The actual tax avoidance window on the millionaire’s tax is just $9,305
Friday, Mar 8, 2019
* Gov. Pritzker’s proposed effective tax rate on a million dollars of annual income is 7.09 percent. Technically, it’s 7.0934746 percent, which is what we’re gonna use here. You can click here to see the math. State taxes on that million bucks would be $70,934.75, for an after-tax income of $929,065.25.
As we’ve already discussed today, at the $1,000,001 income level, the governor’s proposal would tax all income at the 7.95 percent rate. State taxes would be $79,500 for an after-tax income of $920,501. So, you’d be losing about 9 grand for that extra dollar of income. Significant.
The cutoff point above which tax avoidance wouldn’t make sense would be $1,009,305. State taxes would be $80,239.75 for an after-tax income of $929,065.25 - exactly what you would’ve paid if you made a million dollars.
Increase that income by just a dollar, to $1,009,306, and your state tax would be $80,239.83, with an after-tax income of $929,066.17 - 92 cents more than you’d have made with a million dollars in earnings. After that, the gravy gets thicker.