Gov. Pritzker Proposes a $3.4 Billion
Tax Hike on Illinois Families and Businesses
Last Thursday, Governor JB Pritzker finally 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.
Prior to the announcement of the proposed graduated income tax rates, I joined members of the House Republican Leadership Team at a press conference where we announced our unanimous opposition to a graduated income tax structure. Click here to watch my comments at the press conference.
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.
Upon learning the proposed rates, several Illinois business leaders spoke out against Gov. Pritzker’s tax hike that will drive families and jobs out of the state:
Mark Denzler, President and CEO of the Illinois Manufacturers’ Association: “Today’s massive tax hike proposal will further harm the state’s manufacturing sector, which has already lost more than 300,000 jobs since the turn of the century. Illinois cannot afford to lose more of these good, high-paying middle-class jobs. Taxing and spending are not the answer to our daunting challenges. The governor’s plan will vault Illinois to the 3rd highest corporate tax rate and 8th highest individual tax rate in the United States. Given that we already face the highest property taxes in the nation, the most glaring part of today’s announcement is what is not included: there is no mention of property tax relief for job creators or curtailed government spending.”
Illinois Chamber of Commerce President and CEO Todd Maisch: “The Illinois Chamber realizes that Governor Pritzker has inherited real and serious fiscal problems. Unfortunately, his plan for a new tax increase is very unlikely to solve them. Taxing businesses and business owners without restraining state spending nor taking measures that will spur economic growth sends exactly the wrong message to job creators who are already questioning their commitment to Illinois. When they choose to move investment across state lines, government loses tax revenue and our communities take a hit. It is important to note that the increase on the ‘2.7 percent’ of taxpayers the governor is targeting will pay much more than the $3.4 billion net income the plan claims it will generate. They will also pay for the ‘tax relief’ afforded to other taxpayers. Clearly, this plan will trigger a serious reaction from employers, especially since the plan only addresses the perceived budget deficit and does not make any meaningful dent in Illinois’ backlog of unpaid bills nor the future spending demands of progressive members of the governor’s party. The plan should be viewed for what it is: merely a first installment.”
National Federation of Independent Business Illinois State Director Mark Grant: said if Pritzker’s plan were to go through, he would expect small businesses to pack up and take their jobs with them. “And then what happens is the people left behind are stuck with new bills and then all the pension costs we have.”
Warrenville Mobile Office Hours a Success
On Friday I held mobile office hours at the Warrenville Public Library, and several constituents stopped by to say hello or to talk with me about issues related to state government. We had great conversations about the proposal for a graduated income tax, the new minimum wage hike that will take effect next year, the need for pension reform and the need for new business and job growth in Illinois. I want to thank everyone who came out to this event. Future mobile office hours will be held throughout the year in the 41st District. These events will be publicized through my E-Newsletter and on my web site at https://repwehrli.com. No appointments are necessary at mobile office hours, so please stop by a mobile office hours event that is convenient for you.
COGFA Reports on FY19 Revenue Trends
The Commission on Government Forecasting and Accountability (COGFA), the budget-monitoring arm of the Illinois General Assembly, disclosed February 2019 budget numbers, including significant figures on Illinois general-funds cash flow trends, in its latest “Monthly Briefing.” Working with the Department of Revenue on cash flows in February, COGFA reported continued increases in collections on key Illinois taxes such as personal income and sales, although these increase were not sufficient to cover soaring spending responsibilities in areas such as pensions and Medicaid. Personal income tax payments rose $37 million in February 2019 over the comparable figure in February 2018. This helped to support an overall increase in February State general-funds inflows of $38 million during the year-over-year period. While this was not a sufficient increase to enable the State of Illinois to start paying back its more than $8.4 billion in unpaid bills, it enabled the State to financially hold its own during the 28-day month.
Wehrli Signs On as Chief Co-Sponsor of Clean Energy Jobs Act
This year I am the lead Republican on legislation that would make Illinois the national leader in renewable energy. The Clean Energy Jobs Act seeks to move Illinois to 100% renewable energy by 2050, a move that represents a substantial increase in renewable energy expectations when compared to the Illinois Future Energy Jobs Act of 2016. The Clean Energy Jobs Act builds upon the 2016 Act and sets new, higher standards for Illinois’ energy usage. While I admit 100% renewable energy by 2050 might not be fully realistic, we need to trend toward that number and commit to being a national leader in renewable energy.
The legislation, filed as SB 2132 in the Senate and HB 3624 in the House, was written based on information gathered from a clean energy listening tour, which included 60 meetings across the state. The bills target four primary goals:
- Ensuring that all 102 Illinois counties benefit from an improved clean energy economy
- Providing a path toward 100% renewable energy in Illinois by 2050
- Moving the transportation sector away from gasoline and diesel-powered energy and toward electric-powered cars, mass transit and other transportation sources
- Ensuring a carbon-free power sector by 2030
These are lofty goals, but they are necessary if we want to protect the air we breathe and the quality of the environment for future generations. By embracing clean energy technologies like wind, solar and other renewables, we are taking bold steps to ensure our children and grandchildren enjoy a healthier future.
Treasurer’s Office Continues to Return Unclaimed Property to Illinoisans
During the second half of 2018, $2,512,917 was returned to the rightful owners through the Illinois Treasurer’s Office’s “Money Match” program, also known as the I-Cash program. The State Treasurer is currently holding approximately $2.9 billion in unclaimed funds for Illinoisans. The State holds these lost funds until they are claimed by either the original owner or by their heirs.
Common types of unclaimed property include: checking and savings accounts, uncashed wage and payroll checks, uncashed stock dividends and stock certificates, insurance payments, utility deposits, customer deposits, accounts payable, credit balances, refund checks, money orders, traveler’s checks, mineral proceeds, court deposits, uncashed death benefit checks and life insurance proceeds.
Property is returned to its rightful owner at no cost when proper identification is provided.
to Host Environmental Town Hall Meeting on April 13 in Naperville
Please mark your calendars for an upcoming Environmental Town Hall Meeting I’ll be hosting on Saturday, April 13 from 10:00 AM until noon at North Central College in Naperville, in the Wentz Science Center’s Stevenson Hall. I will bring together experts for a meeting that will focus on the Clean Jobs Act and other environmental legislation and issues. Additional information will be coming soon, but please save the date!
Later in the month, on Wednesday, April 24, I will be hosting a general topics Town Hall Meeting at the Naperville City Hall from 7:00 PM until 8:30 PM. I have the council chambers reserved, and after I provide a brief Springfield update, I will take questions from the audience. I hope you will come out for this informational meeting. I look forward to your questions!
Tops New Best of the Best Lists
Naperville recently received top honors in two new rankings for the best of the best. Niche.com recently named Naperville, IL as the city with the best schools in the United States, and Maxpreps.com dubbed Naperville the “best sports town” in Illinois. In the national Niche.com rankings of best cities to live in America, Naperville was recently ranked #6, behind Arlington, Va.; Ann Arbor, Mich.; Berkeley, Calif.; The Woodlands, Texas; and Plano, Texas. In 2018, Naperville was the No. 1 city according to Niche.com.
Illinois Economy Producing New Jobs in
A report to the General Assembly, “Illinois Employment and Wage Update,” works with data on the Illinois economy to analyze where new jobs are being created, and describes the character and educational qualifications of these jobs. Data from the Illinois Department of Employment Security (IDES) and other sources shows an enduring trend within the Illinois job market towards labor-intensive services, particularly in the fields of education and health care. A look at total paycheck numbers in eleven defined employment sectors, ranging from mining to leisure and hospitality, shows a decade-long decline in the number of Illinois workers who make or build physical objects. For example, the number of Illinois paychecks paid out to manufacturing workers dropped from 657,400 in 2008 to 589,300 in 2018. While all of this decline was notched in only two years – the economic-downturn years of 2009 and 2010 – the pink slips handed out during the so-called “Great Recession” were not fully made up during the following eight years. As economic activity continued to move to other U.S. states and abroad, Illinois factories rehired less than one-third of the manufacturing jobs lost during the recession. There have been 28,300 new manufacturing jobs created in Illinois since the beginning of the post-recession upturn in 2010.
Other Illinois economic sectors display much better numbers, but fields such as “professional and business services” (148,800 new jobs created in Illinois since 2010) tend to be areas of professional education where jobs are concentrated in the greater Chicago area. Furthermore, other areas of Illinois net job creation tend to be fields where employers demand specialized experience and educational training. This is particularly significant with respect to new jobs in “education and health services” (98,200 new jobs created in Illinois since 2010), as hospitals and health clinics want people with educational credentials. One major sector, “leisure and hospitality” (103,300 new jobs created in Illinois since 2010) is creating new non-credentialed jobs across Illinois. However, these are lower-paying jobs than the manufacturing jobs that have been lost.
Illinois Scraps Controversial PARCC Testing
The Partnership for Assessment of Readiness for College and Careers (PARCC) test was first administered in Illinois schools in 2015 for students in grades 3 through 8. PARCC data was supposed to provide useful information for teachers and administrators on how to improve the Illinois classroom experience.
While PARCC professionals had invested large quantities of work to generate a statistically valid test experience, and large amounts of data were collected, the test generated a great deal of concern from Illinois teachers and parents. PARCC tests took over, and siloed away from teaching, large segments of teacher-student time. Teachers had to reallocate classroom time to prepare for and administer the test. The PARCC test results were calibrated so as to make it look like many Illinois students were enrolled in failing classrooms. PARCC assessment professionals did not want Illinois teachers and educators to become complacent about their performance, so they calibrated the test and its results to demand very high standards from grade-school students. As a result of this decision, few students, schools, and school districts could perform adequately on the PARCC grade scale.
The PARCC test came to be widely disliked and the Illinois State Board of Education (ISBE) announced in late 2018 their intention to move away from this exam. Last week the ISBE announced its switch to a new standardized test, the Illinois Assessment of Readiness (IAR), for the student age groups previously targeted by PARCC. The IAR is approximately two-thirds of the length of the PARCC test and requires less time to administer to students. The ISBE announcement was made on Tuesday, March 5.