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Fun with numbers

Wednesday, Jun 19, 2019

* Centre Squaer

An economist from a nonpartisan think tank said poverty rates could climb if Illinois changes from a flat income tax to a structure with higher rates for higher earners.

Illinois’ poverty rate is about 14.3 percent, which is right in the middle of the pack of all U.S. states and territories. […]

Illinois Policy Institute Chief Economist Orphe Divounguy said research shows tax increases hurt the economy and the move to increase taxes on small businesses through a progressive income tax could increase poverty. He cited Connecticut as an example.

“The U.S. economy was booming, poverty rates were falling across the country, poverty rates actually increased in the state of Connecticut,” Divounguy said. “And 70 percent of that increase in poverty rates could be directly accounted for by the change to a progressive income tax in 1996.” [Emphasis added.]

That’s such a ridiculous claim.

Connecticut’s flat income tax rate was 4.5 percent from 1991 through 1995. The top rate (over $3,500 a year) remained at 4.5 percent when the progressive tax was put in place. So nobody’s taxes went up.

And, yes, the state’s poverty rate did increase, from 9.7 percent in 1995 to 11.7 percent in 1996, but how the heck do you put 70 percent of blame for that on a tax structure which didn’t increase anybody’s taxes?

The top tax rate was increased by a mere half a point to 5 percent in 2003, but, after some movement both ways, the overall poverty rate fell from its 1996 high to 8.1 percent that year, dropping again the following year to 7.9 percent.

A new top rate of 6.5 percent for heads of households earning more than $800,000 per year was instituted in 2009, during a global recession. The poverty rate that year was 9.4 percent. Illinois, with its flat tax, had a poverty rate of 13.3 percent that year.

* Also, the Census Bureau’s latest numbers show that Illinois’ poverty rate is 12.6 percent, not the 14.3 percent in the story.

Connecticut’s poverty rate is lower than Illinois, at 9.6 percent, even though they now have an income tax of 5 percent for heads of household income between $16,001 to $80K, 5.5 percent for earnings between $80K and $160K, 6 percent for income between $160,001 to $320K, 6.5 percent for income between $320,001 to $400K, 6.9 percent for income between $400,001 to $800K and 6.99 percent over that.

- Posted by Rich Miller        

89 Comments
  1. - Reality Check - Wednesday, Jun 19, 19 @ 12:47 pm:

    The IPI’s fake news site says the IPI’s fake economist opposes the tax reform proposal that the IPI opposes. Bring me the fainting couch…


  2. - Simon says - Wednesday, Jun 19, 19 @ 12:49 pm:

    You mean 6.79% for 400k to 800k bracket, right?


  3. - Jennifer Crew - Wednesday, Jun 19, 19 @ 12:50 pm:

    And this on a day when the author of the Laffer curve nonsense gets the Presidential medal of freedom - it’s almost too much to handle!


  4. - Rich Miller - Wednesday, Jun 19, 19 @ 12:50 pm:

    Simon, not according to this from Connecticut https://www.cga.ct.gov/2018/rpt/pdf/2018-R-0058.pdf


  5. - GOB Bluth - Wednesday, Jun 19, 19 @ 12:54 pm:

    I bet myself $5 I knew exactly who this was coming from when I heard the “an economist from a nonpartisan think tank…” on the radio this morning.

    I won the bet!


  6. - 47th Ward - Wednesday, Jun 19, 19 @ 12:55 pm:

    The Squarepants folks must be so happy that Arthur Laffer is getting a medal from the president. There’s hope for people like Orphe Divounguy, who get paid to pull the wool over peoples’ eyes.


  7. - don the legend - Wednesday, Jun 19, 19 @ 12:59 pm:

    ===67.9 percent for income between $400,001 to $800K ===

    67.9%, now that’s a rate everyone can agree might be too high (banned punctuation)


  8. - Lt Guv - Wednesday, Jun 19, 19 @ 1:03 pm:

    The 2nd highest current rate in CT is 6.9%, not 67.9%. The highest rate is 6.99%. Clearly a simple typo.


  9. - Pundent - Wednesday, Jun 19, 19 @ 1:03 pm:

    As soon as the IPI dropped the Madigan documentary and sent their crew to work on Rauner’s staff they dispensed with any and all pretense of being a “partisan think tank.”


  10. - Left Leaner - Wednesday, Jun 19, 19 @ 1:03 pm:

    Rich, as always, thanks for bringing facts into view.


  11. - Anon221 - Wednesday, Jun 19, 19 @ 1:07 pm:

    Following up on Jennifer Crew’s comment…

    https://www.wglt.org/post/napkin-white-house-medal-path-controversial-economic-idea

    “Once you put those ideas and put them purely in the political sphere, they kind of take on a life of their own,” said sociologist Elizabeth Popp Berman of the University at Albany, SUNY. “It doesn’t really matter what academic economists think about the legitimacy of this. If it serves a political use, it’s going to continue to have some effect.”


  12. - AnonymousOne - Wednesday, Jun 19, 19 @ 1:12 pm:

    34 of 50 states have a graduated income tax structure. All of them must be worse off than Illinois apparently according to this argument. Odd that all these economists around the country could’ve made such destructive decisions for the taxation of their residents./s


  13. - oh? - Wednesday, Jun 19, 19 @ 1:14 pm:

    This is laughable. Taxing high earners increases poverty. These folks are intellectual contortionists. Pretzel power!


  14. - Lucky Pierre - Wednesday, Jun 19, 19 @ 1:16 pm:

    Why is it so hard to believe that raising taxes on small businesses would not create more jobs but actually lead to less jobs.

    The money to hire people or raise wages would be reduced by the higher tax burden.


  15. - Anon312 - Wednesday, Jun 19, 19 @ 1:20 pm:

    The Spongebob Squarebrains folks really need to recalibrate their calculators and dust off their history books. This is getting embarrassing.


  16. - njt - Wednesday, Jun 19, 19 @ 1:24 pm:

    =Why is it so hard to believe that raising taxes on small businesses would not create more jobs but actually lead to less jobs.=

    Because there are real cities, like Settle, in the real world where the sky isn’t falling. But that doesn’t tie to hyperbole or made up facts I suppose.


  17. - ByeFelicia - Wednesday, Jun 19, 19 @ 1:29 pm:

    Just like Hans Zigmund. This “economist” plays fast and loose with the data as well. Thank goodness Zigmund is finally gone (May 31) from state government. Orphe Divounguy has lots to learn, it seems, about obfuscation and gaslighting. What a rookie. Miller gutted and cleaned him like a stock pond Bluegill.


  18. - Demoralized - Wednesday, Jun 19, 19 @ 1:32 pm:

    LP

    The claim is that it increases poverty rates which is absolutely absurd. Of course the Illinois Policy Institute isn’t really known for being honest. They have an agenda and they twist whatever they have to, to get the answer that they want.

    They should be called the Illinois Putz Institute.


  19. - Demoralized - Wednesday, Jun 19, 19 @ 1:34 pm:

    Apparently it doesn’t take a lot of intelligence to be the Illinois Policy Institute’s chief economist.


  20. - Grandson of Man - Wednesday, Jun 19, 19 @ 1:40 pm:

    The same people who believe taxing the rich more and giving the vast majority some tax relief increase poverty have to be the same people who think cutting taxes on the rich and stripping union rights bring middle class prosperity. Maybe the IPI should relocate its Chicago HQ downstate, or have a mobile HQ that’s follows Trump rallies.


  21. - Henry Francis - Wednesday, Jun 19, 19 @ 1:41 pm:

    Illinois’ millionaires: “We’d love to pay higher taxes, but think of what it would do to the poor people. Have you no heart?”


  22. - Lucky Pierre - Wednesday, Jun 19, 19 @ 1:42 pm:

    Higher unemployment by definition leads to higher poverty.

    It is absolutely to absurd to ignore the state with the highest income inequality and highest poverty rate is actually California.

    By coincidence they also have the highest income taxes.

    Maybe you haven’t noticed the rise in poverty and exodus of population in areas that used to thrive here in Illinois


  23. - Rich Miller - Wednesday, Jun 19, 19 @ 1:48 pm:

    ===By coincidence they also have the highest income taxes.===

    And a lower poverty rate than Illinois does.


  24. - Fixer - Wednesday, Jun 19, 19 @ 1:51 pm:

    LP, source (other than IPI) for anything that you said?


  25. - Bavette - Wednesday, Jun 19, 19 @ 1:53 pm:

    Seattle has a progressive income tax?


  26. - Bavette - Wednesday, Jun 19, 19 @ 1:54 pm:

    California when adjusting for Cost of Living has one of the highest poverty rates in the nation.


  27. - City Zen - Wednesday, Jun 19, 19 @ 1:55 pm:

    Hold on. Full stop. Deep breath…

    Connecticut has married tax brackets?


  28. - Bavette - Wednesday, Jun 19, 19 @ 1:55 pm:

    The BEA and Census has all the information Lucky stated.


  29. - oh? - Wednesday, Jun 19, 19 @ 1:56 pm:

    So,LP, “small businesses” ,you know, like lawyers and CPAs, cracking down over 250k in personal income are elite and should be exempt becaus, what? They might hire a gardner?


  30. - Oswego Willy - Wednesday, Jun 19, 19 @ 1:56 pm:

    ===Connecticut has married tax brackets?===

    Yep. Illinois does not, if passed.

    Also, 97% of taxpayers will see no increase in their taxes.

    There. That’s it. Feel better. LOL


  31. - Bavette - Wednesday, Jun 19, 19 @ 1:58 pm:

    $250k is hardly high income in metro Chicago.


  32. - Oswego Willy - Wednesday, Jun 19, 19 @ 2:00 pm:

    ===$250k is hardly high income in metro Chicago.===

    … and yet, a mere 3% statewide… eclipse that mark.

    Oh… only monies above $250K are taxed at the higher rate.

    Anything else?


  33. - Rich Miller - Wednesday, Jun 19, 19 @ 2:00 pm:

    ===$250k is hardly high income in metro Chicago===

    It’s upper income everywhere in Illinois.


  34. - Fixer - Wednesday, Jun 19, 19 @ 2:01 pm:

    Bavette, good think y’all are wanting to get rid of SheeCawGo then. Best of luck funding downstate without them.


  35. - Morty - Wednesday, Jun 19, 19 @ 2:03 pm:

    -$250k is hardly high income in metro Chicago.-

    In what universe?


  36. - Bavette - Wednesday, Jun 19, 19 @ 2:03 pm:

    A family in Metro Chicago making $275k is being punished and is not even close to being rich while downstate takers continues to take.


  37. - Demoralized - Wednesday, Jun 19, 19 @ 2:04 pm:

    LP

    I’ve noticed your same old tired talking points.

    You and the Illinous Policy Institute make good bedfellows.


  38. - oh? - Wednesday, Jun 19, 19 @ 2:04 pm:

    Lp…an economic lesson….a business does not hire unless it can turn a profit on the wage investment.. and beyond that..the money to make the hire is tax exempt.. a write off. Hiring wages have little to do with the “small business” tax liability. So your arguement is farce.


  39. - SaulGoodman - Wednesday, Jun 19, 19 @ 2:05 pm:

    **from a nonpartisan think tank**

    LOL


  40. - Bavette - Wednesday, Jun 19, 19 @ 2:06 pm:

    In metro Chicago universe.


  41. - Oswego Willy - Wednesday, Jun 19, 19 @ 2:06 pm:

    ===A family in Metro Chicago making $275k is being punished and is not even close to being rich while downstate takers continues to take===

    Narrator: that family is in the top 3% of Illinois.

    - Bavette -

    “Looking out” for the 3% won’t be a good look in trying to defeat the progressive tax.

    If anything, you’re helping getting it passed.


  42. - Bavette - Wednesday, Jun 19, 19 @ 2:07 pm:

    As a Chicagoan, I want to get rid of downstate.


  43. - Demoralized - Wednesday, Jun 19, 19 @ 2:08 pm:

    I’m sure they wouldn’t be sorry to lose you either Mr Wizard


  44. - ipi lie - Wednesday, Jun 19, 19 @ 2:08 pm:

    As much as I enjoyed Orphe’s emphatic, elongated spinning of the facts in committee testimony this year, I thought I’d take a quick look at this. The NY Times has an interesting story about the demise of Hartford that was in full swing by 1996. https://www.nytimes.com/2002/08/26/nyregion/poverty-in-a-land-of-plenty-can-hartford-ever-recover.html
    Orphe wouldn’t like some of the answers…caping personal property taxes at 1.5%, letting a private company manage the public schools into the ground, it goes on and on. Apparently some structural issues have harmed all of Connecticut’s cities while helping wealthy suburbs. None of that certainly contributed to poverty rates.


  45. - Oswego Willy - Wednesday, Jun 19, 19 @ 2:08 pm:

    ===- Bavette - Wednesday, Jun 19, 19 @ 2:07 pm

    As a Chicagoan, I want to get rid of downstate.===

    Dear friend,

    This ain’t The Facebook.

    Thanks.


  46. - Bavette - Wednesday, Jun 19, 19 @ 2:14 pm:

    That’s fine if Downstate is extreme right enough to want to get rid of high earning Chicagoland.


  47. - Bavette - Wednesday, Jun 19, 19 @ 2:16 pm:

    CPS, a government run entity, has been driven into the ground by public mismanagement. It definitely goes both ways.


  48. - SaulGoodman - Wednesday, Jun 19, 19 @ 2:29 pm:

    **In metro Chicago universe.**

    Good god. Even in metro Chicago you’d be in the top 5% of households with an income over $250k.


  49. - Distant watcher - Wednesday, Jun 19, 19 @ 2:56 pm:

    Focus, Rich. Focus.


  50. - JS Mill - Wednesday, Jun 19, 19 @ 3:23 pm:

    =A family in Metro Chicago making $275k is being punished=

    They are not being “punished” but their tax rate is higher. That isn’t a punishment.

    Start using grown up words.


  51. - njt - Wednesday, Jun 19, 19 @ 3:29 pm:

    ==Seattle has a progressive income tax?===

    My comment was with regards to the implication that increasing taxes on small business leads to employment decreases. This is not thought to be true, but Seattle is still studying the full effects. You can try Google for more answers.


  52. - Bavette - Wednesday, Jun 19, 19 @ 3:32 pm:

    What taxes did Seattle enact that are being studied?


  53. - Bavette - Wednesday, Jun 19, 19 @ 3:32 pm:

    JS, taking money from a family through taxation because they are successful is punishment.


  54. - Oswego Willy - Wednesday, Jun 19, 19 @ 3:37 pm:

    ===taking money from a family through taxation because they are successful is punishment.===

    Tell that to all the other states with a progress income tax … and the federal government.

    Your trolling is tiring.

    Making this a “millionaire tax” will only help it get passed.


  55. - njt - Wednesday, Jun 19, 19 @ 3:41 pm:

    ==What taxes did Seattle enact that are being studied?==

    A higher minimum wage, which like taxes, raise expenses on a business.


  56. - Enviro - Wednesday, Jun 19, 19 @ 3:47 pm:

    ==taking money from a family through taxation because they are successful is punishment==

    No need to panic @3:32pm

    Taxes on income of $250,000 would not be taxed at a higher rate.
    Only income over $250,000 would be taxed at a higher rate.


  57. - Morty - Wednesday, Jun 19, 19 @ 4:10 pm:

    ‘A family in Metro Chicago making $275k is doing just fine.”

    Fixed it for you.


  58. - Bavette - Wednesday, Jun 19, 19 @ 4:12 pm:

    They are doing fine, but they shouldn’t be punished for for hard work and being successful.


  59. - Morty - Wednesday, Jun 19, 19 @ 4:17 pm:

    “A family in Metro Chicago making $275k is being punished”

    They will pay $675.00 more.

    I believe to word you are looking for is “incovenienced”


  60. - PrairieDog - Wednesday, Jun 19, 19 @ 4:18 pm:

    4.95% of a million is a hell of a lot more than 4.95% of twenty thou. How is that not “fair”?


  61. - PrairieDog - Wednesday, Jun 19, 19 @ 4:19 pm:

    The Rich will be taxed at a higher rate because they are an unpopular minority. Own it.


  62. - Anonymous - Wednesday, Jun 19, 19 @ 4:27 pm:

    4.95% of a million is a hell of a lot more than 4.95% of twenty thou. How is that not “fair”?

    $20,000 is not a living wage even for one person.
    $1,000,000 could support at least 10 families.


  63. - Bavette - Wednesday, Jun 19, 19 @ 4:28 pm:

    Yep, it’s nothing but class warfare and confiscation by state government that has been poorly managed for decades.


  64. - Demoralized - Wednesday, Jun 19, 19 @ 4:28 pm:

    ==How is that not “fair”?==

    Because 4.95% of $25,000 is a far bigger deal from a financial hardship perspective to the guy making $25,000 than to the guy making $1 million.


  65. - Enviro - Wednesday, Jun 19, 19 @ 4:28 pm:

    That was my post @4:27 pm.


  66. - Demoralized - Wednesday, Jun 19, 19 @ 4:29 pm:

    ==confiscation==

    I was waiting for you to make that argument. Taxation is confiscation. Shouldn’t you be on one of those anti-government compounds out in Idaho?


  67. - Bavette - Wednesday, Jun 19, 19 @ 4:29 pm:

    There is no reason a family making $251k should be taxed at a higher rate than a family making $249,999.


  68. - Demoralized - Wednesday, Jun 19, 19 @ 4:32 pm:

    If you are trying to argue against a progressive income tax you aren’t doing a very good job. There isn’t a lot of sympathy from the vast majority of people who don’t make that kind of money. I suggest you find a new argument other than “it’s not fair.”


  69. - City Zen - Wednesday, Jun 19, 19 @ 4:32 pm:

    ==taking money from a family through taxation because they are successful is punishment.==

    They are only punished if they marry.


  70. - Oswego Willy - Wednesday, Jun 19, 19 @ 4:32 pm:

    ===There is no reason a family making $251k should be taxed at a higher rate than a family making $249,999.===

    You are arguing for the 3%

    Good luck with that, LOL


  71. - Demoralized - Wednesday, Jun 19, 19 @ 4:33 pm:

    ==They are only punished if they marry.==

    Give it a rest already. You beat the horse to death and then beat it some more.


  72. - Enviro - Wednesday, Jun 19, 19 @ 4:34 pm:

    ==There is no reason a family making $251k should be taxed at a higher rate than a family making $249,999.==

    Only $1.00 would be taxed at the higher rate..

    This should be obvious but I guess some people aren’t good at math.


  73. - Bavette - Wednesday, Jun 19, 19 @ 4:38 pm:

    I don’t care what the mob wants, I care for what is fair and just. We know what happens with mob rule.


  74. - Bavette - Wednesday, Jun 19, 19 @ 4:38 pm:

    Income taxes should be adjusted for cost of living like wages. It’s tiring subsidizing downstate, especially considering it’s hollowing out.


  75. - Oswego Willy - Wednesday, Jun 19, 19 @ 4:39 pm:

    ===They are only punished if they marry===

    Narrator: It only effects 3%, married or not.


  76. - Demoralized - Wednesday, Jun 19, 19 @ 4:40 pm:

    OK Bavette. Now you’re just trolling. I think it’s time to ignore your nonsense rantings.


  77. - Bavette - Wednesday, Jun 19, 19 @ 4:42 pm:

    Cost of living is a huge factor in wages. I don’t understand why it’s ignored so often.


  78. - Fixer - Wednesday, Jun 19, 19 @ 4:42 pm:

    Bavette, have to complained about this to the feds as well?


  79. - Bavette - Wednesday, Jun 19, 19 @ 4:47 pm:

    Demoralized, why should those of us in metro Chicago who have higher incomes due to a higher cost of living bare the brunt of the tax increases? We already pay more for downstate than they do.


  80. - Demoralized - Wednesday, Jun 19, 19 @ 4:57 pm:

    Since the post is about progressive taxation leading to increases in poverty my only response would be that I don’t believe any of the people you are crying about are being driven into poverty.


  81. - Morty - Wednesday, Jun 19, 19 @ 5:56 pm:

    ‘those of us in metro Chicago who have higher incomes due to a higher cost of living’

    If you are earning in the top 3% of income you have VERY little to complain about.

    Sorry.


  82. - Morty - Wednesday, Jun 19, 19 @ 5:57 pm:

    ‘I don’t care what the mob wants, I care for what is fair and just. We know what happens with mob rule.’

    Elitism at it’s best.

    You are really garnering a lot of sympathy


  83. - Bavette - Wednesday, Jun 19, 19 @ 8:42 pm:

    Morty, this has nothing to do with popularity. Just facts and fairness.


  84. - Oswego Willy - Wednesday, Jun 19, 19 @ 8:46 pm:

    ===this has nothing to do with popularity. Just facts and fairness.===

    Only folks making above $250K will see a higher rate… starting with $1 above $250K

    Everyone else, the 97%, won’t see any increase.

    No increase.

    The 3% are the effected, and only every dollar after the $250K


  85. - Bavette - Wednesday, Jun 19, 19 @ 11:00 pm:

    $250k for a familyy in the Chicago metro area is hardly rich. Why are their taxes being raised at all?


  86. - Oswego Willy - Wednesday, Jun 19, 19 @ 11:02 pm:

    ===$250k for a familyy in the Chicago metro area is hardly rich. Why are their taxes being raised at all?===

    We fed you. Go troll on The Facebook.

    It’s 3% of those in Illinois making over $250K

    That’s who you’re “fighting” for, LOL


  87. - Da Big Bad Wolf - Thursday, Jun 20, 19 @ 8:52 am:

    ==$250k for a family in the Chicago metro area is hardly rich. Why are their taxes being raised at all?==

    Their taxes will be raised, progressive tax or no, because we need more revenue and we have cut services to the bone.


  88. - Honeybear - Thursday, Jun 20, 19 @ 9:13 am:

    Wow, I love it.
    The wailing and gnashing of teeth
    of the wealthy
    the privileged
    the obviously greedy
    the calloused
    the hungry 3% ghosts
    distended belly, narrow neck
    shoving more and more inside
    but nothing will slake their lust for more.
    I shouldn’t be like this.
    I should be bigger
    but I’m not after Rauner.
    I admit my sin of loving
    Bavette’s plaintive wailing
    about fairness.

    You’re a hungry ghost Bavette
    You put yourself
    in this state.
    greedy and manipulative


  89. - Penny - Thursday, Jun 20, 19 @ 9:26 am:

    It is not just an economist from IPI saying that CT’s graduated taxes have lead to an elimination of a middle class, resulting in what I call a bifurcated economy–really rich and really poor–no in between.
    This is from The Atlantic: https://www.theatlantic.com/business/archive/2017/07/connecticut-tax-inequality-cities/532623/

    The economy and cold climate of Chicago are similar to CT. So, if there are nontax reasons for an exodus from CT, it may still apply to Chicago/IL.

    Forbes: https://www.forbes.com/sites/patrickgleason/2016/08/24/ctincometax/#3c92b4474006

    In IL, with the miinimum wage set to increase to $15, small to medium sized employers will be harmed and unemployment will increase. It’s axiomatic. If income taxes on those same employers increases, the effects will be magnified.

    The clear intent of the tone of some commenters is to punish and extract income from a certain class of citizens. For what? To fund a bloated mismanaged state? When will some costs be cut?

    As for “middle class taxes won’t increase.” Well, another pol from Chicago said we could keep our doctors and our insurance plans…sure.


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