can illinoisans afford another income tax hike

7/31/2019 Can Illinoisans Afford Another Income Tax Hike

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Fact Finder

Myth: Illinois can afford another income tax hike.

Fact: Families are tapped out with no room to pay for more tax hikes.

Can Illinoisans afford another income tax hike?

Squeezing more money rom Illinois amilies is not anoption. Teres no room le in the amily budget oranother tax hike. Teyre tapped out.

According to Bureau o Labor Statistics data, the averageMidwestern household is made up o 2.5 persons and

has a beore-tax income o $58,417. Roughly $13,000goes to pay ederal, state, local and other taxes, leavingabout $45,000 or household spending each year.1

Much o this spending is tied up in things that theaverage amily needs to stay aoat such as mortgagepayments, rent, car payments, groceries and health careTese items are necessary. Families cannot easily cutrom this piece o the pie.

Te little money thats le over at the end o the monthis spent on things like amily movie nights, trips tograndmas house and kids soball team ees.

Transportation$7,222 (16%)

Apparel & services$1,474 (3%)

Health care$3,265 (7%)

Entertainment$2,548 (6%)

Reading$101 (0%)

Education$1,153 (2%)

MISC.

Cash contributions$1,589 (3%)

Tobacco products& smoking supplies

$381 (1%)

Personal insurance& pensions

$5,371 (12%)

Food$5,738 (13%)

Alcoholic beverages$380 (1%)

Housing$14,762 (33%)

Miscellaneous$773 (2%)

Average annual expenditures

Average Midwest household spending by category, 2010

Personal care

products & services

$518 (1%)Families tapped out: No room for tax hike

$45,278Source: U.S. Bureau of Labor S tatistics, Consumer expenditures in 2010

Oct. 18, 2012


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Te amily budget shrinks when lawmakers increasetaxes. With axmageddon on the horizon, the ederalgovernment is looking to squeeze $3,452 in higher taxesrom Illinoisans, which comes in the orm o expiringtax cuts and new taxes under ObamaCare.2

Tis is, o course, on top o the states record 67percent income tax hike on Illinoisans in 2011, whichcosts amilies one weeks pay each year.3

Te increased revenue rom the 2011 tax hike wassupposed help Illinois get its scal house in order andpay down its overdue bills. Instead, additional revenuesueled the states habitual overspending and allowed itto dodge structural reorms.

Illinois economic and scal condition worsenedaer the tax hike. Unemployment is outpacing thenational average, with nearly 600,000 Illinoisanslooking or work.4 Illinois stack o unpaid bills is now atroughly $8.5 billion.5 And the states ununded pensionliabilities have skyrocketed to more than $200 billion.6Te tax hike ailed.

$3,452 in 2013Taxmageddon: Expiring tax cutsand ObamaCares new taxes

$625 in 2015Progressive tax vs. 2015 sunset rate of 3.75%7

Instead o improving Illinois scal ooting, Gov. Quinn

continues to aunt his disconnect with economicreality: hes already planning another multi-billion dol-lar tax hike. Passing a progressive income tax is one omy goals beore I stop breathing, Quinn said.8

Advocates or a progressive tax argue that it would onlyincrease taxes on the super wealthy. Tis is ar romthe truth. A closer look at a tax hike plan pushed bya union-unded liberal policy group shows why. Teirprogressive tax plan would increase taxes on 85 percent

o lers in Illinois.

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In act, in 31 o the 34 states with progressive incometax structures, a amily o our with a taxable incomeo $50,000 is taxed at a higher rate than what Illinoiswill tax amilies under its at tax aer the rate hikepartially sunsets to 3.75 percent rom 5 percent in 2015.1

Specically, the progressive income tax would increasethe tax bill or this amily o our by $625 in 2015. Makeno mistake; a progressive income tax would increasethe tax bill or Illinois middle class.

o make things worse, it would also destroy jobs andsap economic activity.

Quinn and other advocates or tax increases dontunderstand that taxing the little money amilies havele at the end o the month will not solve Illinois direscal problems. Worse, causing urther cuts in theamily budget will only give people another reason toleave the state.

Illinoisans shouldnt be orced to contribute less totheir church, save less or retirement or invest less ineducation.

Tese cuts can and should be avoided. Instead oorcing amilies to make dicult cuts, state leadersshould allow amilies to keep more o what they earnLawmakers must put taxpayers rst by cutting spendingand cutting taxes.

Benjamin VanMetre is the Senior Budget and ax PolicyAnalyst at the Illinois Policy Institute. Te Illinois PolicyInstitutes Fact Finder series aims to debunk myths about pub-lic policy issues that afect Illinois.

Potential taxes coming your way

illinoispolicy.org


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1 Scott Moody, Average Illinois household to work an extra week to pay or Gov. Quinns tax hikes, public pen-sions, Illinois Policy Institute (2011), http://www.illinoispolicy.org/uploads/les/WorkanExtraWeek5-11.pd

2 William Beach, Te cost o axmageddon: Impact by state and congressional district, Te Heritage Founda-tion (2012), http://th_media.s3.amazonaws.com/2012/pd/sr-110.pd

3 ed Dabrowski, Te verdict is in: Te tax hike ailed, Illinois Policy Institute (2012), http://illinoispolicy.org/uploads/les/3ReasonstoRepealtheaxHike.pd

4 ed Dabrowski, Te blame game: Illinois unemployment rate jumps to 9.1 percent, Illinois Policy Institute(2012), http://illinoispolicy.org/blog/blog.asp?ArticleSource=5090

5 Benjamin VanMetre, Facts are stubborn things, Illinois Policy Institute (2012), http://illinoispolicy.org/blog/blog.asp?ArticleSource=5018

6 Jonathan Ingram and ed Dabrowski, Pension debt more than doubles under new rules, Illinois Policy Insti-

tute (2012), http://illinoispolicy.org/news/article.asp?ArticleSource=4986

7 ed Dabrowski and Lawrence McQuillan, Progressive income tax: Money grab disguised as tax reorm, Illi-nois Policy Institute (2012),http://illinoispolicy.org/news/article.asp?ArticleSource=5149

8 Huf Post Politic, HufPost interview with Illinois Governor Pat Quinn, Hungton Post (2012), http://www.hungtonpost.com/2012/07/12/hufpost-live-interview-w_n_1669568.html

9 ed Dabrowski and Lawrence McQuillan, Progressive income tax: Money grab disguised as tax reorm, Illi-nois Policy Institute, (2012), http://illinoispolicy.org/news/article.asp?ArticleSource=5149

10 Ibid.
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can illinoisans afford another income tax hike

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