Governor Quinn’s $23,500 Tax Hike
A hypothetical look at the impact of a tax hike over time.
by Mark Cavers
Towards the end of December I sat down with my financial planner to review my finances for the past year and look at the year ahead. We went over my income, spending, and school loans before we came to the last topic, savings, which was a real eye opener for me.
Mark, you need to increase the amount of money you are saving. Dont worry, it won’t be hard. He quickly added, after seeing the dread in my face. All I need you to do is put a side $20 each month, it will make a huge difference.
Phew! I can do that! I responded. But how will that make a huge difference? It is only $240 a year.
Then he explained compounding interest and how if I put just a little away each month it will make a huge difference over time. He said my $20 a month could turn into over $6,000 in 20 years, wow!
When I got home I remembered something my colleague Ashley told me: Governor Quinns 66% tax-hike will cost a single mother of two making $22,000 a year $320 more in taxes, and a carpenter earning $57,000 with three kids will see his taxes go up $982 each year. So I went to Bankrate.com and used their savings calculator to figure out how much Quinns tax hike could end up costing them over 18 years, when their kids might be getting ready to head off to college.
If our two families were able to saving this money, instead of sending it to government, the single mother with two kids would have an additional $7,644.49 to put towards her kids education after saving for 18 years (assuming a 3% return). The carpenter earning $57,000 would have an additional $23,451, the equivalent of over two years of tuition at the University of Illinois. That seems like a heavy burden to force a single dad to shoulder.
Can your son or daughter afford a $23,500 cut in their college fund? If not, find your legislator and let them know how you feel about a tax hike.