Pritzker’s Growth Fantasy
Thursday, Mar 21, 2019
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Gov. J.B. Pritzker’s tax plan assumes Illinois will see average annual income growth of 3.61 percent. His administration claims this “conservative” estimate is both consistent with the state’s recent performance and accounts for a one-year stagnation in income growth to account for a slowing economy.
But Pritzker is wrong on both counts.
According to the IRS, the average annual growth rate of Illinois’ adjusted gross income over the past five years of available data has been 3.37 percent, meaning the administration fails to correctly account for the past. The governor also alleges that a one-year stagnation of income growth in his assumption accounts for an economic slowdown. But Illinois’ total income has not only stagnated, but declined in two out of the past four years on record.
Not only are the governor’s assumptions wrong given the state’s recent performance (which he states are the basis for his claims), but they are wrong given the anticipated growth trajectory of Illinois and the U.S. economy as a whole. The governor’s estimates don’t account for the possibility of a slowdown or even a recession, which two-thirds of business economists in the U.S. expect before 2021, according to polling from the National Association for Business Economics.
Pritzker’s plan won’t deliver on the promises he’s making, meaning it will only serve as a bridge to further tax hikes.