Reick Points Out Pritzker Proposes 10.45% Corporate Income Tax Rate

From State Rep. Steve Reick:

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Gov. Pritzker Proposes a $3.4 Billion Tax Hike on Illinois Families and Businesses

Earlier this month, Governor JB Pritzker unveiled his plan for a graduated income tax in Illinois. Pritzker’s proposed rates would result in a $3.4 billion tax hike on Illinois families and businesses. The proposal is being pushed without any efforts to reform spending.

The Governor’s proposal would move Illinois from a flat income tax rate of 4.95% to a graduated income tax with six tax brackets. Families and small businesses with income between $250,000-$500,000 would pay a state tax rate of 7.75%, while the highest rate of 7.95% would apply to all income over $1,000,000.  As many small business owners file their tax returns as individuals, Pritzker’s tax hike would hit Illinois small businesses especially hard. In 2017, small businesses were responsible for 70% of Illinois’ jobs.

Illinois’ corporate income tax rate would rise from 7% to 7.95%.

Coupled with Illinois’ Personal Property Replacement Tax of 2.5% on corporations (1.5% on partnerships, trusts, and S-corps), corporate income taxes would rise from the current 9.5% to 10.45%, one of the highest tax rates in the nation.

If approved by a three-fifths majority of the House and Senate, a question of whether the Illinois Constitution should be amended to allow for a graduated income tax would be placed before all Illinois voters. It is important to note that the Governor’s proposed rates would not be enshrined in the Constitutional Amendment. For taxpayers, this means that if and when the flat tax guarantee is removed from the Constitution, lawmakers will have a great deal more flexibility to raise tax rates to fund new spending.


Comments

Reick Points Out Pritzker Proposes 10.45% Corporate Income Tax Rate — 3 Comments

  1. Ask Rebecca Miller (LEE) and Her Mother Anna about ethics humanity and kindness

  2. If every penny from an approximate $3.4B state income tax hike went to fund state pensions, it would take around 38 years to fully fund those pensions.

    Just a rough ballpark as neither part of the equation would remain static.

    $130B unfunded state pension liability / $3.4B state income tax hike = 38 years.

    ++++++++++

    Or how about this.

    $130B unfunded state pension liability x 6% interest = $7.8 billion unfunded liability pension interest annually.

    The state income tax hike hike would not even cover annual interest on the state pension unfunded liability.

    And 6% is a lowball figure.

    The pensions use a higher interest rate (discount rate).

    ++++++++++

    It was such a good idea for unions to lobby legislators and Governors to hike pension benefits, while pensions were already underfunded.

    And divert pension contribution funding to salary hikes and other pet projects.

    And state and local school districts to keep handing out salary hikes, hike the number of sick days one receives per year, and lots of other benefit hikes.

    Such as.

    Pensions underfunded?

    Let’s hike the COLA.

    Pensions underfunded?

    Let’s lower the retirement age.

    Pensions underfunded?

    Let’s lower the years of service on needs to retire.

    Pensions underfunded?

    Let’s hike the annual accrual rate (percentage of final average salary one receives per year).

    Pensions underfunded?

    Let’s hike the number of sick days one can exchange for years of service credit.

    etc.

    ++++++++

    But that’s not the problem, the narrative goes.

    The problem is the state didn’t contribute enough money annually to the pension funds.

    While there is some merit to that, it’s akin to repeatedly charging more items to the credit card, even though a balance is carried every month, then claiming, the problem is the monthly payments are too low.

    If there’s a credit card balance, don’t charge more.

    If there’s a pension unfunded liability, don’t hike pension benefits (see above examples of hiked benefits).

    That’s common sense.

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