ But the rates never came down and by 1993 were designated permanent. Until now, that is…”

Survival And Prosperity post, January 13, 2011

“In his election-year budget speech Wednesday, Gov. Pat Quinn called on lawmakers to make permanent the 67 percent temporary income tax increase they approved in 2011

Quinn’s budget speech was the first time he directly addressed what should be done about the pending expiration of much of the temporary tax increase. When lawmakers approved raising the state’s personal income tax rate from 3 percent to 5 percent, they stipulated that the rate should drop to 3.75 percent on Jan. 1, 2015…”

The State Journal-Register (Springfield), March 26, 2014

(Editor’s note: Italics added for emphasis)

Let me guess. “Our fiscal house is burning.”

Something’s burning alright. And Governor Quinn’s wearing them below his waist.

“Facts are stubborn things, and it’s time to set the record straight…”

-Illinois Governor Pat Quinn, Chicago Tribune opinion piece, January 19, 2011

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

“Pat Quinn Plans Income Tax Increase After Elected Governor.” FOX 32. 8 Nov. 2010. (http://www.myfoxchicago.com/story/17817497/pat-quinn-plans-income-tax-increase-after-elected-governor). 26 Mar. 2014.

Long, Ray and Pearson, Rick. “How Democrats wrangled the tax votes in
Springfield.” Chicago Tribune. 12 Jan. 2011. (http://articles.chicagotribune.com/2011-01-12/news/ct-met-tax-hike-how-did-it-pass-20110112_1_income-tax-tax-votes-senate-president-john-cullerton). 13 Jan. 2011.

Long, Ray. “Governor signs income tax increase.” Chicago Tribune. 13 Jan. 2011. (http://newsblogs.chicagotribune.com/clout_st/2011/01/governor-signs-income-tax-increase.html). 13 Jan. 2011.

Finke, Doug. “Quinn makes case to leave state income tax increase in place.” The State Journal-Register. 26 Mar. 2014. (http://www.sj-r.com/article/20140326/NEWS/140329542). 26 Mar. 2014.

Quinn, Pat. “Border Wars.” Chicago Tribune. 19 Jan. 2011. (http://articles.chicagotribune.com/2011-01-19/opinion/ct-oped-0119-illinois-20110119_1_world-class-universities-and-research-budget-reforms-border-wars). 26 Mar. 2014.

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Thursday, March 27th, 2014 Government, Income, Political Parties, Taxes Comments Off on Misled: Illinois Governor Pat Quinn Wants 2011 ‘Temporary’ Income Tax Hikes Made Permanent

Wisconsin Cuts Taxes While Illinois Looks To Make 2011 ‘Temporary’ Tax Hikes Permanent

Throughout the years, I’ve known/met a number of Illinois residents who can’t stand Wisconsin. Mostly from the Chicago area, they equate Wisconsin and its residents as being unsophisticated clowns.

I wonder if they haven’t noticed by now that the only circus around is in the “Land of Lincoln.”

While Illinois falls deeper into an economic abyss (public pension fix my butt), Wisconsin seems to have gotten their finances under control and look to be on the path to prosperity.

So much so they’re cutting taxes. Again.

Patrick Marley and Jason Stein reported on the Milwaukee Journal Sentinel website Monday afternoon:

Lowering taxes for the third time in less than a year, Gov. Scott Walker signed his $541 million tax cut bill in a ceremony Monday at a farm in Cecil as he travels through central and northern Wisconsin touting it.

Speaking at Horsens Homestead Farms, about 35 miles northwest of Green Bay, Walker called it a great day for Wisconsin taxpayers and a sign of the state’s shifting financial fortunes in recent years.

“Now, instead of billion dollar budget deficits, we have a surplus — and today that money is on its way to the workers, parents, seniors, property owners, veterans, job creators and others. You deserve to keep as much of your hard-earned money as possible — because after all, it is your money,” Walker said.

With growing tax collections now expected to give the state a $1 billion budget surplus in June 2015, Walker’s tax proposal will cut property and income taxes for families and businesses, and zero out all income taxes for manufacturers in the state.

Though the state’s tax revenue is increasing, GOP lawmakers and Walker are trimming state spending slightly for the next three years rather than increasing it

(Editor’s note: Italics added for emphasis)

Meanwhile, across the Cheddar Curtain in Illinois there’s this on the website of The State Journal-Register (Springfield). Doug Finke reported Friday:

Hundreds of employees would be laid off, state facilities would be closed and thousands of prison inmates released without supervision, state agency directors told senators Friday during a hearing to gauge the effect of possibly severe spending cuts next year.

During a more than three-hour joint hearing of the two Senate Appropriations committees, agency after agency warned of drastic consequences should they be forced to cut their current budgets by 20 percent.

“There would be extreme consequences for the economy across Illinois,” warned Ben Winick of Gov. Pat Quinn’s budget office. “Over a dozen state facilities would have to close. Thousands of state employees would have to be laid off.”

The hearing occurred just days before Quinn is scheduled to finally deliver his budget outline for the fiscal year that starts July 1…

Translated? Illinois residents, this is what will happen if you don’t support making the Democrat-led temporary 67 percent personal income tax hike and 46 percent corporate income tax hike implemented in January 2011 permanent next year.

I hear Governor Quinn will be delivering his budget plan tomorrow.

Instead of ridiculing Wisconsin, us FIBs (F***ing Illinois Bastards as we’re known by up there) might want to start emulating our neighbors to the north in certain respects before we completely destroy Illinois.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Marley, Patrick and Stein, Jacob. “Scott Walker signs tax cut legislation.” Milwaukee Journal Sentinel. 24 Mar. 2014. (http://www.jsonline.com/news/statepolitics/scott-walker-set-to-sign-tax-cut-legislation-b99231851z1-251936261.html). 24 Mar. 2014.

Finke, Doug. “State agencies outline cuts if forced to make 20% reductions.” The State Journal-Register. 21 Mar. 2014. (http://www.sj-r.com/article/20140321/NEWS/140329821). 24 Mar. 2014.

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Tuesday, March 25th, 2014 Debt Crisis, Deficits, Entitlements, Fiscal Policy, Government, Political Parties, Spending, Taxes Comments Off on Wisconsin Cuts Taxes While Illinois Looks To Make 2011 ‘Temporary’ Tax Hikes Permanent

Illinois Millionaire Tax Hike Could Pass As Part Of Class Warfare Push By Democrats

While I’ve been putting a lot of time lately into my offshore Web projects, Illinois Democrats have been grabbing the local headlines as they replicate President Obama’s class warfare strategy to win votes in November. Monique Garcia, Ray Long, and Maura Zurick reported on the Chicago Tribune website last Friday:

Illinois Democrats went all-in Thursday with their election-year class warfare theme as Speaker Michael Madigan pitched the idea of asking voters to raise taxes on millionaires, Senate President John Cullerton advanced a minimum-wage increase and Gov. Pat Quinn compared wealthy opponent Bruce Rauner to TV villain Mr. Burns…

The newest front in the campaign battle came as Madigan held a rare news conference to announce he wants lawmakers to put a question on the Nov. 4 ballot asking voters whether the state should raise the income tax by 3 percentage points on those who make more than $1 million a year.

The powerful Democratic speaker said the tax hike on millionaires is a way to generate more than $1 billion for elementary and high schools. Madigan based his calculations on what he said are roughly 13,675 millionaires that lived in Illinois in 2011, brushing aside a question about whether such a tax hike might drive them out of the state.

“Well, if they’re in Illinois today, they’re probably so much in love with Illinois that they’re not going to leave,” Madigan said

(Editor’s note: Italics added for emphasis)

I’m not as optimistic as the 71-year-old Speaker of the House is about Illinois millionaires sticking around if they’re targeted with a tax hike.

After all, money typically gravitates to where it’s being treated the best.

And recent demographic data suggests Chicagoland and Illinois residents may not be “so much in love” with the area as Mr. Madigan claims.

That includes the rich as well.

“Cook County’s population grew by 17,000 people in 2012, about .3 percent- but much of that gain came from immigrants, according to Census Bureau estimates released Thursday.

The figures showed that about 32,000 more domestic residents moved out of Cook County than moved in. But a net increase of 17,000 immigrants, along with a high ratio of births over deaths, contributed to an overall gain for the county…”

Chicago Sun-Times website, March 13, 2013

Moving Out
The top outbound states for 2013 were:

1. New Jersey
2. Illinois
3. New York
4. West Virginia
5. Connecticut
6. Utah
7. Kentucky
8. Massachusetts
9. New Mexico”

-United Van Lines press release, January 2, 2014

“As the Great Recession churned job prospects for many, Cook County lost about 13,000 residents with six-figure household incomes to other places, despite the widely hyped revival of downtown housing and jobs…”

Crain’s Chicago Business website, February 14, 2014

“Roughly 13,675 millionaires that lived in Illinois in 2011”

Should Illinois Democrats jack up their income taxes, I suspect the number of Illinois millionaires right before the tax hike is implemented will plummet. Revenue will follow. Out-of-state vacation homes in Indiana and Wisconsin will be declared as primary residences.

“A way to generate more than $1 billion for elementary and high schools”

I highly doubt that.

So does the proposed millionaire tax hike have a chance of becoming reality?

Consider what Greg Hinz blogged on the Crain’s Chicago Business website Friday:

Springfield Democrats have such big legislative majorities that they won’t need any Republican votes to pass the measure if they hang together. And Springfield insiders are saying that odds are much better that Democrats will unify behind the speaker’s proposal- which, after all, would affect only millionaires like Bruce Rauner- than behind another plan being pushed by Senate Democrats to implement a graduated income tax, which would affect far more voters.

Stay tuned. If you can stomach it.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Garcia, Monique, Long, Ray, and Zurich, Maura. “Illinois Democrats go all-in on class warfare theme.” Chicago Tribune. 21 Mar. 2014. (http://articles.chicagotribune.com/2014-03-21/news/chi-speaker-madigan-proposes-asking-voters-to-raise-taxes-on-wealthy-20140320_1_tax-hike-bruce-rauner-income). 24 Mar. 2014.

Hinz, Greg. “GOP leaders blast Madigan’s millionaires tax, but idea likely has legs.” Greg Hinz On Politics.” Crain’s Chicago Business. 21 Mar. 2014. (http://www.chicagobusiness.com/article/20140321/BLOGS02/140329950/gop-leaders-blast-madigans-millionaires-tax-but-idea-likely-has-legs). 24 Mar. 2014.

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Monday, March 24th, 2014 Class Warfare, Demographics, Education, Fiscal Policy, Government, Political Parties, Population, Spending, Taxes, Wealth Comments Off on Illinois Millionaire Tax Hike Could Pass As Part Of Class Warfare Push By Democrats

Repeal Of Illinois ‘Temporary’ Income Tax Hikes Questioned

Short of some other revenue-generating scheme replacing it, the “temporary” 67 percent personal income tax hike and 46 perent corporate tax hike pushed through by Illinois Democrats and signed off by Governor Pat Quinn (D-Chicago) in January 2011 are starting to look permanent.

Big shock there.

Back at the beginning of 2011, the State of Illinois was on the hook for an estimated $8 billion in unpaid bills. “Temporary” increases in personal and corporate income taxes were passed- as I understood it- to help pay down the massive amount owed.

But as I blogged less than two weeks ago on November 25:

This morning, I read that the backlog is now approaching $9 billion.

Big fail there.

No wonder there’s increased chatter then about Illinois Democrats- who’ve controlled state government since 2003- making those “temporary” tax hikes permanent. Ray Long reported on the Chicago Tribune website Saturday:

The harshest Republican critics of a new law to wipe out the state’s $100 billion government worker pension debt argued that the plan should have saved more money or Illinois’ temporary income-tax increase that’s set to expire will never go away.

A look at the state’s finances, however, shows it’s a good bet the tax hike will stick around whether or not lawmakers approved last week’s major overhaul of the retirement systems. If lawmakers allow the tax increase to expire as scheduled at the end of 2014, the state will lose about $5 billion a year. That’s one-seventh of the state’s $35 billion operating budget.

(Editor’s note: Italics added for emphasis)

This wouldn’t be the first time supposedly temporary taxes would be made permanent by Illinois lawmakers. As I noted back on January 13, 2011:

The last time income tax rates in the “Land of Lincoln” went up in 1989, politicians also claimed it was as a temporary increase to combat a financial “rough patch.” But the rates never came down and by 1993 were designated permanent. Until now, that is.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Long, Ray. “State income tax hike doesn’t look so temporary now.” Chicago Tribune. 7 Dec. 2013. (http://www.chicagotribune.com/news/local/ct-illinois-pensions-met-1208-20131207,0,7554970.story). 8 Dec. 2013.

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Sunday, December 8th, 2013 Debt Crisis, Fiscal Policy, Government, Political Parties, Spending, Taxes Comments Off on Repeal Of Illinois ‘Temporary’ Income Tax Hikes Questioned

State Of Illinois Unpaid Bills Could Reach $9 Billion By End Of December

More bad news for the State of Illinois on the financial front.

In January 2011, the state government was on the hook for an estimated $8 billion in unpaid bills. That month, massive personal and corporate income tax hikes went into effect in the “Land of Lincoln.”

This morning, I read that the backlog is now approaching $9 billion.

Doug Finke reported on The State Journal-Register (Springfield, Illinois) website Sunday:

According to Comptroller Judy Baar Topinka’s office… payment delays are once again getting longer. The backlog of bills waiting to be paid in the comptroller’s office has grown by $3 billion since the spring, when the state was flush with tax revenue…

[Topinka spokesman Brad] Hahn said the office believes the total will hit $9 billion by the end of December, exactly where Topinka predicted it would be last summer. It is the second year in a row the backlog will sit at about $9 billion at the end of the calendar year.

(Editor’s note: Italics added for emphasis)

Any other Illinois readers starting to think those January 2011 “temporary” tax hikes won’t be so temporary after all?

I blogged back on January 13, 2011:

The legislation that was pushed through by Democratic lawmakers, who have controlled Illinois state government since 2003, hikes the 3 percent personal income tax rate to 5 percent until 2015, when the rate is supposed to drop to 3.75 percent. However, the last time income tax rates in the “Land of Lincoln” went up in 1989, politicians also claimed it was as a temporary increase to combat a financial “rough patch.” But the rates never came down and by 1993 were designated permanent. Until now, that is.

In an attempt to gain more support among Democrats (no Republicans in the Illinois House or Senate backed the legislation), the measure calls for lowering the personal income tax rate in 2025 to 3.25 percent.

For businesses, the 4.8 percent corporate income tax jumps to 7 percent until 2015, when it would drop to 5.25 percent. In 2025, the corporate rate is then supposed to fall back down to 4.8 percent.

If those “temporary” tax hikes in Illinois are indeed repealed in 2015, look for the State of Illinois to find some other way(s) to make up for that lost revenue.

Source:

Finke, Doug. “Bill backlog growing again and so are payment delays.” The State Journal-Register. 24 Nov. 2013. (http://www.sj-r.com/top-stories/x450320106/Bill-backlog-growing-again-and-so-are-payment-delays?zc_p=0). 25 Nov. 2013.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Monday, November 25th, 2013 Debt Crisis, Fiscal Policy, Government, Political Parties, Taxes Comments Off on State Of Illinois Unpaid Bills Could Reach $9 Billion By End Of December

Illinois Looks To End Budget Year $8 Billion In The Hole

I caught the following last night on the “Clout Street” section of the Chicago Tribune website:

Topinka: State will be $8 billion in hole

Illinois Comptroller Judy Baar Topinka today said the state will end the budget year $8 billion “in the red” unless changes are made.

“The prescription for our financial recovery is simple: stop spending more than we bring in,” said Topinka, a Republican. “But sadly, that still has not occurred.”

Democratic Gov. Pat Quinn’s administration agreed with Topinka’s calculation.

But apparently not the prescription. Recent events demonstrate that Democratic-controlled Illinois is stuck on tax-and-spend mode. I wrote back on January 15:

Well, it’s official. Residents and businesses in Illinois have been hit with massive tax hikes as the state suffers from serious financial woes. From the Chicago Tribune’s Ray Long this afternoon:

Gov. Pat Quinn today signed a major income tax increase the Legislature passed earlier this week.

The Democratic governor’s signature on the legislation means the 67 percent increase in the personal income tax increase takes effect immediately. Corporate income taxes also rose 46 percent.

The legislation that was pushed through by Democratic lawmakers, who have controlled Illinois state government since 2003, hikes the 3 percent personal income tax rate to 5 percent until 2015, when the rate is supposed to drop to 3.75 percent. However, the last time income tax rates in the “Land of Lincoln” went up in 1989, politician also claimed it was as a temporary increase to combat a financial “rough patch.” But the rates never came down and by 1993 were designated permanent. Until now, that is.

In an attempt to gain more support among Democrats (no Republicans in the Illniois House or Senate backed the legislation), the measure calls for lowering the personal income tax rate in 2025 to 3.25 percent…

For businesses, the 4.8 percent corporate income tax jumps to 7 percent until 2015, when it would drop to 5.25 percent. In 2025, the corporate rate is then supposed to fall back down to 4.8 percent.

Disturbingly, these tax hikes were implemented without meaningful streamlining of government operations. I added in that January post:

Critics of the hikes argue that they were implemented without any sweeping cuts or reform. They also point out a number of other deficiencies in the legislation. For example, allowances have been made for spending to actually increase in the coming years. According to the Chicago Tribune, the spending ceiling in each of the next four budget years is $36.8 billion in the 2012 budget year, $37.5 billion in 2013, $38.3 billion in 2014 and $39 billion in 2015.

And if one is to take Governor Quinn at his word, don’t expect him to sign off on any significant spending cutbacks any time soon. Bloomberg’s Tim Jones wrote on April 1:

For governors cutting education and health care and going after public-sector employees to balance budgets, here’s a message from Illinois Governor Pat Quinn: You’re wrong. Not mistaken, not misinformed.

“Just plain wrong,” said Quinn, 62, during a March 22 interview in his Chicago office. “I don’t buy into all these radical cuts in government as a way to make life better for ordinary, everyday people.”
Jones added:

Don’t cut, says Quinn. Build instead, he says, referring to the $5.6 billion spent in the past two fiscal years for 3,240 miles of road repair and upgrading 472 bridges.

Or borrow. Or, at least try to. Ray Long wrote in his “Clout Street” piece last night:

But the administration firmly stated that borrowing money at low-interest rates to help pay down a mounting backlog of overdue bills is “paramount to stabilizing the budget.”

Quinn has sought to borrow $8.75 billion, a figure that many lawmakers are reluctant to support.

Considering that the state of Illinois currently has a a backlog of more than $8 billion in unpaid bills, pensions underfunded by more than $80 billion, and retiree health care liabilities totaling $40 billion (Bloomberg data), I can’t say I’m too optimistic about the state of Illinois effectively resolving this crisis without hitting up Illinois taxpayers for much more of their hard-earned cash.

Sources:

Long, Ray. “Topinka: State will be $8 billion in hole.” Chicago Tribune. 27 Apr. 2011. (http://newsblogs.chicagotribune.com/clout_st/2011/04/topinka-state-will-be-8-billion-in-hole-.html). 28 Apr. 2011.

Jones, Tim. “Illinois’s Quinn Says Budget-Cutting Governors Wrong.” Bloomberg. 1 Apr. 2011. (http://www.bloomberg.com/news/2011-03-30/illinois-s-quinn-says-budget-cutting-governors-have-it-wrong.html). 28 Apr. 2011.

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Thursday, April 28th, 2011 Borrowing, Debt Crisis, Deficits, Entitlements, Fiscal Policy, Government, Health, Political Parties, Spending, Taxes Comments Off on Illinois Looks To End Budget Year $8 Billion In The Hole
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