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It’s not so much the taxes, it’s the growing debt

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* WGN TV interviewed University of Chicago Professor Roger Myerson, who was awarded the 2007 Nobel Prize in Economics, on the governor’s proposed graduated income tax…

But University of Chicago Professor Roger Myerson says framing the debate around the idea that higher taxes would make people leave doesn’t think the issue through all the way. […]

Illinois owes roughly $132 billion in unpaid pension debt, which divides into less than $30,000 per household. Myerson calls this amount the, “hidden mortgage, hidden debt that politicians didn’t tell us about because they weren’t taxing us.” […]

To determine whether or not the state is better or worse off because of this unpaid obligation, Myerson said you need to compare it to a hypothetical Illinois where everyone has been paying more taxes over the last 30 years.

This would mean that the future tax bills for each household would be less, on average. But as a result, the state would become more desirable and housing would become more expensive. And homeowners would need to take on more debt to buy a house. […]

“Of course there is some cost to having to pay more taxes, that’s true. But, it’s not going to ruin the state of Illinois,” Myerson said. “What is more ruinous to Illinois is the systematic unwillingness to face the realities of budgeting, and accumulating debts that will just increase the burden in the future.”

Thoughts?

posted by Rich Miller
Wednesday, Oct 23, 19 @ 11:59 am

Comments

I would gladly pay $30,000 to the state now to avoid my taxes going up in the future.

Comment by Packer Fan Wednesday, Oct 23, 19 @ 12:05 pm
I hate it when Nobel Prize-winning economists who study empirical data provide complicated solutions. Let’s just stick with Tribune anecdotes.

Comment by Roman Wednesday, Oct 23, 19 @ 12:06 pm
Oh so Madigan was just instituting backdoor rent control this whole time!

Comment by Bad Politician Wednesday, Oct 23, 19 @ 12:08 pm
Welp, Donna Arduin might disagree…

To the post,

Thanks Rich for having this part visible;

=== “Of course there is some cost to having to pay more taxes, that’s true. But, it’s not going to ruin the state of Illinois,” Myerson said. “What is more ruinous to Illinois is the systematic unwillingness to face the realities of budgeting, and accumulating debts that will just increase the burden in the future.”===

What is there to disagree? The anecdotal thoughts versus the mathematical analysis by a Nobel, and looking at the political and budgetary, those like Mr. Byrne were never going to be convinced, math is their own math, and that’s “fine” for them. The real concern is for a state founded in 1818 and will be here well past 2019.

It’s economic eyeballs with a realistic mathematical bend.

We’ll see if it first passes, then how this governor takes the ball and sets a table for today and the tomorrows.

Comment by Oswego Willy Wednesday, Oct 23, 19 @ 12:09 pm
Another major hole in the phony right wing talking point and scare tactic, that the rich will leave Illinois because of a graduated income tax.

Spot on about irresponsibility. We’ve been prevented by the state constitution from a fairer progressive state income tax and have missed out on revenue. Now, finally, we have a chance to correct that. The many Democrats who voted for the graduated income tax, Pritzker, unions and other supporters have a great opportunity to band together and turn out voters to pass the amendment. It will need a huge effort. Many supporters want to pay our bills. That’s the point, pay better.

Comment by Grandson of Man Wednesday, Oct 23, 19 @ 12:18 pm
New Study Proves That Higher States Do Drive Wealthy Taxpayers, Job Creators Out Of A State - Wall Street Journal

https://www.wsj.com/articles/californias-tax-the-rich-boomerang-11571697967

Comment by JM Wednesday, Oct 23, 19 @ 12:22 pm
Somebody tell Katrina.

Comment by Marty Funkhouser Wednesday, Oct 23, 19 @ 12:24 pm
Enough with the reasoned analysis already, Prof. Myerson. The Eastern Bloc is hard at work trying to form West Kentucky and you’re hampering their efforts with your facts and inconvenient truths. /s

Comment by Bourbon Street Wednesday, Oct 23, 19 @ 12:30 pm
“But, it’s not going to ruin the state of Illinois”

Enough about you. Let’s talk about me.

Comment by City Zen Wednesday, Oct 23, 19 @ 12:34 pm
Grandson. You are really good at spending other folks money under your premise of ‘fairness’.

Comment by Blue Dog Dem Wednesday, Oct 23, 19 @ 12:35 pm
It is illogical to compare 30 years of payments to:

With
.

In the first instance, an investor has paid
Xdollars over 30 years and received nothing of value in return except average quality social service provision required by law in America and available in every other State at far lower cost.

In America, Xdollars invested in homes over 30 years returns are non- negative, because while paying fair value for normally priced social service provision, property has not devalued relative to other actual options.

In “Alt-Ill’, 30 years of higher tax payment is theoretically supposed to have obviated the debt at issue and have ” increased property values”…

1.This fails to consider Tax Rate Capitalization theory, in which aberrant tax rates are capitalized as negative property value.
2. This assumes an apples-to-apples comparison of the value of funds allocation between:
A)paying for overpriced ( as compared to all of America) social service provision of similar average quality.
B) deployment of funds as interest payments to leverage purchasing power of something of perceived value( real estate).

Comment by Susanh Wednesday, Oct 23, 19 @ 12:41 pm
“Grandson. You are really good at spending other folks money under your premise of ‘fairness’.”

Look to see who’s taken more tax dollars than paid in, both downstate and in other states, and then talk about spending other people’s money.

The fair tax will save the vast majority of Illinois state income taxpayers’ money, so we’ll be taking less of “other people’s money.”

Comment by Grandson of Man Wednesday, Oct 23, 19 @ 12:44 pm
==which divides into less than $30,000 per household==

Really, each household is taking on an equal share of that debt? I’d wager maybe half the household population of Illinois could shoulder that debt. So double it.

Say you’re one of those unlucky ones shouldering that $60,000 burden, paying $2k/yr extra in taxes over 30 years. Or, I could invest that money and have $200,000 annuity waiting for me at retirement. I could spend my remaining days in Illinois property tax free and never touch the principal. Decisions, decisions.

Opportunity costs, professor. What the state takes from us today comes out of our retirement accounts tomorrow. I’m sure the state doesn’t mind, but I do.

Comment by City Zen Wednesday, Oct 23, 19 @ 12:46 pm
=== Say you’re one of those unlucky ones shouldering that $60,000 burden, paying $2k/yr extra in taxes over 30 years. Or, I could invest that money and have $200,000 annuity waiting for me at retirement. I could spend my remaining days in Illinois property tax free and never touch the principal. Decisions, decisions.===

How many folks fit in your wayback machine. Do you serve food on the trip?

Comment by Oswego Willy Wednesday, Oct 23, 19 @ 12:48 pm
Does this not imply at least a bit that pension promises also contributed to this problem? We’ve already done this so we’re on the hook whether we like it or not. What we don’t have to do is continue doing so at a rate beyond our ability to raise the revenue to keep those promises.

Comment by A guy Wednesday, Oct 23, 19 @ 12:49 pm
==except average quality social service provision required by law in America and available in every other State at far lower cost.===

Assumes facts not in evidence. Plus, you’ve apparently never lived anywhere else if you think this.

“Tax Rate Capitalization theory” shows bupkis on the Google, btw.

Comment by Simple Simon Wednesday, Oct 23, 19 @ 12:55 pm
Grandson. Just curious. Are you part of the 3% or the 97%. I think its important for folks to know.

Comment by Blue Dog Dem Wednesday, Oct 23, 19 @ 12:58 pm
“Does this not imply at least a bit that pension promises also contributed to this problem?”

We’ve reformed pensions already, but not the tax code, so the rich can finally be taxed more instead of us returning to cut middle class workers. The fair tax is a pretty good deal, because the higher rates will kick in only for higher incomes, starting at $250,001/year. In other states, high graduated rates kick in at much lower incomes.

Comment by Grandson of Man Wednesday, Oct 23, 19 @ 1:00 pm
The Nobel theorist will know what is tax rate capitalization.
And facts in evidence are the general theory under discussion. The model set forth is assuming that Alt-Ill is standard in relevant economic variables, or this professor would have stated otherwise
Property tax rate literally means: the spending by a community relative to the means of the community.
Illinois property tax rate is aberrant by any standards.
Chicago has it easy btw, in my taxing district the rate has hovered near and above 4% of full fair market value since shortly after the crash

Comment by Susanh Wednesday, Oct 23, 19 @ 1:02 pm
==How many folks fit in your wayback machine.==

Not as many as Myerson’s.

Comment by City Zen Wednesday, Oct 23, 19 @ 1:08 pm
==What we don’t have to do is continue doing so at a rate beyond our ability to raise the revenue to keep those promises.===

How do you figure that we are beyond our ability to raise revenue? Plus, what is your plan other than raising sufficient revenue to pay our bills? I get tired of asking the question when no one ever answers.

Susanh, quality of and spending on social services vary widely across the country. Something of value was received that was greater than other places, so your initial assumption is incorrect. If you want us to be like Mississippi, that is a choice, but I’m glad you are not in the majority.

Comment by Simple Simon Wednesday, Oct 23, 19 @ 1:11 pm
“what they’re going to do ultimately is affect land values”

Comforting if you’re a farmer, commercial property owner, or businesses owner. But I guess those cheap skates haven’t been paying their fair share.

“What is more ruinous to Illinois is the systematic unwillingness to face the realities of budgeting, and accumulating debts that will just increase the burden in the future.”

I’s sure those magic 6% cuts the Governor ordered his agencies find will solve this by mid-March

Comment by Red Ranger Wednesday, Oct 23, 19 @ 1:13 pm
=== Not as many as Myerson’s===

Since he’s talking about moving forward… and a Nobel…

I’m guessing that “snark” of yours isn’t accurate either.

Comment by Oswego Willy Wednesday, Oct 23, 19 @ 1:13 pm
I think it is a great question, in that we should clarify defining the 3% to include public workers getting defined benefits and OPEBs. All present-value multimillionaires by virtue of these entitlements.

When you present-value these benefits as annuities (how much would, say, a nurse need to place in a tax deferred account and for how many years) in order to amass an amount sufficient to purchase an annuity which would pay a fixed amount for 40 or more years with 3% cumulative annual increases.
And similar quantification should be done for health/dental/life/eye/other insurance premium entitlements.

The public service sector may be considered the 1%, when you quantify actual numbers of the covert, hidden, non-taxed benefits packages.
Everyone else is at risk (not being Constitutionally guaranteed) to pay for their own retirement needs in addition to pledging all property as collateral to guarantee these defined benefits to public workers.

Comment by Susanh Wednesday, Oct 23, 19 @ 1:14 pm
=Not as many as Myerson’s.=

How many Nobel prizes do you have?

I’ll take his word over yours, but then again HE has established credentials.

Comment by JS Mill Wednesday, Oct 23, 19 @ 1:18 pm
I understand that it is in the best interest of those who profit under current conditions to keep the conversation generalized, subjective, and emotional.

I invite those who are intellectually honest and have a true desire to help Illinois rather than maintain a self-serving status quo to investigate objective measurements of quality of social service provision.
here is one: nces.ed.gov

Comment by Susanh Wednesday, Oct 23, 19 @ 1:22 pm
=== I understand that it is in the best interest of those who profit under current conditions to keep the conversation generalized, subjective, and emotional.

I invite those who are intellectually honest and have a true desire to help Illinois rather than maintain a self-serving status quo to investigate objective measurements of quality of social service provision.===

I haveta be honest.

Your gibberish, I have NO idea what you’re advocating, for, against, or… whatever.

Please try again, and this time try clarity and brevity, the 50 cent words are hurting… whatever it is you wanna yell at.

Comment by Oswego Willy Wednesday, Oct 23, 19 @ 1:25 pm
Prof Myerson’s hypothetical assumes that the increased taxes collected over the last 30 years in his “Alt-Illinois” scenario would have been spent wisely in contributions to pension funds, etc. by the same politicians that got us into this mess to begin with.

It wouldn’t have mattered how much incremental money the politicians would have had in his scenario, they would not have done the right thing with the money.

That’s who they are.

That’s what they do.

Comment by Occam Wednesday, Oct 23, 19 @ 1:28 pm
===That’s what they do===

Agreed.

Comment by Rich Miller Wednesday, Oct 23, 19 @ 1:32 pm
Susanh…your initial assumptions were wrong. Services vary widely in cost and quality by state, so you can’t discount benefits received by a state. Pointing me to a vast database with no specific products does not help your argument.

If you think all social services are the same, feel free to Google high school graduation rates. Illinois is 31st, Mississippi is 49th. Illinois is 13th in bachelor’s degrees, Mississippi 51st. Where would you locate a business that needs an educated workforce?

Comment by Simple Simon Wednesday, Oct 23, 19 @ 1:47 pm
People who are interested in the short WGN-TV interview might want to look at the op-ed essay on which it was based. It is available at
https://home.uchicago.edu/~rmyerson/research/progressivetax.pdf

Comment by Roger Myerson Wednesday, Oct 23, 19 @ 1:47 pm
JM -
The Murdoch publication that made reporters call Teddy Roosevelt’s inheritance tax “the death tax” ???? That the best you got? Before you reply, remember his first action when he bought National Geographic was to lay off fact checkers and proofreaders … .

Comment by Anyone Remember Wednesday, Oct 23, 19 @ 1:51 pm
I’m not sure what makes Myerson’s conclusions “news”. The IPI has been sounding the alarm on the ever-growing pension-driven debt and its future ramifications for the past decade or so. The difference is, the IPI advocated defaulting on it (until the ILSC shut that argument down). Now that we’re stuck with it (but only if you stay in the state), the question becomes, “Who’s going to pay for it?” And anyone who thinks that the 3% won’t find a way to pass it down to the 97% somehow, should start looking for a bridge to buy.

Comment by Stuntman Bob's Brother Wednesday, Oct 23, 19 @ 1:53 pm
==All present-value multimillionaires by virtue of these entitlements.===

This is just incorrect. No other way to say it. And the rest of your post is simply rewarmed IPI nonsense.

Comment by Simple Simon Wednesday, Oct 23, 19 @ 1:53 pm
==Since he’s talking about moving forward==

“Myerson said you need to compare it to a hypothetical Illinois where everyone has been paying more taxes over the last 30 years.”

“Last 30 years.”

“Last”

==How many Nobel prizes do you have?==

One less than Myerson.

Comment by City Zen Wednesday, Oct 23, 19 @ 1:53 pm
It’s a theory boys and girls. So lets see if the progressive tax solves the state’s problems. Of course, there was an earlier post that contained a link to some work done by two Stanford economists. That one spoke to what high earners in California did after a spike in the progressive rate. Not exactly mind blowing, but that one is based on actual data as opposed to Professor Myerson’s theory. But if the theory fits the narrative you like, get on that bus.

Maybe Professor Myerson can address how a neighboring state to the east has had a low flat tax and hasn’t presented a bill for $30,000 to every household.

Do you have $30,000 to foot your share of the bill Grandson, or are you going to lay that off on your neighbor? Never mind, we know the answer.

Comment by SSL Wednesday, Oct 23, 19 @ 2:11 pm
Good Dr. Myerson may weigh in on these questions:
(and I will go read the paper he cited)

1. How does tax rate capitalization factor into your model?

2. What is present value of an annuity GUARANTEED by the full faith and credit of Illinois (so I guess the rate of return assumption must be no higher than 30 year Treasury rates?) for a 40 year (assumed age 56 retirement and assumptions for the highest-pampered class of medical txt recipients) for $90,000 starting retirement annuity?

3. Was your Ill/AltIll model intended to suggest that money spent on social service provision of ‘average’ quality is fungible with money spent on interest to purchase the use of money in order to vest ownership in an asset?

4. Will he suggest an objective source for quantifying value of social service provision (schools, primarily) relative to other States in America?

Comment by Susanh Wednesday, Oct 23, 19 @ 2:12 pm
=== “Myerson said you need to compare it to a hypothetical Illinois where everyone has been paying more taxes over the last 30 years.”

“Last 30 years.”

“Last”===

Keep up…

=== “Of course there is some cost to having to pay more taxes, that’s true. But, it’s not going to ruin the state of Illinois,” Myerson said. “What is more ruinous to Illinois is the systematic unwillingness to face the realities of budgeting, and accumulating debts that will just increase the burden in the future.”===

You worry about, first the 3%, then it was the “married” folks…

=== One less than Myerson.===

Lots of folks fall in that category then equal Myerson, just saying.

Comment by Oswego Willy Wednesday, Oct 23, 19 @ 2:15 pm
=== 2. What is present value of an annuity GUARANTEED by the full faith and credit of Illinois (so I guess the rate of return assumption must be no higher than 30 year Treasury rates?) for a 40 year (assumed age 56 retirement and assumptions for the highest-pampered class of medical txt recipients) for $90,000 starting retirement annuity?===

Can you explain the Illinois constitution in regards to the pensions, and the difference between Tier 1 and Tier 2?

Thanks.

Comment by Oswego Willy Wednesday, Oct 23, 19 @ 2:18 pm
==2. What is present value of an annuity GUARANTEED by the full faith and credit of Illinois (so I guess the rate of return assumption must be no higher than 30 year Treasury rates?) for a 40 year (assumed age 56 retirement and assumptions for the highest-pampered class of medical txt recipients) for $90,000 starting retirement annuity?===

Absolute nonsense to suggest that this is the typical pensioner or annuity. Some higher paid staff yes, but the average SURS payment is $3278 (2017 SURS report). A 40 year payout is a pipe dream for literally everyone. Typical payouts would be more like 15 years.

A better question is why the obsession with this? The pensions have to be paid, or haven’t you been around IPI long enough to remember the ILSC rulings?

Comment by Simple Simon Wednesday, Oct 23, 19 @ 2:25 pm
Why don’t YOU explain it, then I will correct YOU?

This was an interesting chat, I thought, because a person of intellectual integrity was involved (Dr. Myerson).
I am realizing that this blog is populated by indoctrinated acolytes to a particular agenda.

No real attempts to share information, disagree spiritedly but with an open mind to learn from the others, and in the end to devise strategies which are equitable to all Illinois taxpayers.

It seems illogical to continue in this vein.

Comment by Susanh Wednesday, Oct 23, 19 @ 2:25 pm
=== Why don’t YOU explain it, then I will correct YOU?===

It’s not something to feel bad about…that you can’t. Projecting that on me is not great, but…

=== This was an interesting chat, I thought, because a person of intellectual integrity was involved (Dr. Myerson).
I am realizing that this blog is populated by indoctrinated acolytes to a particular agenda.===

“It’s not me, it’s you”… that’s fun.

=== in the end to devise strategies which are equitable to all Illinois taxpayers.===

Prolly why i asked about your understanding of that pesky constitution. Yep. Prolly. Oh, we’re all taxpayers, thanks.

=== It seems illogical to continue in this vein.===

Hopefully next time you’ll bring more than 50 cent word gibberish?

Be well.

Comment by Oswego Willy Wednesday, Oct 23, 19 @ 2:30 pm
=One less than Myerson.=

The distance between his one and your none (or mine for that matter) is measured in light years.

=I am realizing that this blog is populated by indoctrinated acolytes to a particular agenda.

No real attempts to share information, disagree spiritedly but with an open mind to learn from the others, and in the end to devise strategies which are equitable to all Illinois taxpayers.

It seems illogical to continue in this vein.=

Get some thicker skin and come back.

Comment by JS Mill Wednesday, Oct 23, 19 @ 2:31 pm
==It seems illogical to continue in this vein===

Indeed.

==No real attempts to share information===

I don’t know, I thought I shared a lot with you.

==in the end to devise strategies which are equitable to all Illinois taxpayers.===

Feel free to contribute something that is constitutional. I’ve been paying attention for years now and have not heard anything other than Tier 2 or true consideration models that have not paid off like predicted.

Comment by Simple Simon Wednesday, Oct 23, 19 @ 2:31 pm
“intellectual integrity” -

Yeah, no. Not gonna find that here. Just OW looking to bat you down with /s and LOL’s with a lack of understanding that he makes himself look petty and ignorant.

Comment by WILLYWONKA Wednesday, Oct 23, 19 @ 2:35 pm
This is annuity of typical career described in cps contract.
With only moderate pension spiking (we won’t assume typical stipend packing).

You are welcome to describe case study of early retiree 56 year old with contractual entitlement to pension spiking, and health insurance premium entitlements for 9 or more years, and other OPEBs.

Saying it ain’t so don’t make it not so.

This is the contractual legal entitlement of tens of thousands of Illinois public employees.

Read the teachers’ contracts.
But I suspect you have.

Comment by Susanh Wednesday, Oct 23, 19 @ 2:35 pm
=== Yeah, no. Not gonna find that here. Just … looking to bat you down with /s and LOL’s with a lack of understanding that he makes himself look petty and ignorant.===

I dunno if this adds to the discussion…

Comment by Oswego Willy Wednesday, Oct 23, 19 @ 2:38 pm
==It seems illogical to continue in this vein.==

Mr. Spock, is that you?

Comment by don the legend Wednesday, Oct 23, 19 @ 2:42 pm
==Keep up…==

I’m using the same time frame as our prize-winning time traveler. Are you implying he needs to keep up?

====You worry about, first the 3%, then it was the “married” folks…==

I’m still worried about those married folks. Do they know there’s a Marriage Penalty? And their taxes would go up every year under the “fair” tax due to no inflation indexing?

Won’t someone please think of those married folks.

==The distance between his one and your none (or mine for that matter) is measured in light years.==

That UOM is not sanctioned by the awards committee.

Comment by City Zen Wednesday, Oct 23, 19 @ 2:47 pm
=== I’m still worried about those married folks. Do they know there’s a Marriage Penalty? And their taxes would go up every year under the “fair” tax due to no inflation indexing?===

Fighting for the 3% seems like a weird mantle as your distain for pensions is also a part of your argument against labor.

Weird hill to stand… “What about the 3%”

=== I’m using the same time frame as our prize-winning time traveler. Are you implying he needs to keep up?===

The a Nobel winning economist then closed with….

=== “Of course there is some cost to having to pay more taxes, that’s true. But, it’s not going to ruin the state of Illinois,” Myerson said. “What is more ruinous to Illinois is the systematic unwillingness to face the realities of budgeting, and accumulating debts that will just increase the burden in the future.”===

Agree? Disagree? Is he wrong… going forward?

Now, it’s up to the legislature and Governor to do right, but, lol

Comment by Oswego Willy Wednesday, Oct 23, 19 @ 2:54 pm
Susanh, let’s get back to your stated purpose to devise strategies which are equitable to all Illinois taxpayers.”

Given the ILSC rulings that pensions must be paid, how do you get to your goal? Clearly you want to change the pensions, but they cannot be. That’s a puzzler. It may be why folks on here have no patience with the sophistry, since we’re trying to form solutions to the real world situation.

Comment by Simple Simon Wednesday, Oct 23, 19 @ 2:58 pm
I was just wondering, why doesn’t Illinois look into amending the state constitution? The current constitution is the 4th Illinois has had and it was adopted in 1970. Times have changed. Democrats have the majority and a Democrat Governor. Why can’t they look into amending the pension clause and save Illinois? Or do we have to wait for the fiscal situation to get worse?

Comment by Anonymous Wednesday, Oct 23, 19 @ 3:03 pm
susanh, you have met the best of Mr. Willy.

Comment by Pick a Name Wednesday, Oct 23, 19 @ 3:05 pm
=== I was just wondering, why doesn’t Illinois look into amending the state constitution? The current constitution is the 4th Illinois has had and it was adopted in 1970. Times have changed.===

Narrator: the last call for a constitutional convention failed at the ballot box #InstitutionalKnowledge

Choose a name, please.

Comment by Oswego Willy Wednesday, Oct 23, 19 @ 3:06 pm
=== Why can’t they look into amending the pension clause and save Illinois? Or do we have to wait for the fiscal situation to get worse?===

Explain the process to amend the Illinois constitution.

Thanks.

Comment by Oswego Willy Wednesday, Oct 23, 19 @ 3:07 pm
For those still dreaming of pension “reform” - just stop. The Illinois Supreme Court has not just rejected every such effort, they almost always have done so unanimously. They even shot down the case changes to health care coverage by relying on the pension clause. It’s beyond a pipe dream at this point.

Comment by Anon Wednesday, Oct 23, 19 @ 3:07 pm
=== Given the ILSC rulings that pensions must be paid, how do you get to your goal? Clearly you want to change the pensions, but they cannot be. That’s a puzzler. It may be why folks on here have no patience with the sophistry, since we’re trying to form solutions to the real world situation.===

Are there questions to *this*… ?

Yep.

Comment by Oswego Willy Wednesday, Oct 23, 19 @ 3:08 pm
Dear Anonymous, assuming you are new to this issue, the constitution can be amended (OW suggested looking it up). However, there are other state and federal protections for benefits already earned. Therefore, the vast majority of the “pension debt” would still be owed. And why allow the current employees to be stiffed for little gain, especially when Tier 2 is in place? Sounds like a bad way to treat any fellow human.

Comment by Simple Simon Wednesday, Oct 23, 19 @ 3:16 pm
==Agree? Disagree? Is he wrong… going forward?==

I already addressed that statement in my earlier post.

“Of course there is some cost to having to pay more taxes, that’s true.”

Correct. That cost comes from everyone’s retirement savings. Opportunity cost. Agreed.

“What is more ruinous to Illinois is the systematic unwillingness to face the realities of budgeting, and accumulating debts that will just increase the burden in the future.”

Hard to deny that.

Comment by City Zen Wednesday, Oct 23, 19 @ 3:16 pm
=== vast majority of the “pension debt” would still be owed.===

ILSC - What is owed, is owed. I don’t recall “vast majority” in their ruling.

Comment by Oswego Willy Wednesday, Oct 23, 19 @ 3:24 pm
OW, I was thinking that if the constitution were amended, current employees could be made to pay more in the future, thus saving some of the projected cost to the state. Of course, all previously earned benefits are fully protected by other laws. That’s how I got to “vast majority”. Too abbreviated, perhaps.

Comment by Simple Simon Wednesday, Oct 23, 19 @ 3:28 pm
You only have to know two things about Pritzkers’ budget. The amount his progressive income tax will bring in (around 4 billion) and the additional amount he is proposing to spend: around 10 billion.

Anyone with the sense to avoid being a Nobel Prize winning economist (virtually everyone) can see that almost as soon as the progressive tax passes (if it does) another round of tax increases will be proposed.

We do live in interesting times.

Comment by Tomb Wednesday, Oct 23, 19 @ 3:51 pm
Cousin question to the post, but is there a point in future years where changes in population demographics (post-baby boomers) provide some relief?

Comment by Anon for Now Wednesday, Oct 23, 19 @ 3:54 pm
Grandson of Man said “Many supporters want to pay our bills. That’s the point, pay better.”
Blue Dog Dem then said: “Grandson. You are really good at spending other folks money under your premise of ‘fairness’.”
So Dog, we shouldn’t pay our bills, is that what you’re saying?

Comment by All This Wednesday, Oct 23, 19 @ 4:27 pm
Susanh: “I invite those who are intellectually honest…”
Ugh, give me a break. Let’s start with you. Annuities aren’t pensions. You need a lot more annuity money to generate a $30k a year payout from an annuity than a pension fund, because with an annuity you don’t touch the principal.
Life expectancy in the US is 78.7. Your off a bit with your projection of forty years after 56(96).
The pensioner makes contributions too. And people retiring now made contributions when the interest rates were much higher.

Comment by 17% Solution Wednesday, Oct 23, 19 @ 4:39 pm
Indiana has less debt because they came close to bankruptcy early in their history. They have less government because they had to pay their way and could not borrow off the books.

We have to repay the borrowed money and have gotten used to higher levels of service. We could cut, but don’t want to cut.

Comment by Last Bull Moose Wednesday, Oct 23, 19 @ 6:42 pm
All this. I am not the one who over promised pension benefits,failed to make pension payments or insists on making spending promises you cant keep.

My bad luck to pay more taxes, but my unborn grandkids will foot most of the bill.

Comment by Blue Dog Dem Wednesday, Oct 23, 19 @ 6:55 pm
Blue Dog - Only if they are in the state …

Comment by Looking down the Road Wednesday, Oct 23, 19 @ 6:56 pm
Looking. I know. It would break my heart but i understand this isnt much of a state if your lower middle class.

Comment by Blue Dog Dem Wednesday, Oct 23, 19 @ 7:11 pm
==Maybe Professor Myerson can address how a neighboring state to the east has had a low flat tax and hasn’t presented a bill for $30,000 to every household.==
Illinois had a low flat tax until recently. All states have some debt, Wyoming being the lowest at 4.65% of GDP and New York being the highest at 21.47% of GDP. Households pay taxes taken out of their members’ paychecks. No need to send a bill. Check out the debt clock to see states’ debt: https://www.usdebtclock.org/

Comment by Da Big Bad Wolf Wednesday, Oct 23, 19 @ 7:14 pm
=== Susanh - Wednesday, Oct 23, 19 @ 2:25 pm:

I am realizing that this blog is populated by indoctrinated acolytes to a particular agenda. ===

You must be new here. I see you’ve met OW. Thanks for stopping by. I can’t stop laughing at OW’s gutter quality responses to your legitimate economic questions to the Professor.

Comment by Cadillac Wednesday, Oct 23, 19 @ 8:03 pm
Oh - Cadillac -, lol

=== gutter quality responses to your legitimate economic questions===

Yeah, like asking if they knew how the constitution worked and an unrealistic and unworkable idea of the pension clause…

El - Oh - El

Comment by Oswego Willy Wednesday, Oct 23, 19 @ 8:07 pm
Just a point of clarification A Nobel in Economics is not a real Nobel Prize it is awarded by a different group

Comment by Paul Powell’s Shoebox Wednesday, Oct 23, 19 @ 8:12 pm
Currently in the US 55 year old men have a further life expectancy of 26 years and women have a further life expectancy of 29 years at 55.

Comment by Dybalaton Wednesday, Oct 23, 19 @ 9:53 pm
All This, I think Blue Dog’s point is that we have a spending problem in Illinois. Not a tax revenue problem.

Comment by Dybalaton Wednesday, Oct 23, 19 @ 9:55 pm
=== Currently in the US 55 year old men have a further life expectancy of 26 years and women have a further life expectancy of 29 years at 55.===

You have no point here, lol

=== is that we have a spending problem in Illinois. Not a tax revenue problem.===

According to IPI, there’s 0.14% waste, fraud and abuse, so any cuts will be to real things, oh, outside required/mandatory spending.

- Blue Dog Dem - knows this, it’s his trolling.

Comment by Oswego Willy Wednesday, Oct 23, 19 @ 10:10 pm
==I think Blue Dog’s point is that we have a spending problem in Illinois===

This is pointless semantics unless you list your proposed spending cuts that allow us to pay our outstanding bills.

Comment by Simple SImon Wednesday, Oct 23, 19 @ 10:13 pm
It would be nice to see the People of Illinois take some ownership for the policy decisions made by the people they repeatedly elected to represent them in office instead of pretending like they are astonished that pension payments that were delayed intentionally to avoid raising taxes 30 or 40 years ago created a looming problem now.

We did this. It’s time to stop pretending like we’re hapless victims.

You’re only allowed to do that if you’re under the age of 40.

There’s boomers and members of the greatest generation out there paying zero income tax on their retirement income that didn’t completely pay for the cost of services they benefited from during their entire careers whining and moaning about the situation they created, that they benefited from, and the cost of their services they will never pay for.

We gotta stop letting the voters off the hook for the people they voted for, and quit pretending like it was reasonable to believe people that repeatedly promised to solve the state’s budget issues through “cutting the waste.”

Comment by Candy Dogood Thursday, Oct 24, 19 @ 12:41 am
Countless times I have identified cuts. And added another today. The billboard in Sauget.

Comment by Blue Dog Dem Thursday, Oct 24, 19 @ 3:46 am
The level of cuts needed at this point is something like 10% now moving to 20% later, across the board. A billboard does not do it. Plus that was local, not state.

Do we want services cut that amount? Frankly, I don’t want to be Mississippi. I like a state where the mentally ill get treatment, child wards of the state are looked after, tuition is not even more astronomical, prisons are humane, roads get built, etc.

Comment by Simple Simon Thursday, Oct 24, 19 @ 8:12 am
=== Countless times I have identified cuts.===

Billions? Nope.

=== paying zero income tax on their retirement income===

Which GA and Governor will go along to do that?

This is unrealistic to the politics.

Comment by Oswego Willy Thursday, Oct 24, 19 @ 8:20 am
2. Dr. Myerson’s model does not account for tax rate capitalization as a negative value for homes paying the $30,000 of higher taxes.
The model seems to argue in favor of Tax Rate Capitalization:
(the value of $30,000 of debt is capitalized into the value of Chicago homes, thereby reducing their value by $30,000.)
Net result ALT-ILL homeowners own something of higher value which they can cash out ad move to Belgium.

He argues that if $30,000 of additional taxes had been paid and that debt were obviated, then home values would be higher (in ALT-ILL), but that higher interest costs to support the higher home values ‘cancels out’ that benefit.

But doesn’t his model fail to account for the property tax rate capitalization of the $30,000 taxes paid to obviate the debt REDUCING the value of the home by $30,000?

That is:
ILL vs ALT-ILL:
ILL failed to pay $30,000 taxes, amassed debt.
ALT-ILL PAID those taxes, has not got that debt.

ILL did NOT suffer additional $30,000 property value loss at present value due to paying the higher taxes which would have been capitalized in negative value of the home

ALT-ILL paid those taxes, suffereed the $30,000 tax-capitalization reduction in value, but recaptured $30,000 of value by having n $30,000 debt encumbrance in the end.

Comment by Susanh Thursday, Oct 24, 19 @ 10:07 am
=== Susanh - Wednesday, Oct 23, 19 @ 2:25 pm:

I am realizing that this blog is populated by indoctrinated acolytes to a particular agenda. No real attempts to share information, disagree spiritedly but with an open mind to learn from the others, and in the end to devise strategies which are equitable to all Illinois taxpayers.

It seems illogical to continue in this vein. ===

Friend,

You’re screaming into the wind.

Good luck

Comment by Oswego Willy Thursday, Oct 24, 19 @ 10:43 am
4. Actuarial assumptions for pension liability calculation:
We will agree to assumptions for 30-year pension obligations for public employees.
Look at Social Security actuarial source material for tables differentiating by income quartiles.
Teachers are at LEAST in 3rd (of 4) income quartile and thus enjoy higher projected lifespans.
There is a source-cited academic case to be made for 40-year average retirement pension obligations.

https://www.ssa.gov/oact/NOTES/as120/LifeTables_Body.html

“An examination of the age-adjusted central death rates reveals several distinct periods of mortality reduction since 1900, as shown in Table 5. During the period 1900-1936, annual mortality reduction summarized for all ages, averaged about 0.7 percent for males and 0.8 percent for females. During the following period, 1936-1954, there was more rapid reduction, averaging 1.6 percent per year for males and 2.4 percent per year for females. The period 1954-1968 saw a much slower reduction of 0.7 percent per year for females and an actual increase of 0.2 percent per year for males. From 1968-1982 rapid reduction in mortality resumed, averaging 1.8 percent for males and 2.2 percent for females, annually. From 1982-2001, mortality rates decreased an average of 1.0 percent per year for males and 0.4 percent for females. More detailed analysis of average annual percentage reduction in age-adjusted central death rates for selected periods is shown in 5.

For the entire period 1900 to 2001, mortality, summarized over all ages, declined at an average annual rate of 0.93 percent for males and 1.19 percent for females. However, mortality has generally declined at a slower rate for older individuals, throughout the last century. Between 1900 and 2001, the age-adjusted rates for ages 65 and older declined at an average annual rate of 0.59 percent for males and 0.84 percent for females.

For the period 1982-2001, the average annual rate of improvement for females was considerably less than that for males for most of the age groups shown in 5. For earlier historical periods, the opposite is true, i.e., the average annual rate of improvement for males was generally less than that for females.”

Comment by Susanh Thursday, Oct 24, 19 @ 10:57 am
- Susanh -

Why are you continuing in this vein with us acolytes?

LOL

The hot air now is nice against the fall breeze.

So, please, continue in “this vein”

Comment by Oswego Willy Thursday, Oct 24, 19 @ 11:00 am
3. tax rate capitalization has to factor in non-ideal (non-efficient) beginning conditions when setting up an ILL vs. ALT-ILL model.
Model of ILL needs to factor in that
similar social service provision costs normalized to quality are aberrant high in Illinois.
There is a way to normalize cost-per-quality of education dollars spent.
Look at results of national education preparedness of Illinois students:
https://www.nationsreportcard.gov/profiles/stateprofile/overview/IL?cti=PgTab_Findings&chort=1&sub=MAT&sj=IL&fs=Grade&st=MN&year=2017R3&sg=Gender%3A+Male+vs.+Female&sgv=Difference&ts=Single+Year&tss=2013R3-2017R3&sfj=NP&selectedJurisdiction=ILand

compare and contrast to dollars spent per studetn (also available at nces.ed.gov)

Comment by Susanh Thursday, Oct 24, 19 @ 11:02 am
5. Quantify normalized present value of Constitutionally guaranteed defined-benefit pension entitlements of public employees (teachers and government) as an annuity.

This allows us to look at the true, present day value which nurses and other non-teachers would need to pay today in order to accumulate enough wealth to generate the Constitutionally guaranteed entitlement of lifelong income beginning at age 55 which teachers demand as their right.

Looking at any annuity calculator quickly illustrates that in order to generate $90,000* annual income, which will rise by 3% the next year to $92,700, and the year after will rise to $95481, and at year 3 will be $98345…
this can be described as a lifetime annuity with COLA

UNDER CPS CONTRACT, we can assume this as a minimum pension obligation, owed by taxpayers.
then factor in the OPEBs: FREE health insurance age 55-65 (if Medicare gets Chicago taxpayers off the hook at age 65) as well as all the other OPEB perks…read the contract.)

Comment by Susanh Thursday, Oct 24, 19 @ 11:14 am
OW: the reason to post factual data is to create a record of willful disregard

Comment by Susanh Thursday, Oct 24, 19 @ 11:18 am
=== reason to post factual data is to create a record of willful disregard===

LOL

Like you ignoring the constitution.

Keep screaming. It’s funny and ridiculous.

=== This allows us to look at the true, present day value which nurses and other non-teachers would need to pay today in order to accumulate enough wealth to generate the Constitutionally guaranteed entitlement of lifelong income beginning at age 55 which teachers demand as their right===

Pensions are constitutionally guaranteed.

Gonna change that pesky constitution?

Good luck.

Comment by Oswego Willy Thursday, Oct 24, 19 @ 11:21 am
7. Constitution of Illinois.
‘Pensions may not be impaired’ is a line item,
much like the Illinois Constitutional provision about graduated income tax.

This whole blog post is about changing the Il Constitution to allow for graduated income tax.

The FUTURE benefits of STARTING IN THE PRESENT Illinois public employees should and could be changed to:
social security withholding just like nurses and doctors.
defined contribution retirement plans just like nurses and doctors and EVERYBODY else in the world.

Or are you saying that teachers and government workers are more important to society than nurses and doctors?

Comment by Susanh Thursday, Oct 24, 19 @ 12:03 pm
=== Or are you saying that teachers and government workers are more important to society than nurses and doctors?===

LOL

No, I’m saying wonky long comments to seem “smart and winning” fail to grasp the obvious.

71… 36…

The difference between the wonks and the “hacks” is the wonks can be “right” on a whole slew of things in the abstract or in the actual.

The problem is… lol… wonks think the “hacks” don’t grasp things.

No.

The hacks can “count”… and understand the constitution and measure with the same weight as wonky gibberish the political will that will allow any change.

Ignoring all that makes you continuing in this vein… comedy gold, for me at least.

All that typing… and you fail to grasp… 71…36… referendum.

Good luck.

Comment by Oswego Willy Thursday, Oct 24, 19 @ 12:12 pm
=== The FUTURE benefits of STARTING IN THE PRESENT Illinois public employees should and could be changed to:
social security withholding just like nurses and doctors.
defined contribution retirement plans just like nurses and doctors and EVERYBODY else in the world.===

All that ridiculous typing, now “all caps” too… because you fail to grasp the obvious.

No one is changing the constitution as you lay out in endless droning to… basically… “it’s not fair they get this and others don’t.”

Life is like that sometimes.

I mean, it’s truly comical.

“ The FUTURE benefits of STARTING IN THE PRESENT Illinois public employees should and could be changed to:
social security withholding just like nurses and doctors.
defined contribution retirement plans just like nurses and doctors and EVERYBODY else in the world.”

It comes down to you don’t like the pension clause “cause… everyone”

Welp… just as I thought.

Get the 71 and 36, save the typing.

Us acolytes count better than you.

Comment by Oswego Willy Thursday, Oct 24, 19 @ 12:18 pm
“ There is a source-cited academic case to be made for 40-year average retirement pension obligations.”
Not every state worker is a teacher. What about prison guards?

Comment by 17% Solution Thursday, Oct 24, 19 @ 1:19 pm
- 17% Solution -

You can’t have a rational conversation when someone writes a novella that eventually ends;

=== The FUTURE benefits of STARTING IN THE PRESENT Illinois public employees should and could be changed to:
social security withholding just like nurses and doctors.
defined contribution retirement plans just like nurses and doctors and EVERYBODY else in the world.===

The reality is, from jump street where there was no continuing in some sort of vein is that “no pension clause cause I don’t get that too”

Trying to talk to someone like that is why they gave up, initially.

The tripe was there from the beginning.

Comment by Oswego Willy Thursday, Oct 24, 19 @ 1:24 pm
==Not every state worker is a teacher. What about prison guards?===

Safety workers have a different contribution and benefits schedule that reflect a shorter career. Not really comparable.

A 40 year payout is still nearing the maximum ever paid. It can’t be considered typical for any type of analysis, and it shows a lack of intellectual honesty.

Comment by Simple Simon Thursday, Oct 24, 19 @ 3:30 pm
“Or are you saying that teachers and government workers are more important to society than nurses and doctors?”

Nice straw man argument. Unfortunately none of the “indoctrinated acolytes to a particular agenda” made that argument.

Comment by 17% Solution Friday, Oct 25, 19 @ 6:45 am
I will give you credit for catching the tactic, but withdraw credit for your failure to note it was a derisive mimicry of your own tactics.

To speak to that statement seriously: your policy demands and manipulation of public spending make it clear that you DO devalue medical professionals.
Not only do you demand they work for far lower compemsation per hour than the workers whose agenda you advance, you demand that the medical profession pay for your elevated status of pay, exclusion from liability, and entitlements.

So let me rephrase it as a statement rather than a question, which removes the basis of your objection:

You assert by your actions that teachers and government workers are more important to society than nurses and doctors.

Comment by Susanh Friday, Oct 25, 19 @ 7:02 am
I have written several comments which haven’t been published
Not sure why
Some or all contained links to source citations.
These deleted comments were explanatory of prior comments
It may be some of those deleted comments answer questions raised in criticism

Comment by Susanh Friday, Oct 25, 19 @ 7:06 am
- Susanh -

Why are you continuing in this vein with us acolytes?

The constitution isn’t going to be changed.

You are wasting your own time. Plus…

===No real attempts to share information===

Your plan won’t happen.

===disagree spiritedly but with an open mind to learn
from the others, and in the end to devise strategies which are equitable to all Illinois taxpayers.===

Your plan won’t happen. See a pattern here.

LOL

Comment by Oswego Willy Friday, Oct 25, 19 @ 7:36 am
“ You assert by your actions that teachers and government workers are more important to society than nurses and doctors.”
What actions? My only action was to point out some of your ridiculous assertions.

Comment by 17% Solution Friday, Oct 25, 19 @ 9:14 am
- 17% Solution -

Wait till they find out doctors and nurses are getting state pensions too… if the work for, say, IDOC, as an example.

Shhh.

Comment by Oswego Willy Friday, Oct 25, 19 @ 9:20 am
”Safety workers have a different contribution and benefits schedule that reflect a shorter career. Not really comparable.”
Simple Simon I was responding to the ridiculous notion that ALL state workers live to be an average of 96 years. This is absurd for teachers or prison guards or judges or anyone. I couldn’t find anything specifically about number of 96 year olds, but just four years later, the US Census 2010 number is that there are just 53,364 centenarians in the whole USA.

Comment by 17% Solution Friday, Oct 25, 19 @ 9:27 am
“mimicry of your own tactics.”
What tactics? Show me where I have misrepresented what you said.
“ Not only do you demand [nurses and doctors] work for far lower compemsation per hour than the workers whose agenda you advance..”
Doctors and nurses in the private sector make “far lower compensation “ than doctors and nurses working for the state of Illinois? I never knew that. Show us your work.

Comment by 17% Solution Friday, Oct 25, 19 @ 9:41 am