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Illinois spends, taxpayers feel the pinch

By   /   January 21, 2013  /   3 Comments

By Scott Reeder | Special to Watchdog.org

SPRINGFIELD – Is your wallet a little thinner these days?

More than likely, the state of Illinois is to blame.

About the same time the Illinois Legislature jacked up income taxes 67 percent two years ago, the federal government gave us a temporary break on how much we pay into Social Security.

That cut inadvertently softened the wallop of the state tax increase, but the relief from Washington expired at the beginning of this year.

Now we get to experience the state tax increase in all of its glory. Bureaucrats in Springfield are sucking away one extra week of our pay.

And to what end?

The state is still broke. The pension system is floundering. Government employee unions’ hunger for more dollars remains as voracious as ever.

Illinois revenues have never been higher in the Land of Lincoln’s 190-year history.

But our politicians are still crying poor.

Why? Because they are still spending money faster than they are taking it in.

Rather than curbing the spending, they’re laying the groundwork for another tax hike.

Advocates are calling it “progressive” tax reform.

Never mind that that the Illinois Constitution prohibits a graduated income tax rate; proponents are prepared to change the constitution.

Just last week, state Rep. Naomi Jakobsson, D-Champaign, introduced a proposed constitutional amendment to do just that.

The underlying reason for the proposed switch is a desire for the state to collect more money.

You’ll hear some malarkey that a progressive income tax only will make the “rich” pay more.

To see just how wrong that thinking is, just look to our neighbor to the west – Iowa. Over in the Tall Corn State, the top income tax rate is 8.98 percent. And the people who paid that rate in 2012 earned $66,105 or more.

Does anybody think that a family living on $66,000 is rich?

And yes, I’m aware that the Illinois Legislature could choose a different income level than Iowa to start taxing at the top rate. But the fact of the matter is that 31 of the 34 the states that have a progressive structure tax $50,000 at a higher marginal rate than Illinois will in 2015.

The question remains: why increase taxes at all when state revenues are at an all-time high?

“I don’t support a progressive tax because we already have enough money coming in,” said Rep. David Harris, R-Arlington Heights. “We need to look at spending … and the place to start is pensions.”

Year after year, decade after decade, the Illinois Legislature has refused to institute comprehensive pension reform. Each year we keep dumping more money into our failing pension systems.

Next year, for example, the state will allocate $6.8 billion toward pensions – almost $1 billion more than this year.

The state continues to pay its bills months late.

And even as spending increases, core government services are being cut. Our governor and Legislature seem unable to set priorities or make tough decisions.

Why give them more money?

Illinois’ problem is that it is spending too much.

And every working Illinoisan is feeling the pinch because of it.

Scott Reeder is a senior contributing editor to Watchdog.org, veteran statehouse reporter and journalist in residence at the Illinois Policy Institute. Readers can subscribe to his free reports from the Springfield by going to REEDERREPORT.COM. Contact him at sreeder@illinoispolicy.org.

 

 

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  • http://www.facebook.com/profile.php?id=806775173 Charlie Malone

    Again, Mr. Reeder is sensationalizing the issue by claiming Illinois is spending too much. The facts however, show that Illinois has a revenue problem, not an expenditure problem.

    Illinois is not a spend-happy state. Illinois has the fewest number of state employees per capita out of all 50 states. Illinois spends the fewest state dollars per student for education out of all 50 states. Studies have shown that Illinois pension benefits are in line with most other states’ pension benefits – its just that the State as employer skipped its share of payments into the pension system many years.

    Illinois is in the bottom five of all 50 states in total state expenditures per capita. Illinois is dead last among our neighboring states in total state expenditures per capita.

    Total state expenditures per capita

    Illinois: $3599
    Wisconsin: $6798
    Iowa: $5810
    Missouri $3857
    Kentucky: $5576
    Indiana $4004

    Source: http://www.statehealthfacts.org/comparemaptable.jsp?ind=32&cat=1

  • http://www.facebook.com/profile.php?id=806775173 Charlie Malone

    On the other side – revenue, compare Illinois’ individual income tax rate with those of some of our neighboring states, and you can be the judge if Illinois’ rate is too low or too high. But the way, Wisconsin has the best funded pension system out of all 50 states, because they have made all of their annual payments over the years, rather than skipping them many years like Illinois.

    Individual state income tax rates:

    Illinois: 5% (after bring 3% for 20 years)

    Iowa:
    — 0.36 percent on the first $1,428 of taxable income.
    — 0.72 percent on taxable income between $1,429 and $2,856.
    — 2.43 percent on taxable income between $2,857 and $5,712.
    — 4.50 percent on taxable income between $5,713 and $12,852.
    — 6.12 percent on taxable income between $12,853 and $21,420.
    — 6.48 percent on taxable income between $21,421 and $28,560.
    — 6.80 percent on taxable income between $28,561 and $42,840.
    — 7.92 percent on taxable income between $42,841 and $64,260.
    — 8.98 percent on taxable income of $64,261 and above.

    Wisconsin:
    — 4.6 percent on the first $10,070 of taxable income.
    — 6.15 percent on taxable income between $10,071 and $20,130.
    — 6.5 percent on taxable income between $20,131 and $151,000.
    — 6.75 percent on taxable income between $151,001 and $221,660.
    — 7.75 percent on taxable income of $221,661 and above.

    Missouri:
    — 1.5 percent on the first $1,000 of taxable income.
    — 2 percent on taxable income between $1,001 and $2,000.
    — 2.5 percent on taxable income between $2,001 and $3,000.
    — 3 percent on taxable income between $3,001 and $4,000.
    — 3.5 percent on taxable income between $4,001 and $5,000.
    — 4 percent on taxable income of $5,001 and $6,000.
    — 4.5 percent on taxable income of $6,001 and $7,000.
    — 5 percent on taxable income of $7,001 and $8,000.
    — 5.5 percent on taxable income of $8,001 and $9,000.
    — 6 percent on taxable income of $9,001 and above.

    Kentucky:
    — 2 percent on the first $3,000 of taxable income.
    — 3 percent on taxable income between $3,001 and $4,000.
    — 4 percent on taxable income between $4,001 and $5,000.
    — 5 percent on taxable income between $5,001 and $8,000.
    — 5.8 percent on taxable income between $8,001 and $75,000.
    — 6 percent on taxable income of $75,001 and above.

    The exception of being higher than Illinois is Indiana:
    which has a flat tax of 3.4 percent. But Indiana also adds 1.5 to 2% to one’s state tax return for county taxes, in addition to the county and local taxes covered by real estate taxes.

  • Kathleen K.

    Our property taxes in Northern Illinois are off the rails. When looking at tax rates, you need to factor property taxes in as well. I know Missouri, Kentucky and Iowa have low or reasonable property tax rates. In Rockford, we are paying nearly $12,000/year for a house now worth about $275,000. Most of our property tax dollars are being spent on public sector unions. Something has got to change.. and please, quit expecting the taxpayer to fund your retirement. Time to move out of Illinois.

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