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I thought you might be amused by this. On the left is Illinois’s state tax revenues for 2016 and their sources. On the right is Illinois’s state tax revenues for 2017 and their sources. You can click on either image for a larger image.
Between 2016 and 2017 Illinois personal income tax rate increased by 25%. Despite that increase or, some would say, because of it, between 2016 and 2017 Illinois’s tax revenues decreased by about 3%.
From these data our state’s politicians conclude that Illinois needs to increase personal income tax rates. I think a more reasonable conclusion would be that strategy is not working.
Illinois is not paying its bills. It’s already paying more to borrow than any other state. It already has the highest property tax of any state in the union.
If you’re wondering what prompted this post, consider this op-ed from the State Journal-Register:
A decade ago, pension payments consumed about 8 percent of the state’s revenue. By 2017, they were consuming 18 percent, according to a Moody’s analysis of state financial reports.
Illinois can’t even keep up with what Moody’s refers to as a “tread water†level of payments. “Tread water†payments cover only new obligations, plus accrued interest for the pension plans. They don’t begin to address Illinois’ $133.5 billion in unfunded liabilities.
[…]
The Civic Committee is taking a sober look at the state’s politics and finances. Their decision to stand down for now on a structural fix to the state’s pension problems is a reflection of prior failed efforts to work around a state constitutional ban on diminishing or impairing employee pension rights.
Writing a decade ago, the committee foretold an Illinois that now exists. “The State then will be faced with two difficult choices: massive cutting of state expenditures and grants, or raising taxes to such a high level that some businesses and residents will flee Illinois. Or both,†the Civic Committee warned.
Spending has not been cut. But the Committee was right about the rest: Taxes are higher, and people are fleeing Illinois.
Solutions are limited and they amount to political hara-kiri. Either the state’s constitution must be amended to allow the state to reduce public employee pensions, the number of state employees must be cut, pay rates for state employees must decline, or some combination. We quite patently can’t increase revenues by increasing marginal rates. We must cut expenses.







