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* 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
Wednesday, Jun 19, 19 @ 12:45 pm
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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…
Comment by Reality Check Wednesday, Jun 19, 19 @ 12:47 pm
You mean 6.79% for 400k to 800k bracket, right?
Comment by Simon says Wednesday, Jun 19, 19 @ 12:49 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!
Comment by Jennifer Crew 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
Comment by Rich Miller Wednesday, Jun 19, 19 @ 12:50 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!
Comment by GOB Bluth Wednesday, Jun 19, 19 @ 12:54 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.
Comment by 47th Ward Wednesday, Jun 19, 19 @ 12:55 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)
Comment by don the legend Wednesday, Jun 19, 19 @ 12:59 pm
The 2nd highest current rate in CT is 6.9%, not 67.9%. The highest rate is 6.99%. Clearly a simple typo.
Comment by Lt Guv 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.”
Comment by Pundent Wednesday, Jun 19, 19 @ 1:03 pm
Rich, as always, thanks for bringing facts into view.
Comment by Left Leaner Wednesday, Jun 19, 19 @ 1:03 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.”
Comment by Anon221 Wednesday, Jun 19, 19 @ 1:07 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
Comment by AnonymousOne Wednesday, Jun 19, 19 @ 1:12 pm
This is laughable. Taxing high earners increases poverty. These folks are intellectual contortionists. Pretzel power!
Comment by oh? Wednesday, Jun 19, 19 @ 1:14 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.
Comment by Lucky Pierre Wednesday, Jun 19, 19 @ 1:16 pm
The Spongebob Squarebrains folks really need to recalibrate their calculators and dust off their history books. This is getting embarrassing.
Comment by Anon312 Wednesday, Jun 19, 19 @ 1:20 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.
Comment by njt Wednesday, Jun 19, 19 @ 1:24 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.
Comment by ByeFelicia Wednesday, Jun 19, 19 @ 1:29 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.
Comment by Demoralized Wednesday, Jun 19, 19 @ 1:32 pm
Apparently it doesn’t take a lot of intelligence to be the Illinois Policy Institute’s chief economist.
Comment by Demoralized Wednesday, Jun 19, 19 @ 1:34 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.
Comment by Grandson of Man Wednesday, Jun 19, 19 @ 1:40 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?”
Comment by Henry Francis Wednesday, Jun 19, 19 @ 1:41 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
Comment by Lucky Pierre Wednesday, Jun 19, 19 @ 1:42 pm
===By coincidence they also have the highest income taxes.===
And a lower poverty rate than Illinois does.
Comment by Rich Miller Wednesday, Jun 19, 19 @ 1:48 pm
LP, source (other than IPI) for anything that you said?
Comment by Fixer Wednesday, Jun 19, 19 @ 1:51 pm
Seattle has a progressive income tax?
Comment by Bavette Wednesday, Jun 19, 19 @ 1:53 pm
California when adjusting for Cost of Living has one of the highest poverty rates in the nation.
Comment by Bavette Wednesday, Jun 19, 19 @ 1:54 pm
Hold on. Full stop. Deep breath…
Connecticut has married tax brackets?
Comment by City Zen Wednesday, Jun 19, 19 @ 1:55 pm
The BEA and Census has all the information Lucky stated.
Comment by Bavette Wednesday, Jun 19, 19 @ 1:55 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?
Comment by oh? 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
Comment by Oswego Willy Wednesday, Jun 19, 19 @ 1:56 pm
$250k is hardly high income in metro Chicago.
Comment by Bavette Wednesday, Jun 19, 19 @ 1:58 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?
Comment by Oswego Willy Wednesday, Jun 19, 19 @ 2:00 pm
===$250k is hardly high income in metro Chicago===
It’s upper income everywhere in Illinois.
Comment by Rich Miller Wednesday, Jun 19, 19 @ 2:00 pm
Bavette, good think y’all are wanting to get rid of SheeCawGo then. Best of luck funding downstate without them.
Comment by Fixer Wednesday, Jun 19, 19 @ 2:01 pm
-$250k is hardly high income in metro Chicago.-
In what universe?
Comment by Morty 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.
Comment by Bavette Wednesday, Jun 19, 19 @ 2:03 pm
LP
I’ve noticed your same old tired talking points.
You and the Illinous Policy Institute make good bedfellows.
Comment by Demoralized 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.
Comment by oh? Wednesday, Jun 19, 19 @ 2:04 pm
**from a nonpartisan think tank**
LOL
Comment by SaulGoodman Wednesday, Jun 19, 19 @ 2:05 pm
In metro Chicago universe.
Comment by Bavette 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.
Comment by Oswego Willy Wednesday, Jun 19, 19 @ 2:06 pm
As a Chicagoan, I want to get rid of downstate.
Comment by Bavette Wednesday, Jun 19, 19 @ 2:07 pm
I’m sure they wouldn’t be sorry to lose you either Mr Wizard
Comment by Demoralized 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.
Comment by ipi lie 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.
Comment by Oswego Willy Wednesday, Jun 19, 19 @ 2:08 pm
That’s fine if Downstate is extreme right enough to want to get rid of high earning Chicagoland.
Comment by Bavette Wednesday, Jun 19, 19 @ 2:14 pm
CPS, a government run entity, has been driven into the ground by public mismanagement. It definitely goes both ways.
Comment by Bavette Wednesday, Jun 19, 19 @ 2:16 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.
Comment by SaulGoodman Wednesday, Jun 19, 19 @ 2:29 pm
Focus, Rich. Focus.
Comment by Distant watcher Wednesday, Jun 19, 19 @ 2:56 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.
Comment by JS Mill Wednesday, Jun 19, 19 @ 3:23 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.
Comment by njt Wednesday, Jun 19, 19 @ 3:29 pm
What taxes did Seattle enact that are being studied?
Comment by Bavette Wednesday, Jun 19, 19 @ 3:32 pm
JS, taking money from a family through taxation because they are successful is punishment.
Comment by Bavette Wednesday, Jun 19, 19 @ 3:32 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.
Comment by Oswego Willy Wednesday, Jun 19, 19 @ 3:37 pm
==What taxes did Seattle enact that are being studied?==
A higher minimum wage, which like taxes, raise expenses on a business.
Comment by njt Wednesday, Jun 19, 19 @ 3:41 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.
Comment by Enviro Wednesday, Jun 19, 19 @ 3:47 pm
‘A family in Metro Chicago making $275k is doing just fine.”
Fixed it for you.
Comment by Morty Wednesday, Jun 19, 19 @ 4:10 pm
They are doing fine, but they shouldn’t be punished for for hard work and being successful.
Comment by Bavette Wednesday, Jun 19, 19 @ 4:12 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”
Comment by Morty Wednesday, Jun 19, 19 @ 4:17 pm
4.95% of a million is a hell of a lot more than 4.95% of twenty thou. How is that not “fair”?
Comment by PrairieDog Wednesday, Jun 19, 19 @ 4:18 pm
The Rich will be taxed at a higher rate because they are an unpopular minority. Own it.
Comment by PrairieDog Wednesday, Jun 19, 19 @ 4:19 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.
Comment by Anonymous Wednesday, Jun 19, 19 @ 4:27 pm
Yep, it’s nothing but class warfare and confiscation by state government that has been poorly managed for decades.
Comment by Bavette 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.
Comment by Demoralized Wednesday, Jun 19, 19 @ 4:28 pm
That was my post @4:27 pm.
Comment by Enviro Wednesday, Jun 19, 19 @ 4:28 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?
Comment by Demoralized 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.
Comment by Bavette Wednesday, Jun 19, 19 @ 4:29 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.”
Comment by Demoralized 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.
Comment by City Zen 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
Comment by Oswego Willy Wednesday, Jun 19, 19 @ 4:32 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.
Comment by Demoralized Wednesday, Jun 19, 19 @ 4:33 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.
Comment by Enviro Wednesday, Jun 19, 19 @ 4:34 pm
I don’t care what the mob wants, I care for what is fair and just. We know what happens with mob rule.
Comment by 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.
Comment by Bavette Wednesday, Jun 19, 19 @ 4:38 pm
===They are only punished if they marry===
Narrator: It only effects 3%, married or not.
Comment by Oswego Willy Wednesday, Jun 19, 19 @ 4:39 pm
OK Bavette. Now you’re just trolling. I think it’s time to ignore your nonsense rantings.
Comment by Demoralized Wednesday, Jun 19, 19 @ 4:40 pm
Cost of living is a huge factor in wages. I don’t understand why it’s ignored so often.
Comment by Bavette Wednesday, Jun 19, 19 @ 4:42 pm
Bavette, have to complained about this to the feds as well?
Comment by Fixer Wednesday, Jun 19, 19 @ 4:42 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.
Comment by Bavette Wednesday, Jun 19, 19 @ 4:47 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.
Comment by Demoralized Wednesday, Jun 19, 19 @ 4:57 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.
Comment by Morty Wednesday, Jun 19, 19 @ 5:56 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
Comment by Morty Wednesday, Jun 19, 19 @ 5:57 pm
Morty, this has nothing to do with popularity. Just facts and fairness.
Comment by Bavette Wednesday, Jun 19, 19 @ 8:42 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
Comment by Oswego Willy Wednesday, Jun 19, 19 @ 8:46 pm
$250k for a familyy in the Chicago metro area is hardly rich. Why are their taxes being raised at all?
Comment by 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?===
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
Comment by Oswego Willy Wednesday, Jun 19, 19 @ 11:02 pm
==$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.
Comment by Da Big Bad Wolf Thursday, Jun 20, 19 @ 8:52 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
Comment by Honeybear Thursday, Jun 20, 19 @ 9:13 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.
Comment by Penny Thursday, Jun 20, 19 @ 9:26 am