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*** UPDATED x1 *** Progressive, peer-reviewed study: Pritzker’s tax plan falls $280 million short

Monday, Apr 1, 2019

* The buried lede

The peer-reviewed exam by the Project for Middle Class Renewal and the Illinois Economic Policy Institute constructed eight scenarios based partly on progressive income tax structures among Illinois’ neighbors. The Associated Press obtained the study in advance of its release.

Gov. J.B. Pritzker has proposed changing the state’s flat-rate income tax system, in which everyone pays 4.95 percent, to a progressive structure in which wealthier residents pay a higher percentage. It would start at 4.75 percent for the lowest wage earners, remain at 4.95 percent for those earning $100,000 to $250,000, and top out at 7.95 percent for incomes over $1 million.

Authors Robert Bruno and Frank Manzo constructed eight scenarios, drawn in part from graduated tax structures in nearby states such as Iowa and Minnesota, and tested each against five public policy goals: Cutting taxes for at least two-thirds of taxpayers, reducing property taxes by 10 percent, protecting small businesses, wiping out Illinois’ built-in $1.2 billion “structural” deficit, and boosting education and brick-and-mortar funding by hundreds of millions of dollars. […]

Pritzker’s measure is among the scenarios evaluated by Manzo and Bruno, director of the University of Illinois’ Labor Education Program and head of the Project for Middle Class Renewal. The study determined that the Democrat’s plan would mean a tax cut for 85.3 percent of tax filers , no change in the current liability for 12 percent of taxpayers, and an increase for 2.8 percent — those making more than $250,000 a year.

It would generate $3.12 billion extra per year, less than Pritzker’s estimate of $3.4 billion

According to the AP and to one of the study’s authors, the study figured Pritzker’s corporate tax hike into its projection.

Business interests have been saying for weeks that the Pritzker proposal wouldn’t raise as much as advertised, but this is the first group on the left saying the same thing.

Click here for the study and click here for the press release.

Overall, the report had good news for the Pritzker camp. But it’s not good at all if the governor’s revenue projection is off by 8 percent.

I’ve asked the governor’s office for a response.

*** UPDATE *** The governor’s office points out that the study didn’t run Pritzker’s actual plan. The study “implemented” the plan using Fiscal Year 2018 numbers, instead of the higher incomes during Fiscal Year 2021, when the plan would first be implemented.

That explains a lot of the discrepancy. They also went back a year earlier to calculate their estimates than Pritzker (2015 vs. 2016).

- Posted by Rich Miller        

32 Comments
  1. - Perrid - Monday, Apr 1, 19 @ 11:16 am:

    All projections are guesses, but yeah, it looks like Hynes et al. put on some VERY rosy colored glasses.


  2. - Skeptic - Monday, Apr 1, 19 @ 11:18 am:

    Did the report take into account how Illinois is going to wither up and blow away like the proposal’s opponents seem to suggest?


  3. - Fav human - Monday, Apr 1, 19 @ 11:19 am:

    Actually being within 8% with all that seems like a pretty good proposal


  4. - Thomas Paine - Monday, Apr 1, 19 @ 11:19 am:

    “We’re prepared to work with Republicans to find $280 million in cuts if necessary.”


  5. - Chicago Cynic - Monday, Apr 1, 19 @ 11:24 am:

    IPI and others on the right said his proposal was more than a billion short. This analysis finds it’s within $280 million. I’m sure other analyses are going to also find the tax raises more than $3 billion. In other words, we’re at least in the ballpark. Sounds like some modest tweaking may be necessary but not what the naysayers are throwing out.


  6. - Matt - Monday, Apr 1, 19 @ 11:27 am:

    Projections that are off by 8%? Including a marriage penalty?

    This isn’t the best way to roll out tax reform.


  7. - Nick Name - Monday, Apr 1, 19 @ 11:32 am:

    Doesn’t Pritzker intend to sell bonds? Maybe he feels he can cover it that way.


  8. - Grandson of Man - Monday, Apr 1, 19 @ 11:38 am:

    I thought the top rate was a bit too low. It should be higher, like Iowa’s or Minnesota’s.

    A major finding of the study is income gap between the median household and the top 1% over the last three decades. It grew massively. It’s absolutely necessary for our economic and fiscal health that we get more revenue from the rich. We really need income redistribution.

    We can’t keep going with the rich paying proportionally less taxes than the lowest incomes. We can’t keep going with talk of big spending cuts. We suffered enough when Bruce Rauner unleashed his war on labor and Madigan, resulting in massive cuts.


  9. - Nonbeleiver - Monday, Apr 1, 19 @ 11:40 am:

    Hard to know if the $280 million is a solid number. If it is, they got reasonably close.

    However, it is no longer a millionaires tax as it begins at $250K. Unfortunately, not a surprise to me that this was done.

    After the $250K the the marriage penalty kicks in and is there and no attempts to address that issue. And it is not indexed ( we all saw the AMT that was established for the ‘rich’ in the late 1960’s affect a huge number of middle class people in later years.

    It is hard to believe that the Governor does not know this. Therefore one has to believe that this is the usual camel’s nose in the tent and that the marriage penalty and lack of CPI indexing is really a stealth mechanism to gain ever larger government revenues without being upfront about it.


  10. - Anonymous - Monday, Apr 1, 19 @ 11:44 am:

    This is pretty damn good. We go from a 3 billion budget hole to a 300 million budget hole? Sign me up.


  11. - PublicServant - Monday, Apr 1, 19 @ 11:46 am:

    Let’s give people a chance to vote on a graduated tax amendment to the constitution shall we? Then let the haggling begin.


  12. - Annonin' - Monday, Apr 1, 19 @ 11:51 am:

    Hey let’s get to reporting on the FactCheckers finding Spanky Baise ad FALSE


  13. - Nonbeleiver - Monday, Apr 1, 19 @ 11:51 am:

    “Let’s give people a chance to vote on a graduated tax amendment to the constitution shall we? Then let the haggling begin.”

    Yes, but a specific proposal that makes for an honest discussion and knowing what we are voting on.


  14. - Former State Worker - Monday, Apr 1, 19 @ 12:01 pm:

    “It would generate $3.12 billion extra per year, less than Pritzker’s estimate of $3.4 billion”

    In the spirit of Rauner, we should do nothing then?


  15. - wordslinger - Monday, Apr 1, 19 @ 12:06 pm:

    –Therefore one has to believe that this is the usual camel’s nose in the tent…–

    There are elections to the GA every two years. The body turns over quite a bit. It is up to the people to elect members who won’t vote for higher taxes, if that is their wish.

    Despite what some Downstate con men are peddling, it is a democratic republican form of government.


  16. - RNUG - Monday, Apr 1, 19 @ 12:07 pm:

    Close enough, given the gap the past several years.

    Pass it, implement it, then tweek it a bit on the high end if you come up short.


  17. - Jibba - Monday, Apr 1, 19 @ 12:10 pm:

    Easy. Acknowledge rosy estimates, pledge reduced funding increases to line items if actual revenue falls short, and appoint bipartisan commission to immediately work on reorganizing delivery of services with an eye toward savings if possible.


  18. - Shytown - Monday, Apr 1, 19 @ 12:25 pm:

    8% isn’t actually that far off and these are all projections either way. Wouldn’t be impossible to make up the difference if it came down to it. Not ideal, but it would still do the state a helluva lot of good.


  19. - Nonbeleiver - Monday, Apr 1, 19 @ 12:28 pm:

    - wordslinger - Monday, Apr 1, 19 @ 12:06 pm:

    –Therefore one has to believe that this is the usual camel’s nose in the tent…–

    There are elections to the GA every two years. The body turns over quite a bit. It is up to the people to elect members who won’t vote for higher taxes, if that is their wish.”

    Despite what some Downstate con men are peddling, it is a democratic republican form of government.

    And your real point? Stating the obvious does not address the issues I outlined.


  20. - wordslinger - Monday, Apr 1, 19 @ 12:32 pm:

    –And your real point? Stating the obvious does not address the issues I outlined.–

    I believe it does, if you’re peddling the “camel nose” bit.


  21. - njt - Monday, Apr 1, 19 @ 12:38 pm:

    ===After the $250K the the marriage penalty kicks in and is there and no attempts to address that issue.===

    Illinois median household income would need to roughly quadruple for this to be an issue for the majority of voters.


  22. - JS Mill - Monday, Apr 1, 19 @ 12:43 pm:

    =After the $250K the the marriage penalty kicks in…CPI indexing=

    There is no “marriage penalty.” The tax goes up when you exceed $250,000 in income regardless of whether you are married, single, have a harem.

    The CPI indexing is nonsense. This is a very easy to understand tax.

    I am tired of those who are simply against paying the bills injecting nonsense into the discussion. If you oppose the brackets come up with something else that will pay the bills.

    It is very simple math.


  23. - Sue - Monday, Apr 1, 19 @ 1:01 pm:

    Grand son of Man- I am assuming you are not in the 3 percent. Seeing how you are so willing to increase other people’s taxes- I assume you are willing to pitch in. Why not send the Dept of Rev a volunteer notary contribution and pay this year’s taxes at 8 percent which you are encouraging


  24. - Nonbeleiver - Monday, Apr 1, 19 @ 1:10 pm:

    wordslinger - Monday, Apr 1, 19 @ 12:32 pm:

    –”And your real point? Stating the obvious does not address the issues I outlined.–

    I believe it does, if you’re peddling the “camel nose” bit.”

    Yes, I am stating the obvious for those who know how this works and its implications. Of course, there are those who never figure it out.


  25. - Back to the Future - Monday, Apr 1, 19 @ 1:11 pm:

    My guess is that Hynes and the other group are both wrong.
    Both groups are hoping to present a balanced budget. They just have to figure out the degree to which they have to overestimate revenue and underestimate expenses.
    Different names same old Springfield hustle. I was hoping for change.
    I suspect the biggest hurdle to the tax change will be that voters may not trust anything that Springfield comes up with.


  26. - wordslinger - Monday, Apr 1, 19 @ 1:13 pm:

    –Yes, I am stating the obvious for those who know how this works and its implications.–

    You said I was stating the obvious. Now it’s you?


  27. - Huh? - Monday, Apr 1, 19 @ 1:13 pm:

    The $280 million will be filled when Pritzker sells the Thompson Center. /s


  28. - Sue - Monday, Apr 1, 19 @ 1:16 pm:

    Not to state the obvious but what does the State do until 2021 in terms of revenue. How much is JB willing to stiff the pensions to freely spend on his campaign promises pending the new tax regime. If I was on the TRS Board I would be preparing a lawsuit to force JB to first honor the pension contributions required by the ramp even if the lawsuit is tossed at least the Board would be acting in the best interests of the participants


  29. - City Zen - Monday, Apr 1, 19 @ 1:32 pm:

    Aren’t the Project for Middle Class Renewal and the Illinois Economic Policy Institute the same thing? This paper makes it sound like two independent groups came together when they’re basically affiliated to each other.


  30. - Last Bull Moose - Monday, Apr 1, 19 @ 2:01 pm:

    We could fill the gap with a soda tax. To increase regional divisions we would exempt counties where most people call it pop.


  31. - Whatever - Monday, Apr 1, 19 @ 7:34 pm:

    ==After the $250K the the marriage penalty kicks in and is there and no attempts to address that issue.==

    They will have to amend the income tax act for there to be a marriage penalty. Under current law, filing a joint Illinois return is elective. If both spouses have $200,000 in income, they can file separate returns and stay out of the $250,000 bracket. Of course, the GA could change to law to require joint filing.


  32. - Nonbeleiver - Monday, Apr 1, 19 @ 8:24 pm:

    “They will have to amend the income tax act for there to be a marriage penalty. Under current law, filing a joint Illinois return is elective. If both spouses have $200,000 in income, they can file separate returns and stay out of the $250,000 bracket. Of course, the GA could change to law to require joint filing.

    Yes, of course you are correct and I know that. But since this is a change from a flat % to a graduated tax that should be done. Amend it under the original proposal instead of not addressing that issue.

    As to filing a separate income tax. Yes, obviously that could be done. But most married people have joint income on a variety of investments and tax deductions. So it would be much more complicated. Is that the point to make it more difficult?


Sorry, comments for this post are now closed.


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