Illinois revenue and urban legends.

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Fred,

You state: “It is a problem of a state that won’t raise sufficient revenue to pay its bills. There is too little revenue and too little spending on the real needs of the state.”

But Illinoisans are the highest taxed state per capita in the nation. How can we not be raising sufficient revenue unless our bills are “even higher”?

Isn’t the real issue, the corrupt bargains between politicians (Republicans and Democrats) and Union leaders? The ever escalating pensions and tricks and gimmicks that allow state and municipal workers to generate a pension that in some cases is higher than the highest salary these individuals ever had? That state and municipal workers in Illinois are the only slice of the middle class that has continued to see strong net income (including benefits and pensions) increases, while the rest of the middle class saw stagnant if not declining total compensation?

While revenue likely should be increased to pay down the horrendous debts we’ve accumulated as a state, city and municipal workers should shoulder their part as well. If not, this remains a stalemate that will end with the first bankruptcy of a state. Not to put to fine a point on it, but if both sides don’t come together on this issue the state “WILL”  go bankrupt, whether Rauner is there, or another future ex-convict of a governor.

Josh McClure

Josh,

As a guy interested in taxes, revenue and finances, I wonder what list you are citing that puts Illinois as number one, the highest taxed, in the nation.

Your comment to this blog is full of urban legends.

No matter. I agree that the working people of Illinois are over-taxed. But that is because the richest people are under-taxed.

You must be aware that Illinois has a flat income tax. That means that the heaviest tax burden falls on those that earn the least. It means that members of the Pritzker family who own the Hyatt Hotel chain and live in Illinois, are taxed on their huge income at the same rate as the maid that cleans the Hyatt’s rooms.

It also means the local city and county governments must rely on property taxes to make up for the fact that the state doesn’t raise enough revenue, leaving the state to rely on the taxes of its least wealthy citizens.

How can a state pay its bills when it taxes the people the most who have no extra money? You can’t raise revenue by taxing people who have no money.

Reliance on property taxes is an additional burden on those who can least afford it.

Those like Bruce Rauner have no trouble paying their property taxes on their multiple homes. Plus they have the accountant and lawyers to find tax loop holes. But those of us in Chicago, who struggle every month to meet our mortgage payment, have just seen a massive increase in property taxes.

Again it is a burden on those who can least afford it.

To pay for their schools, local school districts must tax the maximum the law allows to make up for the fact that the state doesn’t have the money to take care of what the Illinois Constitution says is a primary responsibility: Funding public education.

This is less a burden on towns on the North Shore than it is on towns like Robbins and Harvey.

The result is that the support for an Illinois student’s education depends on their zip code.

Or really their skin color and their economic class.

That is the real reason for the current situation, Josh. Not pensions and labor contracts.

Ask the members of AFSCME, faced with a take-it-or-leave-it bargaining position by the Governor, about the so-called sweet-heart deals for state workers.

I agree with you about the declining living standards of the working class in this state. But your solution is to pull state workers down into the pit instead of stopping state giveaways to private companies.

You must know that the largest corporations in Illinois collect and keep the state income tax they collect. They have done it for years under both Republican and Democratic administrations.

My pension is a contract. You believe in the sanctity of a legal and mutually agreed upon contract, don’t you?

But again. No matter. The Illinois Supreme Court believes in it and has ruled that our pensions are a legal contact and guaranteed by our state’s constitution.

As to who has and who has not paid their share, as a financial expert you are aware that state workers and teachers have never missed a payment into their pension funds while the state went decades without making any of their payments.

If the state were a private corporation they would be charged with a federal crime for failing to make their payments.

Someone would go to jail.

I’m no lawyer, but your threat of state bankruptcy goes counter to my understanding of the law. Since the state has the power to raise revenue, the courts will order it to if they, the legislature, does not raise revenue on their own.

Fred

10 thoughts on “Illinois revenue and urban legends.

  1. Sorry, since 2010 we are 6th in population…meaning the total ammount of taxes paid…is pretty much right where it ought to be logically

  2. When looking at total tax burden , real estate, income,sales taxes, we are 9th in the country according to a recent list.
    Has anybody proposed increasing income tax and decreasing real estate taxrs an equivalent amount?
    Nope, vested interests. Local pols would not get their skim, it would go to the Springfield guys.

    • Anonymous (no return email).
      You need to read the rules.
      From my posted “rules of engagement”:

      This is my personal blog.

      This blog does not shy away from contentious areas.

      With that in mind, the basic rules of engagement are those of civility. The usual stuff: Do not troll; do not flame; don’t engage in ad hominem attacks; treat the other people on this blog with respect. Remember that my audience are mainly teachers, educators and activists, and you’ll get much further at convincing people with well-thought-out arguments than with rants.

      And finally, I reserve the right to maintain this environment with all the tools at a blogmaster’s usual disposal — mercilessly closing threads, deleting comments, and banning people as needed.

  3. Josh said “The ever escalating pensions and tricks and gimmicks that allow state and municipal workers to generate a pension that in some cases is higher than the highest salary these individuals ever had?”

    No municipal or state middle class worker ever gets a pension that is higher than the salary they made while working. But politicians do ! Case in point is our former Mayor Daley who gets three pensions – all three send him monthly payments : State legislature, State’s Attorney, City of Chicago.

    Now why does he get to collect all three, when I can not collect my Social Security (even though I paid into it before I worked for the Municipality) because I get a pension.

  4. The old progressive tax “solution” will not work. The uber “rich” will simply “move” away and use the same pols as consultants to help them avoid the tax. Notice the many pols that are in the real estate appeal law firms. The progressive tax is socialist dream – Illinois is not NY or California – people do have not stay here and many of the rich have already other addresses.

    The entire tax issue for Illinois residents is very high and growing (soda tax). I read these studies and question if the included all the taxes, tolls, fees etc. It seems like one piece of puzzle (income tax) is always called out.

  5. Move to where?

    States that have higher income taxes than we do?

    Because almost all of them do.

    I think you minimize the relevancy of Chicago as major metropolitan area.

    What’s more, that tired old canard “the rich will just leave” hasn’t caused an exodus in California and Minnesota which enacted higher income taxes.

    Trickle down doesn’t work. It’s never worked. Smart people know it’s a red-herring for the rubes.

    Source: every reputable economist of the 20th and 21st century

  6. Hmmm… Illinois income taxes were lowered when Rauner entered office, but Illinois has lost population at an accelerated rate in the past two and a half years. In fact, more than any other state in each of the last three years. Why, that flies in the face of conservative logic! If only they relied upon facts!

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