Average Illinois Household to Work an Extra Week to Pay

May 11, 2011

for Gov. Quinn’s Tax Hikes, Public Pensions

“…The state is on target to end its fiscal year June 30 with an $8.3 billion blot of red ink on its
books. … The political problem is explaining to taxpayers why that is the case even after the
state income tax was raised by 67 percent. Most of the tax hike is needed to make the state’s
pension 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

To pay for Gov. Quinn’s tax hikes and the rising Alternatively, another way to look at the higher
Tax & Budget Brief

cost of state pensions, Illinoisans will lose out
on an extra week’s paycheck this year. Most
Illinoisans would instead prefer to see pension
benefits reduced for current employees.
Graphic 1 (next page) illustrates the average
spending by household on major expenditures,
including federal, state and local taxes. All
expenditures are estimated for fiscal year 2012,
which is the first full year under Gov. Quinn’s
new tax hikes (see Methodology section).
state tax bill is to estimate the additional
time spent working to pay for it. Graphic 3
shows that without Gov. Quinn’s tax hikes,
the average Illinois household would work 58
minutes per workday to pay their state and local
tax bill. Graphic 4 shows the added tax load
resulting from the tax hike; the average Illinois
household will have to work nine more minutes
a day to pay their local state or tax bill – which
comes out to 67 total minutes of each workday
going to state and local taxes alone.

If Gov. Quinn’s tax increases had not been
passed, the average Illinois household would
spend $10,988 in state and local taxes in fiscal
year 2012. This amount represents more than
the combined annual spending on food ($7,013)
and healthcare ($3,805) for an average family.
However, Graphic 2 shows how the state and
local tax bill will climb by $1,594 thanks to Gov.
Quinn’s tax increase. This increase is nearly
equal to what an average Illinois household
spends annually on clothing: $1,699. It also will
raise the average combined federal, state and
local tax bill to $12,582. As a result, this higher
tax bill will mean fewer dollars for all other
spending.
Graphic 2 also shows the spending reductions
assuming an across-the-board cut in household
spending. For instance, the housing budget will
have to fall by an estimated $517 dollars that
will instead be sent to Springfield. (Better plan
to turn down the thermostat next winter.)
While an extra nine minutes per workday
may not sound too onerous, consider that
this works out to a full workweek over the
entire 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 to
Springfield.
This isn’t what voters want. A January 2011
poll of 500 likely voters commissioned by the
Illinois Policy Institute asked Illinoisans how
to address the state’s increasing pension costs.
Sixty-four percent of respondents said that
benefits for current public employees should be
reduced, while 26 percent felt that Illinois state
taxes should be raised (Graphic 5).
In other words, state leaders are pushing a
“solution” to the pension problem in the form
of tax hikes that is directly opposed to what the
majority of voters prefer, which is prospective
pension benefit reform.

J. Scott Moody is a senior fellow for Budget and Tax Policy for the Illinois Policy Institute.
 Page 2 of 4

Graphic 1.
Major Expenditures per Illinois Household
WITHOUT Gov. Quinn’s Tax Hikes (Fiscal Year 2012)

Insurance Other; $5,886

$6,209
Entertainment; $3,055 Federal Taxes; $25,612

State leaders Healthcare; $3,805

are pushing
Transportation; $8,894
a “solution”
to the pension
Clothing; $1,699
problem in State and Local Taxes;
$10,988

the form of Housing; $17,568

tax hikes Food; $7,013

that is directly
opposed to 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 Office and Illinois Policy Institute.

what the
majority of
voters prefer. Graphic 2.
Major Expenditures per Illinois Household WITH Gov. Quinn’s
Tax Hikes (Fiscal Year 2012)

Other; $5,713
Insurance
$6,026
Federal Taxes; $25,612
Entertainment; $2,965

Healthcare; $3,693

Transportation; $8,632

Clothing; $1,649

State and Local Taxes;

$12,582
Housing; $17,051
Food; $6,806

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 Office and Illinois Policy Institute.
 Page 3 of 4

Graphic 3.
Minutes of an Eight-Hour Workday Needed to Pay for Major
Expenditures per Illinois Household WITHOUT Gov. Quinn’s
Tax Hikes (Fiscal Year 2012)
While an
extra nine
Other
Insurance 31
Entertainment 33 Federal Taxes
136

Healthcare
16
minutes per
20
workday may
Transportation
47 not sound
too onerous,
Clothing
9
State and Local Taxes
consider that
58
this works
Housing
93 Food
37
out to a full
workweek
Source: U.S. Department of Commerce: Bureau of Economic Analysis and Census Bureau, U.S. Department of Labor: Bureau of over the entire
Labor Statistics, Tax Foundation and Illinois Policy Institute. Numbers may not sum to total due to rounding.
year.
Graphic 4.
Minutes of an Eight-Hour Workday Needed to Pay for Major
Expenditures per Illinois Household WITH Gov. Quinn’s Tax
Hikes (Fiscal Year 2012)

Other
Insurance 30
32 Federal Taxes
Entertainment
136
16

Healthcare
20

Transportation
46

Clothing
9
State and Local Taxes
67

Housing
90 Food
36

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.
 Page 4 of 4

Methodology
Graphic 5. Illinoisans Prefer
This analysis is based on fiscal year 2012, which Pension Benefit Reform over
is the first full fiscal year under the higher Tax Hikes
Illinois tax rates.
“In 2015, pension payments will increase
The consumption data is based on the 2009 from $4 billion per year to $8 billion per
Consumer Expenditure Survey (CES) published year, and there will not be enough revenue
by the U.S. Department of Labor’s Bureau of to cover this increase. What do you think
Labor Statistics. While the CES only publishes should be done to cover this increase?
Sixty-four data by region, the estimate for Illinois was Do you think that...”
created by allocating the regional data based
percent of on Illinois’s share of personal income for the
respondents midwest region. The data was extrapolated
to fiscal year 2012 using the Consumer Price
said that Index forecast from the Congressional Budget
Office.
benefits for
current public The fiscal year 2012 state tax collections
are based on data from the Commission on
employees Government Forecasting and Accountability:
http://www.ilga.gov/commission/cgfa2006/
should be Upload/FY12econforecastrevestimate.pdf.
reduced, while The local tax collection was extrapolated from
data from the U.S. Department of Commerce’s
26 percent felt Census Bureau.
that Illinois The fiscal year 2012 federal tax collection data
state taxes is from the Congressional Budget Office. The
estimate for Federal taxes paid by Illinois is
should be based on data from the Tax Foundation:
raised. http://www.taxfoundation.org/files/sr139.pdf.

Source: Poll of 500 likely Illinois voters was conducted by Public

Opinion Strategies on behalf of the Illinois Policy Institute between
January 10-11, 2011. N = 500 Likely Voters. Margin of Er-
ror = + 4.38%.