Public Sector Unions Win Again – Illinois Braces for Another Tax Increase

Public Sector Unions Win Again – Illinois Braces for Another Tax Increase

Illinois “Progressives” (a single word to describe “economically illiterate public union sympathizers”) want to pick your pocket once again. The Progressives want to hike the Illinois 2015 top tax rate from 3.75% to a whopping 9%.

Moreover the income tax rate will go up on a sliding scale for everyone making over $18,000.

Promises, Promises

Recall that On the campaign trail in 2010, Gov. Pat Quinn told voters he’d veto any income tax hike that would raise Illinois’ rate over 4 percent.

That was one of the quickest disclosed tax lies in history. Here are a few snips from my January 13, 2011 post Business Owners Blast IL Tax Hikes;Quinn’s Blatant Lies;Neighboring States Gleeful, Mayor Daley Whines;Escape to Wisconsin; Arrogance,Greed,Corruption

Tax insanity in Illinois is now official. Governor Pat Quinn signed off on a 67% hike in personal income taxes and a 46% hike in corporate taxes the moment the bill hit his desk.

The personal income tax rate immediately rises to 5 percent, up from 3 percent. The corporate income tax rate rises immediately to 7 percent, up from 4.8 percent. The Chicago Tribune reports Quinn, House Speaker Michael Madigan and Senate President John Cullerton — all Chicago Democrats — muscled the tax hike through in the eleventh hour of the lame-duck legislature. Only Democrats voted for the bills.

Not Fixed

That tax hike was supposed to permanently fix the Illinois budget. It did nothing of the kind.

On June 11, 2011, I noted Illinois Insanity: State Spend $365K Taxpayer Dollars to Teach People How to Fish; Hands Out $4 Million in Free Tuition to AFSCME Public Union Workers

On August 31, 2011, I noted Illinois Loses Most Jobs in Nation Following Tax Hikes.

Also recall that Instead of acting to help cities, Governor Quinn strengthened prevailing wage laws several times (see my March 27, 2011 article Poisonous Illinois; Caterpillar CEO Threatens to Leave Illinois over Taxes; Illinois Attorney General Wins Dubious Honor “Prevailing Wage Award”).

Illinois Overtakes California for Second Highest Unemployment Rate in Nation

With the above backdrop, no one should have been surprised by my September 25, 2013 report Unhappy Anniversary: Illinois Overtakes California for Second Highest Unemployment Rate in Nation

Temporary Hike?

Quinn’s tax hike was billed as temporary. Fortunately the legislature actually passed it that way.

On January 04, 2013 the Chicago Tribune discussed the setup in Your Quinncome tax hits home

Two years ago on their night of infamy, 1/11/11, General Assembly Democrats — and exclusively Democrats — voted to raise the Illinois personal income tax rate by 67 percent.

But when the Democrats boosted the personal income tax rate from 3 to 5 percent — with a companion hike in the corporate income tax — most of us didn’t suffer: The state tax hike coincided with a 2-percentage-point decrease in the federal payroll withholding for Social Security. That payroll tax reduction, a last-minute proposal from President Barack Obama’s White House, was the final component of a bipartisan Washington deal to keep the Bush-era income tax cuts in place.

Think of it this way: The impact of your Quinncome tax increase — long advocated by Gov. Pat Quinn and made law by his signature two years ago — has finally hit home. Your home. You just took a pay cut.

What’s more, the Illinois tax hike hasn’t been the saving grace for you, and for your state, that Democrats promised on 1/11/11: State government remains insolvent, unable to pay billions in bills as they come due. And there’s no additional money to educate your children or to care for your disabled fellow citizens. Why not?

Because just about every penny of the state’s roughly $7 billion in new Quinncome tax revenue goes to paying public pension costs — either making annual contributions to pension funds, or paying off debt from years when Illinois foolishly borrowed money to make its annual pension contributions.

Remember, the Democrats sold the Quinncome tax as temporary: It’s in full force for four tax years, 2011 through 2014, then is scheduled to fall to 3.75 percent in 2015 and to 3.25 percent in 2025.

Beware the “Progressives”

In 2015, the personal income tax rate is supposed to drop to 3.75%.

However, the Illinois Policy Institute reports State Rep. Naomi Jakobsson, D-Urbana, introduced legislation for a new progressive tax rate schedule that hit Illinois’ middle and working classes hard.

Under current Illinois law, the individual income tax rate will be 3.75 percent in 2015. Under Jakobsson’s new plan, however, a higher 4 percent rate kicks in for people earning just $18,000.

Here is Jakobsson’s proposed scheme.


If you think that is absolutely nuts, you are not the only one.

The Illinois Policy Institute writes “Jakobsson’s progressive tax rates attack the middle class as well. Her 5 percent tax rate applies to people earning just $36,000. When an Illinoisan earns more than $58,000, Jakobsson’s tax rates jump to 6 percent, and again to 7 percent on income earned after $95,000 – nearly double the rate Illinoisans will pay in 2015.

It’s no surprise that Jakobsson’s progressive tax hike proposal targets the middle class – it’s how progressive income taxes work. That’s where a lot of the money is.”

About the Author:  Mike Shedlock is the editor of the top-rated global economics blog Mish’s Global Economic Trend Analysis, offering insightful commentary every day of the week. He is also a contributing “professor” on Minyanville, a community site focused on economic and financial education. Every Thursday he does a podcast on HoweStreet and on an ad hoc basis he contributes to many other websites, including UnionWatch.

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