Not only would a progressive income tax hike end up taking more money directly from all taxpayers’ pockets, but it would also have negative economic effects on jobs growth, after-tax income adjusted for cost of living, and overall economic output.View Report
A report from one of the largest credit rating agencies criticized Gov. J.B. Pritzker’s “dubious” budget proposal for avoiding necessary fiscal reforms.
Despite finding favor among some politicians and political candidates in Illinois, states with a progressive income tax are more vulnerable during recessions than flat-tax states.
S&P Global Ratings has warned that Illinois’ bond sale to help pay old bills could merely add more debt to Illinois’ burden if the state does not also enact fiscal reforms.
Of the three major ratings agencies, only Moody’s Investors Service has indicated that Illinois lawmakers’ lack of long-term solutions for reducing that debt is a severe problem.
Illinois’ bond rating may not be junk, but the state’s finances still are.
The state’s bill backlog is expected to hit $22.7 billion and pension costs are predicted to grow 14 percent by fiscal year 2018.
S&P cited Illinois lawmakers’ failure to pass a budget and the lengthy budget impasse as reasons for its one-notch credit downgrade. Over the years, Illinois’ state credit rating has been downgraded multiple times due to massive spending and excessive borrowing.
Credit rating agencies have warned Illinois’ credit could slide into junk territory if the legislative session ends in May without a budget deal to get the state’s finances back on track.
Standard & Poor’s sent Chicago Public Schools’ credit rating deeper into junk territory in the wake of the new $9.5 billion teachers’ contract. The ratings firm said the new contract will make the district’s financial crisis worse.
The ratings agency also warns that another downgrade could be coming if the state doesn’t enact serious reforms to improve its fiscal condition.