OT: Illinois fair tax: yes or no?

[Leslie Forman]

I'm a no.

In principle, I agree with graduated income tax, but I don't trust anyone in Illinois to not use this as a method to unilaterally tax the **** out of everyone within a few years. You're removing something that places severe limitations in how they tax, once it is gone, they can use this to abuse the tax system however they want in the future. Based on the amount of corruption and idiocy with money in this state, I wouldn't want them to have that power while they have shown a complete lack of competency around budgetary work so far.

This is cutting off your nose to spite your face stuff, though. Don't fall for the election buzzwords. Some construction contract skimming ain't responsible for hundreds of billions of dollars.

A constitutional amendment to the pensions clause is basically our only hope now, but all the politicians are scared of the legal battle after what happened with the Supreme Court. But with how bad things are getting I think it might finally happen within the next several years.

[Friend_Of_Haley]

I'm a no.

In principle, I agree with graduated income tax, but I don't trust anyone in Illinois to not use this as a method to unilaterally tax the **** out of everyone within a few years. You're removing something that places severe limitations in how they tax, once it is gone, they can use this to abuse the tax system however they want in the future. Based on the amount of corruption and idiocy with money in this state, I wouldn't want them to have that power while they have shown a complete lack of competency around budgetary work so far.

This is cutting off your nose to spite your face stuff, though. Don't fall for the election buzzwords. Some construction contract skimming ain't responsible for hundreds of billions of dollars.

A constitutional amendment to the pensions clause is basically our only hope now, but all the politicians are scared of the legal battle after what happened with the Supreme Court. But with how bad things are getting I think it might finally happen within the next several years.

I'm not theoretically opposed to a graduated tax (though I think a comprehensive tax structure from property to sales to income is necessary).

But the problem I find is I think it's crazy that they haven't pushed for a constitutional ammendment to fix the pension issue. IL doesn't even have a big spending problem as it relates to spending on services. The budgetary issue is almost purely from the pensions. And I'm sympathetic to honoring pensions, my dad has a public pension (though locally, not state funded), but modest reforms could go a long way, and we could talk about comprehensive tax reforms that produce real middle class relief. This graduated rate doesn't really solve the gap even.

So I'm still torn.

[Ccwatercraft]

34 states have some kind of graduated income tax.

And?

Illinois has been losing people in part because of how poorly our state government has been run, well, forever. In the numbers I was able to see, we were only 1 of 10 states to lose people in 2019. I can easily see this trend becoming worse with tax reform, to the extent that we actually lose tax revenue. We have to reduce spending.

In Minnesota they have a graduated tax with the highest tax rate at 9.85%, they currently have 5.64 million people & are projected to have over 6 million by 2032.

That's actually kind of sucky, 400k in the next 11 years?

Christ, florida almost pulls that off every year. And covid is bumping it higher, 0 taxes I'm sure plays a role, It was certainly on my checklist.

[Jcool0]

And?

Illinois has been losing people in part because of how poorly our state government has been run, well, forever. In the numbers I was able to see, we were only 1 of 10 states to lose people in 2019. I can easily see this trend becoming worse with tax reform, to the extent that we actually lose tax revenue. We have to reduce spending.

In Minnesota they have a graduated tax with the highest tax rate at 9.85%, they currently have 5.64 million people & are projected to have over 6 million by 2032.

That's actually kind of sucky, 400k in the next 11 years?

Christ, florida almost pulls that off every year. And covid is bumping it higher, 0 taxes I'm sure plays a role, It was certainly on my checklist.

Minnesota is one of the 20 fastest growing states. If a graduated tax was so bad shouldn't they be losing not gaining people?

Florida is still where all the old people go. Over 20% of the population is over 65 (which is #2 in the US).

[Dominator83]

I'm a no.

In principle, I agree with graduated income tax, but I don't trust anyone in Illinois to not use this as a method to unilaterally tax the **** out of everyone within a few years. You're removing something that places severe limitations in how they tax, once it is gone, they can use this to abuse the tax system however they want in the future. Based on the amount of corruption and idiocy with money in this state, I wouldn't want them to have that power while they have shown a complete lack of competency around budgetary work so far.

This is cutting off your nose to spite your face stuff, though. Don't fall for the election buzzwords. Some construction contract skimming ain't responsible for hundreds of billions of dollars.

A constitutional amendment to the pensions clause is basically our only hope now, but all the politicians are scared of the legal battle after what happened with the Supreme Court. But with how bad things are getting I think it might finally happen within the next several years.

I'm not theoretically opposed to a graduated tax (though I think a comprehensive tax structure from property to sales to income is necessary).

But the problem I find is I think it's crazy that they haven't pushed for a constitutional ammendment to fix the pension issue. IL doesn't even have a big spending problem as it relates to spending on services. The budgetary issue is almost purely from the pensions. And I'm sympathetic to honoring pensions, my dad has a public pension (though locally, not state funded), but modest reforms could go a long way, and we could talk about comprehensive tax reforms that produce real middle class relief. This graduated rate doesn't really solve the gap even.

So I'm still torn.

A big problem with Pensions are with politicians. Politicians can collect a pension for being state comptroller, another separate pension if he/she moves up to senator, then another separate pension for governor, etc. It needs to be 1 pension for all politicians

[MisterRoy]

As others have said, the progressive tax makes sense but they need to deal with the pension issue before getting more money. The politicians are not going to vote that they can't double or triple dip into the pension pool. They lack integrity. Fix the problem, get more resources.


Sent from somewhere you’ve never been.

[dougthonus]

This is cutting off your nose to spite your face stuff, though. Don't fall for the election buzzwords. Some construction contract skimming ain't responsible for hundreds of billions of dollars.

My guess is with this change that my taxes will be higher within five years. Maybe not initially, but after they don't make enough on the high bracket, they'll raise the other brackets. Before too long it will be the minimum bracket is 5% and the max bracket is 10% if I had to guess.

They will get it passed by promising people tax savings, then shortly afterwards just raise them back so everyone is paying what they always were and you're hitting the middle class harder and the upper class a lot harder. That wouldn't be the worst, but they need to solve the ridiculous pension problem before I'd want to give them any more money.

There's a fair chance I'll eventually leave Illinois and the two biggest factors will be total tax burden and weather.

A constitutional amendment to the pensions clause is basically our only hope now, but all the politicians are scared of the legal battle after what happened with the Supreme Court. But with how bad things are getting I think it might finally happen within the next several years.

I'd vote for yes for that for sure.

[League Circles]

34 states have some kind of graduated income tax.

And?

Illinois has been losing people in part because of how poorly our state government has been run, well, forever. In the numbers I was able to see, we were only 1 of 10 states to lose people in 2019. I can easily see this trend becoming worse with tax reform, to the extent that we actually lose tax revenue. We have to reduce spending.

In Minnesota they have a graduated tax with the highest tax rate at 9.85%, they currently have 5.64 million people & are projected to have over 6 million by 2032.

There are countless things that are different about the states. In many ways Minnesota has much more to offer. Comparing one factor doesn't tell us much. The bottom line is that the state is trying to increase taxes notably, and particularly on people that have the easiest time relocating (whether on paper or altogether), while already losing people at a concerning rate.

[dougthonus]

There are countless things that are different about the states. In many ways Minnesota has much more to offer. Comparing one factor doesn't tell us much. The bottom line is that the state is trying to increase taxes notably, and particularly on people that have the easiest time relocating (whether on paper or altogether), while already losing people at a concerning rate.

Illinois is in a lot of trouble with negative population growth and economic growth and spending out of control, they are losing tax money due to those first two things while at the same time needing more money.

I don't know what their solution is, but it isn't going to be pretty. I wouldn't be surprised if in 20-30 years Chicago is another Detroit and Illinois is an extremely unattractive state to live in.

They need to fix their pension problem, and even if they can't do it retroactively, they need to stop all new pensions as soon as possible and switch to 401k contributions like everyone else in the world.

[drosestruts]

This is why in my first post in this thread I wrote that I'm not going to wait for perfection to impede progress.

Already I've seen people falling off topic discussing how the real problem is the pensions, or a lack of trust in elected officials, or government spending, or the potential for raised taxes in other brackets down the road.

1. Pensions are a problem, this bill isn't about pensions, this reminds me of opponents to legalizing marijuana claiming "it won't raise enough money to fix our deficit". Stop waiting for a magic bullet, progressive tax rates are the better way to tax (I hate that they branded it "fair tax" by the way, but I'm not going to vote against something because I don't like their marketing strategy)

2. If you distrust elected officials, vote for different ones.

3. If you'd like to see cuts to government spending, again, vote for people who have that as part of their plan

4. Right now, with the flat tax rate, the government can raise the taxes for everyone and anytime, it's something we have no control over. In the future, they'll be able to raise the rates for different income levels without raising for others. It just doesn't seem like a big deal to me, they already had the ability to raise my taxes, now they still do, their the government, they control the taxes.


This bill is a small-step forward for Illinois which often lags behind other states in adopting progressive policies (I believe someone else noted 34 others states already have similar tax structures).

[ChettheJet]

All the amendment does is allow for a graduated tax system just like the federal government and most states have.

For everybody thinking that this allows Illinois to raise income taxes on everybody without asking. How stupid are you? They have always been able to raise taxes it's just that they raised them on everybody at the same time at the rate rate of increase. Those commercials are just lying to try to make you think the legislature needed to ask for your permission to raise taxes in a referendum or something, That's not how representative government works.

If it's so unfair why are billionaires sending tens of millions of their own money to fight the move? Ken Griffin just spent an ADDITIONAL $26.7 million to run ads opposing the bill. Because he can afford to spend that now to try and save more than that in increased taxes over the next 5 years. He's not doing it to help out seniors and low income workers.

[Jcool0]

And?

Illinois has been losing people in part because of how poorly our state government has been run, well, forever. In the numbers I was able to see, we were only 1 of 10 states to lose people in 2019. I can easily see this trend becoming worse with tax reform, to the extent that we actually lose tax revenue. We have to reduce spending.

In Minnesota they have a graduated tax with the highest tax rate at 9.85%, they currently have 5.64 million people & are projected to have over 6 million by 2032.

There are countless things that are different about the states. In many ways Minnesota has much more to offer. Comparing one factor doesn't tell us much. The bottom line is that the state is trying to increase taxes notably, and particularly on people that have the easiest time relocating (whether on paper or altogether), while already losing people at a concerning rate.

California, Illinois and New York have all experienced bigger per capita personal income gains than the nation as a whole since the beginning of 2010, and all saw taxpayers with incomes below $50,000 overrepresented among the leavers from 2011 through 2018. These departures may indicate failures of governance as well, but it’s a different set of governance failures, presumably related more to housing costs, commutes and job opportunities than taxes per se.

There also isn’t much evidence in the IRS data — yet — of an exodus of high-income taxpayers hit by the state-and-local-tax-deduction limits imposed by the 2017 tax bill. That is, the number of taxpayers with adjusted gross incomes of $200,000 or more leaving for other states actually fell in high-tax California, Connecticut, Illinois, New Jersey and New York from 2017 to 2018, the year the cap went into effect. Those who ended up with higher tax bills due to the change generally didn’t find out exactly how much higher until 2019, though, so it may just be too early to tell.

https://www.bloomberg.com/opinion/articles/2020-01-09/where-people-leaving-new-york-california-and-illinois-are-going

[ImSlower]

I'm literally below the poverty line due to my career ending (thanks Covid!), I'm a No.

[Chicago-Bull-E]

I'll vote yes, this seems like a no brainer.

[Chicago-Bull-E]

I'm literally below the poverty line due to my career ending (thanks Covid!), I'm a No.

Why would you vote "No" if you're not making much money?

[Ccwatercraft]

In Minnesota they have a graduated tax with the highest tax rate at 9.85%, they currently have 5.64 million people & are projected to have over 6 million by 2032.

That's actually kind of sucky, 400k in the next 11 years?

Christ, florida almost pulls that off every year. And covid is bumping it higher, 0 taxes I'm sure plays a role, It was certainly on my checklist.

Minnesota is one of the 20 fastest growing states. If a graduated tax was so bad shouldn't they be losing not gaining people?

Florida is still where all the old people go. Over 20% of the population is over 65 (which is #2 in the US).

I'll put it this way, it's safe to assume that people dont move to Minnesota because they are attracted to high tax rates. Also safe to assume people move to Florida/Texas because they are attracted to 0% tax rates.

[chefo]

I'm with Doug with that one--Illinois is arguably the worst fiscally managed state in the entire country that has not shown any ability to manage money in any capacity. It's not just income taxes. It has one of the highest property tax burdens in the country.

OK, so now let's tax the higher earners at 8% or thereabouts. These kind of tax increases ALWAYS hit the higher upper middle class in the end--lawyers, doctors, engineers, etc... and they always creep lower over time--see California and NJ. You're taxing millionaires more at first and before you know it, that's still not enough to plug in the fiscal holes, and down the brackets you go.

The really rich ($20M+ net worth) and high income ($5M+) have a ton of ways to exploit regulatory arbitrage internationally, let alone within the country. You're not going to get much out of them, if they choose not to pay. An extra 3% on $5M of income is $150K. Even to people like that, that's real money. They already have both legal and financial advice on retainer and they'll ask them to find loopholes.

Citadel, if push comes to shove, doesn't need to be in Chicago any longer. It's not like open pit commodities trading is where the action is. And given how much of electronic trading Citadel controls nation-wise, the providers will follow them, should they move. The servers of the CME can be anywhere in the world, if Illinois gets too tax happy. Or, you'll just see the NYSE or somebody else start an exchange in FL or Texas, if it gets really bad. To start one up costs less than how much Griffin is spending to defeat that bill. If he gets really fed up, you'd better believe it his residence will magically change to FL or Singapore, or Malta, or Monaco.

Just for some reference--if you look at the stats, NY and NJ did not lose that many 'millionaires' from the Federal Republican tax changes, only 6k people or so, out of 1M. But, they lost a ton of the highest income people like Carl Icahn and David Tepper that usually paid tens of millions of taxes, to Florida. Same with Trump--technically, he's a FL resident. I hear of hedge fund and PE shops moving down to Miami and West Palm, almost on a monthly basis, entire staff in tow.

The local Illinois accountant, doctor, senior corporate manager and lawyer are not going to move, because they do they have the resources or time to play the residence game, and that's why the local tax man will inevitably come after them in time. The truly rich have a very real tax pain threshold that, once breached, can lead to a huge tax decrease state-wise as these types can flee the state in a month and not lose a beat.

Inevitably, these taxes will end-up California-like across the board, and Illinois doesn't have the weather to make people swallow them indefinitely.

[drosestruts]

So what I'm hearing is a lot of you are voting against this due to a belief that in the future your taxes will rise, so you'll be voting against progressive tax rates to keep flat tax rates which can be raised at any time already, and you think that the flat tax rate also wouldn't rise?

[dougthonus]

So what I'm hearing is a lot of you are voting against this due to a belief that in the future your taxes will rise, so you'll be voting against progressive tax rates to keep flat tax rates which can be raised at any time already, and you think that the flat tax rate also wouldn't rise?

The proposed brackets are as follows:
1 Up to $10,000 4.75% marginal rate Up to $10,000 4.75% marginal rate
2 $10,001—$100,000 4.90% marginal rate $10,001—$100,000 4.90% marginal rate
3 $100,001—$250,000 4.95% marginal rate 100,001—$250,000 4.95% marginal rate
4 $250,001—$350,000 7.75% marginal rate $250,001—$500,000 7.75% marginal rate
5 $350,001—$750,000 7.85% marginal rate $500,001—$1,000,000 7.85% marginal rate

Really, this is a straight tax on the wealthy as stated now with no real tax break for anyone. The nominal tax break that is there for people of one tenth of a percent or one twentieth of a percent is just so they can say they are giving people a tax break which is kind of a joke. Of course unless you are wealthy, you don't really care about a straight tax on the wealthy because maybe it saves you money in the long run (which is probably a good idea, vote in your best interest).

My guess is that in a very short period of time they will ramp up bracket #3 to over 7%, but they wouldn't raise a flat tax to over 7% and that if you are middle class you will be hurt more by this passing than if it doesn't pass. I think the graduated tax is absolutely more fair, but my guess is everyone making over 100k a year will be worse off in five years if this passes than if it doesn't, but I could be wrong.

I also hate that their proposal creates a MASSIVE marriage penalty which is as bad a tax policy as flat tax is. If you removed the marriage penalty and doubled these numbers for married couples, then I would feel a lot more comfortable with it, but their plan day 1 is already to create a god awful new tax structure.

I won't hate it if it passes, there are obviously some good strengths to graduated tax in general, the fact that they're immediately making a really bad tax structure is a huge turn off though.

[transplant]

The Dems want this bad. Being limited to a flat tax rate makes it very hard to achieve their #2 priority (getting as much tax revenue as they can to spend however they want) because raising huge sums of tax revenue with a flat tax angers the lower half of the income spectrum which makes it very hard for them to achieve their #1 priority (getting re-elected).

The graduated tax would be a godsend For the Dems since they could get their spending money from rich people who aren’t going to vote for them anyway.

This said, I probably will vote for the graduated tax out of pure self interest. I do ok, but I ain’t rich. However, I agree with Doug, that they’ll end up raising the tax rate for my bracket within 5 years or so.

Public servants, my ass.