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* SJ-R on the income tax increase’s upcoming expiration…
University of Illinois economist J. Fred Giertz said he doubts lawmakers would be willing to forgo the money when the state already is in dire financial trouble.
“I don’t see people willing to do that,” said Giertz. “Even with the tax increase, we have a shortfall. If you add pension costs, they are not going to think seriously about getting rid of the tax increases unless they are willing to make horrendous budget cuts.”
Next year is an election year, including for governor. Giertz said elected officials might consider it easier to extend the rate than to raise rates in the first place.
“Maybe they believe the political cost of not letting them expire won’t be as great as increasing the rates,” said Giertz.
* The Question: Do you believe the General Assembly will pass a bill that is signed into law permanently extending the tax hike? Take the poll and then explain your answer in comments, please.
posted by Rich Miller
Thursday, Apr 4, 13 @ 2:01 pm
Sorry, comments are closed at this time.
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I thought it would become permanent when they passed it in the first place.
Comment by downstate commissioner Thursday, Apr 4, 13 @ 2:05 pm
They’ll exptend it until they can replace it with a graduated income tax.
Comment by PublicServant Thursday, Apr 4, 13 @ 2:07 pm
Unless we increase sales tax base to services, there is no other way to keep revenues up other than to make 5% income tax permanent.
Comment by Nickypiii Thursday, Apr 4, 13 @ 2:12 pm
Who is going to vote for it? I just don’t see it.
Comment by The Captain Thursday, Apr 4, 13 @ 2:13 pm
Yes. There will be much sturm-und-drang, but there’s no other realistic option.
I predict a miraculous 60 votes in the House and 30 in the Senate, and Quinn will sign it. Unless he’s not renominated, then he might want to stick it to the next governor, lol.
Comment by wordslinger Thursday, Apr 4, 13 @ 2:14 pm
Yes they will pass a bill to extend the law to make the tax increase permanent.
However, I believe that they will reduce the rate from 5% to 4 1/2% in an attempt to appease the voters.
Comment by MOON Thursday, Apr 4, 13 @ 2:19 pm
I think they will just pass another extension. Maybe do what MOON suggests. But either way I think they have to keep the revenues at least for awhile.
Comment by Been There Thursday, Apr 4, 13 @ 2:20 pm
this site is very interesting………people making comments hoping to influence policy. I can promise you that over 50% of the voters in this state do not want a tax increase.
still, I think the tax has a chance of becoming permanent only because this state is currently circulating a fiscal toilet filled with “other stuff” and this is one of the only two big ticket items (other one is pension reform) which can actually make a big difference quickly.
however, making permanent these tax increases without significant cuts in the budget, and especially pension reform will go over like a you know what in the punch bowl with taxpayers.
we need honest adults with the interests of the entire state at heart thinking about these issues.
Comment by unbiased observer Thursday, Apr 4, 13 @ 2:23 pm
I didn’t vote (cop out, I know) because I honestly have no clue what to even guess. Seems like there is also a couple variables such as whose going to be Governor and an election right before hand. Obviously they could make it permanent in lame duck, but I think a lot will depend on how the election plays.
I would like to see them phase it out over time and look more into tax reform such as extending the sales tax to more services.
Comment by Ahoy! Thursday, Apr 4, 13 @ 2:27 pm
–I can promise you that over 50% of the voters in this state do not want a tax increase.–
My guess is closer to 100% don’t want it, but life is full of lousy choices.
Comment by wordslinger Thursday, Apr 4, 13 @ 2:30 pm
I didn’t think it was temporary when they passed it.
We need a graduated income tax.
Comment by Chavez-respecting Obamist Thursday, Apr 4, 13 @ 2:31 pm
The financial problems are so bad with the extension, they will have to extend to avoid decimating programs important to Democrat constituencies. In doing so, they will also offer up “sacrifices” to ameliorate the political backlash. Among these, a pension reduction package.
Comment by Norseman Thursday, Apr 4, 13 @ 2:34 pm
No. They’ll extend it without making it permanent.
Comment by Wensicia Thursday, Apr 4, 13 @ 2:36 pm
We need…. unbiased observers.
Comment by Chi Thursday, Apr 4, 13 @ 2:38 pm
The day it passed I posted it was a permanent tax. Quinn lied about this tax to get re elected and we will be lied to again to make it permanent.
Comment by Fed up Thursday, Apr 4, 13 @ 2:47 pm
The state must make it permanent in order to hopefully remove its scarlet stain from the Philly Fed Study chart posted on this site today.
Also, unless truly painful pension rollbacks are enacted (which are highly unlikely), a failure to make the increase permanent could invite another unpleasant visit from the bond rating agencies.
Of course, Governor Quinn could return from Mexico with a miraculous and painless solution to Illinois’ ills. I recommend a visit to the Basilica of Our Lady of Guadalupe. If it happens, that will be the place.
Comment by Cook County Commoner Thursday, Apr 4, 13 @ 2:54 pm
While they still have a Dem supermajority, it will be made permanent. Shortly after, depending upon next year’s election results, the new governor and supermajority will consult on increasing overall taxes through a graduated scheme. Meanwhile, the ILGOP will be working on their get out the vote brochures for the June 2015 governor’s and house and senate races…
Comment by Captain Illini Thursday, Apr 4, 13 @ 3:01 pm
A 4 year extension will be passed during veto session.
Comment by Six Degrees of Separation Thursday, Apr 4, 13 @ 3:22 pm
==this state is currently circulating a fiscal toilet filled with “other stuff”==
I am strongly against fiscal toilet circulation, empty or otherwise.
Comment by The Doc Thursday, Apr 4, 13 @ 3:32 pm
The real consequences to the 66% Illinois State Personal Income Tax increase passed in Jan 2011 was not felt until Jan 2013.
Jan 2013 was when the Fed’s 2% payroll tax break expired.
Since the Fed’s payroll tax break began at the exact same time that Illinois tax increase began what we had was a transfer of wealth and a theft from the future.
The transfer of wealth was from the taxpayers FICA social security retirement accounts and into the Illinois treasury.
It was like a free ride for Illinois politicians.
No-on in Illinois ever seen the Fed’s payroll tax break, the state took it. HOWEVER NOW THEY DO, but many are unable to connect the dots just like down the road when they will inform us all that the social security crisis is upon us MUCH FASTER than first thought!
Now that the payroll tax break expiration/state income tax increase is actually kicking in what do we see in Chicago’s economy? A loss of about 70,000 jobs in the last report, close to all the job gains of last year and I fear it’s just the begining . A non-farm payroll level that’s at the same level as in 1997.
I say it depends on how hard the economy gets hit when the voting time comes around but most likely once they have the money they are not giving it back.
Comment by anon Thursday, Apr 4, 13 @ 3:35 pm
The tax needs to be extended. It’s simple arithmetic.
Comment by 47th Ward Thursday, Apr 4, 13 @ 3:37 pm
We’ll do just like Cyprus. One day we’re all going to wake up to a report that the banks are closed and they’ll take what they need from our personal bank accounts and tell us it’s necessary to prevent bankruptcy.
Comment by anon Thursday, Apr 4, 13 @ 3:37 pm
I thought it was likely to be made permanent when it first passed. We taxpayers have gotten “used to it” by now so we won’t put up much of a stink.
Comment by dupage dan Thursday, Apr 4, 13 @ 3:52 pm
@anon:
Baloney. We aren’t Cyprus or Greece or any other country like that. People like to use those dishonest comparisons to try and make a point but the ridiculousness of those comparisons blurs the argument.
*************************
As for the tax increase, it would be dumb not to extend it. The revenue is needed just to keep the state dog paddling along. It would be the height of irresponsibility to let it expire.
Comment by Demoralized Thursday, Apr 4, 13 @ 3:53 pm
Again, a 5% personal income tax is very low! Look at the other States surrounding us and look at what they pay. The States personal exemption amount should be raised to help low and middle income taxpayers pay less of their income. A graduated tax will never happen because of the hoops needed to jump through to change the State constitution.
Comment by Nickypiii Thursday, Apr 4, 13 @ 4:09 pm
“We need a graduated income tax. ”
And when we amend the constitution to make that happen, we need to amend the pension clause, too.
Oh, and extend the income tax to pension income, too.
Comment by Chris Thursday, Apr 4, 13 @ 4:22 pm
The General Assembly has a majority of taxeaters, St. Rep. CL McCormick’s term
Comment by Cal Skinner Thursday, Apr 4, 13 @ 4:24 pm
Since when is a politician going to give BACK any money?
It is only a matter of time before it becomes permanent.
Comment by Huh? Thursday, Apr 4, 13 @ 4:25 pm
Yes. Illinois has and has had a revenue problem for decades. We need a graduated tax. Not sure why a graduated tax “will never happen because of the hoops needed to jump through to change the State constitution.” The hoops are being jumped through (or the hoops are being attempted to jump through) to change the State constitution for pensions………….why not taxes? No one would be looking or speaking of constitutional changes to amend pensions if the revenue had been raised to pay the bills for ALL Illinoisans along the way instead of using pension funds. Old news. But why one is constitutionally untouchable while the other is, is interesting.
Comment by geronimo Thursday, Apr 4, 13 @ 4:28 pm
The income tax increase was totally spent the moment that it was approved. Its function was to stop the increase in the unfunded pension liability when coupled with an economic recovery which would also increase tax revenue. That plan has failed to some degree as the eonomey has not yet fully recovered. The slowness of the recovery has resulted in the income tax increase only slowing the growth of the unfunded pension liability. Illinois cannot hope to fund the pension plans without the income tax increase or some other tax increase which is just as large.
Comment by Small Town Tax Payer Thursday, Apr 4, 13 @ 4:35 pm
I voted “No” because passing a permanent bill would be too honest for them… they’ll extend it for a few years, and probably do that over and over again, never really expecting to let the hikes expire but never being honest about their intentions.
It’s the smart thing to do.
Comment by Harry Thursday, Apr 4, 13 @ 4:40 pm
I’ll be surprised if Madigan puts 60 votes on an extension. The reason he got to 60 when it first passed was a big group of lame duck Dems who voted for it.
Besides, the income tax is sure to be a prime issue in the 2014 gubernatorial race. The politics of the issue suggest the hike will mostly expire as scheduled in 2015. Even though the loss of $6 billion in revenue would surely make us even less credit worthy.
Comment by reformer Thursday, Apr 4, 13 @ 4:57 pm
Probably another extention until a graduated income tax structure can be implemented.
Comment by Meaningless Thursday, Apr 4, 13 @ 5:05 pm
No - they’ll extend it another few years, knowing full well that the state needs the 5% rate to keep budget close to being balanced. But not enough votes to truly make it permanent.
Comment by Robert the Bruce Thursday, Apr 4, 13 @ 5:11 pm
If you give a polictitian a penny, he will always spend two. Rare is it ever they give money back
Comment by lewijoh Thursday, Apr 4, 13 @ 5:40 pm
How do they not? The whole is bigger now than it was when they passed the temporary. Jeeeeez.
Comment by downhereforyears Thursday, Apr 4, 13 @ 5:44 pm
As long as the Democrats are in power, taxes will go up.
Comment by VanillaMan Thursday, Apr 4, 13 @ 6:17 pm
@Wordslinger:
Which is why all the folks who voted for
the increase were voted outta office, right?
Comment by Percival Thursday, Apr 4, 13 @ 6:32 pm
–We’ll do just like Cyprus. One day we’re all going to wake up to a report that the banks are closed and they’ll take what they need from our personal bank accounts and tell us it’s necessary to prevent bankruptcy.–
Yeah, just like Cyprus. A money-laundering haven for Russian gangsters.
Is that a Illinois Review meme, or just a head injury? Is there a difference?
Comment by wordslinger Thursday, Apr 4, 13 @ 7:47 pm
Voted “yes”…
Come “End of Session”, the votes will magically be there, and right before Summer, and campaign season begins at the Fairs, we in Illinois are going to have that increase made permanent.
It’s not like Madigan or Cullerton are going to lose thier majorities of this. The seats they may lose, are already on “borrowed time”.
Comment by Oswego Willy Thursday, Apr 4, 13 @ 8:03 pm
Yes, it will become permanent … it’s the math, they can’t do without it.
Comment by RNUG Thursday, Apr 4, 13 @ 8:27 pm
madigan will extend the income tax increase then retire, lisa madigan for governor.
Comment by foster brooks Thursday, Apr 4, 13 @ 8:29 pm
I think when it comes down to it they will pass the constitutional amendment to permit themselves to levy a graduated tax. If that is approved by the voters in 2014, they will replace the 5% flat tax with a graduated tax that charges high earners up to a few percent more and reduces the tax on low and middle income by a few percent less. That will raise more revenue but reduce taxes for most people.
Comment by jake Thursday, Apr 4, 13 @ 10:08 pm
jake….
while they are passing constitutional amendments do you think they should pass another constitutional amendment to take away the main arguments of the “cant change anything about current pension plan” folks?
specifically, should they just remove the pension protection language to the illinois constitution at the same time? (and please dont write it wont matter because federal contract law will still protect the pensions, and if that doesnt work then intergalactic treaties with other solar systems also protect illinois pensions from ever being changed no matter what, no matter how little).
it going to take pension reform and increased taxes and adults compromising to make this work.
Comment by unbiased observer Friday, Apr 5, 13 @ 6:26 am
They could do that biased observer, but it would be struck down as a state law impairing the Obligation of Contracts per Article 1, Section 10 of the US Constitution. The state can, of course, try, but ice in hell has a better chance of surviving.
Comment by PublicServant Friday, Apr 5, 13 @ 6:46 am
shocking response from public servant. very big minded, big picture, broad thinking. love the fact that you dont view this state’s problems from a narrow perspective.
Comment by unbiased observer Friday, Apr 5, 13 @ 6:59 am
That, biased observer, IS the big picture. Constitutional options to resolve the state’s debt problems have been offered. The sooner we get around to implementing them, the better for the state.
Comment by PublicServant Friday, Apr 5, 13 @ 7:08 am
folks this comes down to three things.
math, politics, and current law. i list them in order of importance.
the math cannot change. the state is heading for a disaster. the only 2 things which can make the quick big changes needed are pension reform AND revenue increases. they must occur together.
politics will not allow tax increases without pension reform. voters will not support increased taxes merely to maintain perceived generous pensions (whether true or not is politically immaterial) of a very small minority of state population.
legal issues are very important, too. this will be looked at by the supreme court and consideration may have to be given to change the constitution to just bypass all this controversy about language in current constitution preventing vitally necessary changes in pension obligations.
fair, honest adults need to sit around and figure out the absolute smallest amount of tax increase needed to get us through this mess and they also need to figure out the absolute smallest pension benefit decrease to get us through this mess.
there is your blueprint, folks. do work.
Comment by unbiased observer Friday, Apr 5, 13 @ 7:37 am
Folks, biased observer presents what he, via his crystal ball, thinks will happen at some unspecified point in the future. And he mentions math, but doesn’t support it with figures, instead falling back on his self-appointed role as the prophet of doom. He thinks he’s being fair and open-minded, but, in reality, allows his opinions to govern the actions that he says must occur because his reality is unforgiving. Now I understand how he feels. No one likes to pay taxes, but as has been pointed out many times before on this site, the state’s problem is debt and a structural deficit that has existed for 7 decades. The pensions were just the bank, and if they weren’t there to borrow from, the feds would have required a 6.25% fica payment from the state annually. The state couldn’t borrow from that now could they? In the private sector, that 6.25% is paid by the employer. In addition, most contribute a matching amount towards employee 401Ks. I’ve worked in both the private sector and the public sector. In the United States, and Illinois, the rule of law cannot just be disregarded because it is politically expedient. In fact, that rule of law frees the private sector to focus on profits and the public sector to focus on providing the services that support US society at all levels.
The problems that Illinois faces are not insurmountable, but they will require sacrifice from all Illinois citizens. Passing unconstitutional laws is not a solution, and is the worst way to kick the can down the road because it makes people think that a problem has been solved when it really hasn’t. The debt/structural deficit issue has been allowed to fester long enough. Consider and implement the legal solutions that have been offered.
That’s the real blueprint folks. Lets solve this together.
Comment by PublicServant Friday, Apr 5, 13 @ 8:02 am
public servant suggests implementing all possible solutions to the fiscal catastrophe EXCEPT pension reform, which he deems unconstitutional. I remind public servant that his opinion and frankly anyone else’s opinion with the exception of a judge is ultimately irrelevant.
legislators, the politics favor pension reform. trying to raise revenue and NOT addressing pension issue is politically not going to work. way more people will be affected by tax increases than pension reform. it is simple political calculus. that being said, I think both are needed, despite what public servant states to the contrary. its too bad he isn’t willing to compromise as well.
also, the causes of this fiscal are tragic and unfortunate. however, they are in the past and focusing on the misdeeds of the past, and allowing ourselves to become so emotional and angry over what transpired obfuscates our ability to find concrete solutions in the present and the future.
lets focus on solutions, and not be embittered by the past misdeeds. the entire state will take a hit on this as part of the solution, and that will include pension reform.
as for illegality of pension reform, we will let the courts decide that. lets not forget that part of our system allows us create new laws to server the public needs, and to eliminate older laws which no longer serve society. happens all the time.
Comment by unbiased observer Friday, Apr 5, 13 @ 9:44 am
Frankly UB, we both have opinions. We disagree. I am, unlike you seem to have decided, willing to compromise, but I would rather not have the state did itself a deeper hole than it has already dug for its citizens by doing things that most thinking people say are unconstitutional. If those types of “solutions” are pursued, I will oppose them, take the state to court, and win. You may not think that will happen, but if, and I believe when it does, what “solutions” will you get behind than?
Comment by PublicServant Friday, Apr 5, 13 @ 11:17 am
we will cross that bridge when and if we come to it. unfortunately, if we cant come to an agreement involving both revenue increase and pension reform within about 2-3 years, we are going to see an unprecedented level of dysfunction by a state.
over 30% state budget towards pension obligation in 2014 and heading north yearly. it is unsustainable. i agree that pension folks got hosed over many years, but dwelling upon that doesnt really solve our problems. and the understandable emotion that betrayal elicits, oftentimes clouds the reason of affected individuals. i understand that, but it doesnt solve the problem. we need to have laser like focus of solutions. solutions which are as fair as possible for the entire state population.
Comment by unbiased observer Friday, Apr 5, 13 @ 12:21 pm