T a x & B u d g e t
B r i e f
M a y 1 1 , 2 0 1 1
To pay for Gov. Quinn’s tax hikes and the rising cost of state pensions, Illinoisans will lose outon an extra week’s paycheck this year. MostIllinoisans would instead prefer to see pensionbenets reduced for current employees.Graphic 1 (next page) illustrates the averagespending by household on major expenditures,including federal, state and local taxes. Allexpenditures are estimated for scal year 2012, which is the rst full year under Gov. Quinn’snew tax hikes (see Methodology section).If Gov. Quinn’s tax increases had not beenpassed, the average Illinois household wouldspend $10,988 in state and local taxes in scalyear 2012. This amount represents more thanthe combined annual spending on food ($7,013)and healthcare ($3,805) for an average family.However, Graphic 2 shows how the state andlocal tax bill will climb by $1,594 thanks to Gov.Quinn’s tax increase. This increase is nearly equal to what an average Illinois householdspends annually on clothing: $1,699. It also willraise the average combined federal, state andlocal tax bill to $12,582. As a result, this highertax bill will mean fewer dollars for all otherspending.Graphic 2 also shows the spending reductionsassuming an across-the-board cut in householdspending. For instance, the housing budget willhave to fall by an estimated $517 dollars that will instead be sent to Springeld. (Better planto turn down the thermostat next winter.) Alternatively, another way to look at the higherstate tax bill is to estimate the additionaltime spent working to pay for it. Graphic 3shows that without Gov. Quinn’s tax hikes,the average Illinois household would work 58minutes per workday to pay their state and localtax bill. Graphic 4 shows the added tax loadresulting from the tax hike; the average Illinoishousehold will have to work
nine more minutes a day
to pay their local state or tax bill – whichcomes out to 67 total minutes of each workday going to state and local taxes alone. While an extra nine minutes per workday may not sound too onerous, consider thatthis works out to a full workweek over theentire year. That’s right. In order to pay Gov.Quinn’s higher tax bill, the average household will have to send an entire week’s paycheck toSpringeld. This isn’t what voters want. A January 2011poll of 500 likely voters commissioned by theIllinois Policy Institute asked Illinoisans how to address the state’s increasing pension costs.Sixty-four percent of respondents said thatbenets for current public employees should bereduced, while 26 percent felt that Illinois statetaxes should be raised (Graphic 5).In other words, state leaders are pushing a“solution” to the pension problem in the formof tax hikes that is directly opposed to what themajority of voters prefer, which is prospectivepension benet reform.
J. Scott Moody
is a senior fellow for Budget and Tax Policy for the Illinois Policy Institute.
Average Illinois Household to Work an Extra Week to Payfor Gov. Quinn’s Tax Hikes, Public Pensions
“…The state is on target to end its scal year June 30 with an $8.3 billion blot of red ink on itsbooks. … The political problem is explaining to taxpayers why that is the case even after thestate income tax was raised by 67 percent. Most of the tax hike is needed to make the state’spension payments,
and the rest basically is needed to make up for lost federal Medicaid money.”
– Doug Finke, Statehouse Insider column, State-Journal Register, May 1, 2011
Page 2 of 4
State leaders are pushing a “solution” to the pension problem in the form of tax hikes that is directly opposed towhat the majority of voters prefer.
Graphic 2.Major Expenditures per Illinois Household WITH Gov. Quinn’sTax Hikes (Fiscal Year 2012)
Federal Taxes; $25,612State and Local Taxes;$12,582Food; $6,806Housing; $17,051
Clothing; $1,649Transportation; $8,632Healthcare; $3,693Entertainment; $2,965Insurance$6,026Other; $5,713
Source: U.S. Department of Commerce: Bureau of Economic Analysis and Census Bureau, U.S. Department of Labor: Bureau of Labor Statistics, Tax Foundation, Congressional Budget Ofce and Illinois Policy Institute.
Graphic 1.Major Expenditures per Illinois HouseholdWITHOUT Gov. Quinn’s Tax Hikes (Fiscal Year 2012)
Federal Taxes; $25,612State and Local Taxes;$10,988Food; $7,013Housing; $17,568
Clothing; $1,699Transportation; $8,894Healthcare; $3,805Entertainment; $3,055Insurance$6,209Other; $5,886
Source: U.S. Department of Commerce: Bureau of Economic Analysis and Census Bureau, U.S. Department of Labor: Bureau of Labor Statistics, Tax Foundation, Congressional Budget Ofce and Illinois Policy Institute.
Page 3 of 4
While an extra nine minutes per workday may not sound too onerous,consider that this works out to a full workweekover the entire year.
Graphic .Minutes of an Eight-Hour Workday Needed to Pay for MajorExpenditures per Illinois Household WITH Gov. Quinn’s TaxHikes (Fiscal Year 2012)
Federal Taxes136State and Local Taxes67Food36Housing90
Clothing9Transportation46Healthcare20Entertainment16Insurance32Other30
Source: U.S. Department of Commerce: Bureau of Economic Analysis and Census Bureau, U.S. Department of Labor: Bureau of Labor Statistics, Tax Foundation and Illinois Policy Institute. Numbers may not sum to total due to rounding.
Graphic 3.Minutes of an Eight-Hour Workday Needed to Pay for MajorExpenditures per Illinois Household WITHOUT Gov. Quinn’sTax Hikes (Fiscal Year 2012)
Federal Taxes136State and Local Taxes58Food37Housing93
Clothing9Transportation47Healthcare20Entertainment16Insurance33Other31
Source: U.S. Department of Commerce: Bureau of Economic Analysis and Census Bureau, U.S. Department of Labor: Bureau of Labor Statistics, Tax Foundation and Illinois Policy Institute. Numbers may not sum to total due to rounding.
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