The Tax Foundation each year assesses how a state’s tax structure impacts its business climate and rates the states. There is good news this year: Illinois moved up from 31st to 23rd this year because the state’s temporary income tax hike was allowed to expire as promised.
Once upon a time the state’s individual income tax rate was 3 percent. Then in January 2011 state lawmakers hiked it to 5 percent, claiming the money was needed to ease the pension crisis, pay down Illinois’ $8.5 billion in unpaid bills and strengthen the economy.
After the hike collected more than $25 billion from Illinois residents, none of those goals was achieved. State leaders only managed to delay meaningful reforms while all three problems grew steadily worse to the point that our pension debt is $131 billion, our state’s credit rating is in the toilet and the unpaid bills stand at $8 billion.
Lawmakers under election pressure did let the “temporary” income tax rate expire as 2015 dawned, but only down to the present 3.75 percent — not the original 3 percent. Even so, the reduction this year will let a family of four keep $900 more out of their hard-earned $50,000 income.
The Tax Foundation news that we are ranked in the middle should be heartening. It should broadcast a message to businesses that Illinois’ climate is improving.
The reality is that state lawmakers want to reach back into your pocket to end the 144-day-old budget stalemate. If they succeed, the business climate ranking for 2017 will go back down, they again will have lied to you about more taxes fixing anything and you won’t have your $900.
Depending on whether property tax caps pass, you may also have some of Illinois’ 6,968 local government units knocking on your door wanting more of what the state isn’t passing along.