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Can Illinoisans Afford Another Income Tax Hike

Can Illinoisans Afford Another Income Tax Hike

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Published by: Illinois Policy Institute on Oct 18, 2012
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10/16/2013

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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. Tere’s no room le in the amily budget oranother tax hike. Tey’re tapped out.According to Bureau o Labor Statistics data, the averageMidwestern household is made up o 2.5 persons andhas a beore-tax income o $58,417. Roughly $13,000goes to pay ederal, state, local and other taxes, leavingabout $45,000 or household spending each year.
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Much o this spending is tied up in things that theaverage amily needs to stay aoat – such as mortgagepayments, rent, car payments, groceries and health care.Tese items are necessary. Families cannot easily cutrom this piece o the pie.Te little money that’s le over at the end o the monthis spent on things like amily movie nights, trips tograndma’s house and kids’ soball 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 careproducts & services$518 (1%)
Families tapped out: No room for tax hike
$45,278
Source: U.S. Bureau of Labor Statistics, Consumer expenditures in 2010 
Oct. 18, 2012
 
 Te amily budget shrinks when lawmakers increasetaxes. With “axmageddon” on the horizon, the ederalgovernment is looking to squeeze $3,452 in higher taxesrom Illinoisans, which comes in the orm o expiringtax cuts and new taxes under ObamaCare.
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Tis is, o course, on top o the state’s record 67percent income tax hike on Illinoisans in 2011, whichcosts amilies one week’s 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 revenuesueled the state’s habitual overspending and allowed itto dodge structural reorms.Illinois’ economic and scal condition worsenedaer the tax hike. Unemployment is outpacing thenational average, with nearly 600,000 Illinoisanslooking or work.
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Illinois’ stack o unpaid bills is now atroughly $8.5 billion.
5
And the state’s ununded pensionliabilities have skyrocketed to more than $200 billion.
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 Te tax hike ailed.
$3,452 in 2013
Taxmageddon: Expiring tax cuts
and ObamaCare’s new taxes
$625 in 2015
Progressive tax vs. 2015 sunset rate of 3.75%
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Instead o improving Illinois’ scal ooting, Gov. Quinncontinues to aunt his disconnect with economicreality: he’s already planning another multi-billion dol-lar tax hike. Passing a progressive income tax is “one o my goals beore I stop breathing,” Quinn said.
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 Advocates or a progressive tax argue that it would only increase taxes on the super wealthy. Tis is ar romthe truth. A closer look at a tax hike plan pushed by a union-unded liberal policy group shows why. Teirprogressive tax plan would increase taxes on 85 percento 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 aer the rate hikepartially sunsets to 3.75 percent rom 5 percent in 2015.
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Specically, 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 don’tunderstand that taxing the little money amilies havele at the end o the month will not solve Illinois’ direscal problems. Worse, causing urther cuts in theamily budget will only give people another reason toleave the state.Illinoisans shouldn’t be orced to contribute less totheir church, save less or retirement or invest less ineducation.Tese cuts can and should be avoided. Instead o orcing amilies to make dicult cuts, state leadersshould allow amilies to keep more o what they earn.Lawmakers must put taxpayers rst by cutting spendingand cutting taxes.
Benjamin VanMetre
is the Senior Budget and ax Policy  Analyst at the Illinois Policy Institute. Te Illinois Policy Institute’s 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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