Talking Points on the Impacts of Tax Hike
The economy is bad and the states fiscal situation is worse. Lawmakers wouldnt have raised taxes unless they needed to, right? Wrong.
The economy is bad and the states fiscal situation is worse. Lawmakers wouldnt have raised taxes unless they needed to, right? —– Wrong. The tax hike passed without any Republican support. The Democrats in charge are beholden to the public employee unions their largest political contributors who demanded a tax increase and fought any accompanying reform to spending and government-run systems of Medicaid and education. Average voters are at the back of the line. This, combined with the lame duck opportunity, created the right circumstances for the tax hike.
What does a 66 percent tax hike mean for individual residents? —– A family of four making $80,000 a year will pay an additional $1,440 in taxes. Thats food off the table, clothes off their back and money they cant save for college or spend at local businesses.
- Annual impact Per Household on their Tax Bill: $1,488 (this is an average of all households)
- Total Lost Personal Income: $16.1 billion over 3-5 years
- Per Household Lost Income: $3,376 over 3-5 years
- Or Equivalent Lost Jobs: 268,660 over 3-5 years
The corporate tax was hiked. What does that mean for businesses? —– The corporate tax rate went up by 46% and is now among the highest in the nation at 9.5%, including the personal property replacement tax (7% + 2.5%). We expect a wave of businesses to leave the state for other more business friendly environments. The governors in Indiana and Wisconsin have already issued invitations to any businesses who want to escape Illinoiss high tax ways.
How serious do you expect out-migration from Illinois will be? —- Illinois is already one of the top out-migrator states in the nation. Our study released today showed that from 1991 to 2009 the state lost 1.2 million people, which comes to about one person leaving Illinois every 10 minutes. Since 1991, the state has lost $163.6 billion in net income and $16.9 billion in state and local tax revenue due to this out-migration. Through a slow drip, weve lost thousands of taxpayers. Now that this tax hike has passed, it will probably burst the pipes, said Collin Hitt, Director of Policy for the Illinois Policy Institute.
How did this happen? —- Structural overspending, driven by massive expansion in Medicaid eligibility along with the growth in pension obligations combined with the lame duck opportunity created the right circumstances.
For additional information or commentary on the impact of the tax hike, contact the Institutes Manager of Media Relations Diana Rickert: Diana@IllinoisPolicy.org or 312-725-8039.