What if we taxed the highest income earners in Illinois at the current rate for our state’s lowest income earners and vice versa?
It would raise $32.5 billion in new state and local revenue for Illinois (a 56.2 percent increase in public revenue). Taxes for the bottom 60 percent of households would be reduced or unchanged. It would eliminate state and local budget deficits and avoid the serious consequences of budget cuts. This according to a new study released May 26 by the Center for Tax and Budget Accountability and United for a Fair Economy.
In 2007, the bottom 20 percent of households in Illinois paid 13 percent of their income in sales, property, and income taxes, three times as much as the 4.1 percent paid by the top 1 percent of earners in Illinois.
Although currently “flipping” the regressive tax structure and taxing the top 1 percent at 13 percent is unlikely, the benefits of a progressive income tax are obvious.
“By enacting a progressive income tax, Illinois could reduce taxes for the bottom 80 percent of families and still raise billions of dollars more in state revenue,” according to Ron Baiman, director of budget and policy analysis at the Center for Tax and Budget Accountability.
“For example, based on 2007 Illinois Department of Revenue data, 28,999 millionaire filers contributed more than $1.7 billion in state tax revenue of Illinois’ $9.2 billion in total 2007 individual income tax revenue, despite paying an effective tax rate of 1.3 percent, about half the effective rate of other middle income filers.”
At the heart of the budget crisis facing Illinois is a regressive state tax structure that is unfair, unsound and unsustainable. The constant attacks on education funding and modest public employee pensions are symptoms of that crisis. Fortunately, inverting the state’s current tax structure presents a sensible solution.
Illinois Education Association is an association of more than 130,000 members composed of Illinois elementary and secondary teachers, higher education faculty and staff, educational support professionals, retired educators and college students preparing to become teachers.
At the heart of the illinois budget crisis is Illinois politicians spending money. Supposedly that money was spent on services that benefit the people of Illinois. The pension crisis for example exists because the state did not pay their obligations, instead they spent the money elsewhere. The vendor payment delays exist for the same reason.
The pensions undefunding should be covered by giving the pension funds bonds for all past and future underpayments. Vendor payments should be caught up. Programs should be cut if need be.
It is important not to impact some services, but rates can be raised to cover some services as well.
If the state can’t handle the “burden” of a park, maybe a locality can take over the park.
The state has been foolish and continues their same rash decisions with no thought of the suffering the people of this state have to bear, now or in the future.
Funding pensions, paying vendors and attempting to maintain essential services requires a stable source of revenue. A system that taxes its poorest citizens at a rate three times higher than its richest citizens is not only foolish, rash and unfair, but it does not provide that stable source of revenue. As former IEA and NEA President Reg Weaver often said, “The problem with taxing poor people is they ain’t got no money!” Illinois needs progressive taxation.
And just how do you propose to force these rich people to remain in Illinois? A Berlin Wall, perhaps? The problem was, is, and will be politicians making promises they can’t keep, and you keep electing them. The budget problem isn’t calculus, it’s second grade math: you are spending too much.
The money needs to come from somewhere……………..taxing the wealthy will drive them from Illinois. I’m willing to pay into the system for my pension as most others do no have a pension system that promises as much as SURS. The entitlement era needs to end……………God bless the troops, past and present.
We need to raise the economic condition of the bottom 90% of workers. We have had a redistribution of wealth upward to the top 1% that has dramatically distorted our economy and taken money from the many and sent it to the few. Rather than circle the wagons and shoot in, let’s debate possible policies that actually would result in more pay going to the every-day worker. The corporate CEOs have sold us a bill of goods and stolen from us. As far as I’m concerned, if they want subsidies from Illinois they need to be held accountable to the public. And if they won’t do that, then we should have U-Haul on speed dial.
Good morning Veteran Don. I would bet that you’d not be in favor of a reduction in pensions for U.S. military personnel, correct? Those pensions were hard-won and every penny well-earned. The government made a promise to support those in the armed forces with a pension, showing gratitude for the sacrifices they’ve made.
My friend, teachers have been promised the same thing. This is not entitlement, anymore than a military pension is.
If we cut out all the tax breaks and everyone paid the flat amount they were supposed to we wouldn’t have the revenue problems we have today. We continue to give tax breaks that somehow benefit the rich.
So let me understand the budget. We raised taxes, and IIllinois still can’t pay its bills and cut funding for education.
I fully and totally support military pensions. They were what was promised and must be delivered-now and in the future, without change. We should not have a Tier I and Tier II military pension system. That’s the equivalent of saying some people are “more equal” than others. As Lynn says, we need to keep our promises to our vets. It’s the same deal for people in TRS and SURS. And unlike military pensions, we contribute 8-10% of each check to our pensions and must work at least thirty-five years to collect one. I believe no one in the military contributes anything to their pensions and must work for only twenty years. (In fairness, if they put in nineteen years and eleven months and three weeks and six days, they no pension at all; that has to be changed to give some benefit after say, ten or fifteen years.) A person who puts his life on the line for me for twenty years deserves his or her pension. So does a cop and fireman. But somehow, when the money is short, we forget about them. They keep their promise to come whenever anyone dials 911. And some don’t come home afterwards either. I’m a teacher – should I teach kids, “It’s okay to break promises when they are too hard to keep?” Wealthy people won’t leave Illinois is droves if taxes increase a small amount; they’d be hard pressed to find a similar state with lower taxes. Do we want good schools, affordable universities, prisons for bad people, group home for the disabled, roads and bridges from everywhere to everywhere but not pay for them? Which of the foregoing list would you cut? Pension are an easy target because they don’t seem to directly benefit anyone except the recipients. But people who became teachers and stayed teachers took a package deal. At this point I am committed to my career and my pension. The state should be too.