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Data from the Illinois Department of Revenue show that the wealthiest taxpayers, those earning more than $500,000, submitted about 58,000 returns and paid $3.2 billion in income taxes in 2015. Those earning between $100,000 and $500,000 totaled one million returns and paid $5.4 billion in taxes — the largest segment — while middle-income taxpayers turned in 1.3 million returns and paid $2.7 billion.
The task at hand, of course, is to figure out how to give the lower tiers a significant tax break, while still producing enough new revenue to un-hollow-out the government and do things like spend more money on education, lower property taxes, etc.
The negotiators will have far more detailed numbers than these, but I thought you might like to see them anyway.
posted by Rich Miller
Friday, Dec 14, 18 @ 3:00 pm
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Eat the rich
Comment by Precinct Captain Friday, Dec 14, 18 @ 3:04 pm
Would also be interesting to see what those top to tiers also pay in real estate taxes
Comment by DuPage Saint Friday, Dec 14, 18 @ 3:06 pm
Given the pressing need for more revenue, I would not anticipate much tax relief for the middle class. Simply being spared more increases would suit me fine.
I also only see a couple of billion being raised from the two highest groups using increases of 1 to 2 points. It seems like wishful thinking that the highest incomes will go to MN or CA rates.
Comment by Jibba Friday, Dec 14, 18 @ 3:10 pm
In the more holistic picture of the total state and local tax burden, it’s shown that the top income tier pays the least. A progressive income tax attempt should look to shifting this burden more toward the wealthiest.
Purely in terms of state income tax rates, it is very clear. The highest incomes are taxed too low, also by comparison with our neighbor states.
Thankfully Pritzker supports a progressive income tax, and perhaps more importantly, says he wants to work with people to come up with a good plan.
Comment by Grandson of Man Friday, Dec 14, 18 @ 3:15 pm
I hate the bands in that data set. The gulf between $100,000 and $500,000 is enormous. Break it down more IDOR, please.
Comment by Three Dimensional Checkers Friday, Dec 14, 18 @ 3:16 pm
Well, there it is. There’s the need for a progressive income tax.
What a lift and battle it’s going to be though.
And honestly
I’ve never trusted Madigan
Comment by Honeybear Friday, Dec 14, 18 @ 3:17 pm
They ought to start with a definition of middleclass? Is it really an income of 150,000 or $250,000? If residents with incomes up to a quarter million dollars are spared any tax hike, it would be difficult to raise enough revenue to meet basic state needs.
Comment by anon2 Friday, Dec 14, 18 @ 3:18 pm
The unlimited bracket is so skewed. Lumping people making a $0.5 million in with people making $100 million is just silly. I mean, the math comes out to $55k per return, which would be more than 10% of the lower end of that bracket range’s income. Which is just not accurate.
Comment by Perrid Friday, Dec 14, 18 @ 3:20 pm
@- DuPage Saint - Friday, Dec 14, 18 @ 3:06 pm:
“Would also be interesting to see what those top to tiers also pay in real estate taxes”
It would also be interesting to see what “disconnect” may exist between those top tiers - in other words, how many have de-facto IL residence in very high value properties, yet manage to have a tax home in some other, low/no income state?
Maybe it’s also time for a statewide real property tax on such high-value homes that applies to values above some largish threshold, to claw back some of those avoided taxes from those not likely to simply abandon their primo digs?
Comment by Hieronymus Friday, Dec 14, 18 @ 3:27 pm
@Anon2, read it again. They seem to be defining all taxpayers (or returns) that make less than $100k as being middle class. I don’t know where the cutoff is, where you are too poor to pay state income taxes, but calling someone making $25k a year seems iffy.
Comment by Perrid Friday, Dec 14, 18 @ 3:37 pm
“in other words, how many have de-facto IL residence in very high value properties, yet manage to have a tax home in some other, low/no income state?”
Since the data in being provided by the IDOR, currently they all are filling Illinois returns. The real question is how many will become residents of low tax states (not difficult to do) to avoid a progressive tax rate.
Comment by Anonymous Friday, Dec 14, 18 @ 3:38 pm
Sorry, I make slightly more than $100K and I am definitely middle income. Do I want to pay more taxes to Illinois, not really. Why? because the spending priorities are screwed up. Guaranteed pension increases have to go for future retirees, no more across the board money drops for public schools and remove artificial spending limitations on schools (in other words eliminates the different funds schools have to maintain), stop paying salaries and pension benefits for part-time municipal and state elected officials would be a good first step. Then come to the taxpayers and admit that the previous people in power (including Madigan and Cullerton) screwed up so now we have to fix it. I would pay double just to hear them both do a mea culpa of the state funding debacle.
Comment by NeverPoliticallyCorrect Friday, Dec 14, 18 @ 3:40 pm
This might be useful. https://www2.illinois.gov/rev/research/taxstats/IndIncomeStratifications/Pages/default.aspx
Comment by Perrid Friday, Dec 14, 18 @ 3:44 pm
—. The gulf between $100,000 and $500,000 is enormous —
Indeed, a family making 125k is not rich by any stretch of the imagination.
Comment by Southcounty Friday, Dec 14, 18 @ 3:47 pm
California did a similar rev
Comment by Blue Dog Dem Friday, Dec 14, 18 @ 4:13 pm
When comparing possible brackets in Illinois to other states, it will be important to look at what constitutes taxable income in those other states. Illinois taxes based on the federal adjusted gross income, the number at the bottom of page 1 of the 1040, and it has relatively few deductions. Many other states, particularly those with graduated taxes use the federal taxable income as a starting point. That’s the page two income after all the itemized deductions, and it’s a lot less for many middle and upper middle income households. A $100,000 household income for Illinois income tax would likely be in a lower bracket in another state that uses taxable income instead of AGI.
That may change with the changes in deductions in federal taxes from the new law. For now any data from other states with brackets has to be adjusted for the impact of using the AGI instead of taxable income with deductions.
Comment by muon Friday, Dec 14, 18 @ 4:14 pm