Illinois is just eight weeks away from significant tax relief for working families.
The flat state income tax rate paid by all Illinoisans will drop to 3.75 percent from 5 percent on Jan. 1, 2015. This gradual “phase out” was written into law by state Democrats when they unilaterally passed a record rate increase in 2011.
Some 6.7 million Illinoisans who earn a living will get a 1.25 percentage point pay increase as government takes less out of every paycheck. Considering that the state’s median income droppedby $6,500 between 2007 and 2012, this is an important boost for stagnant wages.
Unlike a minimum-wage increase, which would affect about 400,000 Illinoisans at or below the state minimum wage, the upcoming tax relief does not require affirmative action from government officials to go into effect. Tax relief is already on the books. It’s the law.
That’s not to say the chattering political class won’t try to convince state leaders to break the promise of tax relief.
Much of the talk is downright silly – case in point, a not-so-subtle lobbying campaign to introduce Governor-elect Bruce Rauner – who just got elected on a wave of taxpayer frustration – to the idea of a retroactive tax increase.
The reality is that stopping tax relief (to say nothing of reaching back into the past for retroactive tax increases) will force a typical wage earner to pay more than $3,000 in additional taxes over the next five years.
It’s true that Gov. Pat Quinn and legislative Democrats have not been as frugal with the spending side of the ledger as they promised to be, and the unbalanced state of the budget is what’s driving much of the tax-hike talk.
Spending was intentionally marked to surpass available revenues; a common trick for forcing tax increases. Break it, and then force others to buy it.
Hark back to May when state Rep. Luis Arroyo said of the budget bill he was maneuvering to pass: “My job is just to get this bill out of the floor and pass it. I’m not going to tell you how we are going to pay for it just yet.”
The big spenders will try to cry poor, but as my colleague Ben VanMetre pointed out earlier this year, the problem isn’t a lack of funds:
“Between 2011 (when the tax hike was implemented) and 2015 (when the tax hike will partially sunset), the tax hike will have generated $31.6 billion in new, additional revenue for the state of Illinois.
“To put that number into perspective, $31.6 billion is more than what Illinois spends on all core government services (e.g., education, health care, human services, public safety) in a full fiscal year.
“Even with all of this extra money, Illinois’ finances are still a disaster. The extra revenue has only allowed lawmakers to skirt meaningful reforms as the state’s fiscal crises continue to worsen.”
To think that bad habits will miraculously change if only we give the General Assembly more money is ludicrous. As they’ve proven in every bloated budget cycle since the tax hike went into effect, state government officials have not earned the right to demand more from the hardworking people of Illinois.
Most governors would give their eye teeth to be sworn into office just as a broad-based tax relief was taking effect – especially tax relief that required not a single ounce of political capital be expended.
There is no better indicator of a clean break with Illinois’ failed fiscal policies of the past than to honor the promised tax relief that’s on the books.
Indeed, it is the very essence of compassionate and competitive leadership.