Illinois income tax hikes failed to fix state finances
In a single year, Illinoisans witnessed their state’s net worth drop by a staggering 35%, or $47.4 billion, despite shouldering the largest permanent income tax hike in state history.
A comprehensive analysis of state data released Aug. 29 reveals Illinois’ two massive income tax hikes since 2011 have failed.
The state’s net position deficit more than quadrupled to $189.1 billion from $43.6 billion from 2011 to 2018, according to Illinois’ 2018 Comprehensive Annual Financial Report, or CAFR. A state government’s net position is similar to an individual’s net worth.
These figures on their own actually understate how much Illinois’ fiscal health worsened in the year following the state’s record-breaking income tax hike in 2017. That’s because they were “restated,” largely in order to calculate the true cost of state employee health care liabilities for the first time. The original net position deficit for fiscal year 2017, reported in Illinois’ previous CAFR, was $141.7 billion.
That means in a single year, Illinoisans witnessed their state’s net worth drop by a staggering 35%, or $47.4 billion, despite shouldering the largest permanent income tax hike in state history.
Only New Jersey is home to a worse net position than Illinois. Notably, New Jersey Democratic Senate President Steve Sweeney – who also works as an ironworker union official – has been traveling the state calling for pension reform and government worker health care reform in the face of this reality.
Illinois’ enormous fiscal problems show why opponents of Pritzker’s progressive income tax have branded it as the “blank check” amendment. When the introductory progressive income tax rates fail to fix the state’s fiscal problems, history shows that rather than pursue necessary spending reforms, lawmakers will simply hit up middle-class taxpayers for more.