Taxpayer debt burden is already at least $45,500 per person.
Ballooning Deficit Could Point to Tax Hikes
According to the Tax Foundation,
Illinois ranks in the middle of the pack for its business tax competitiveness.
However, with the state’s massive deficit and continuing budget gridlock, this
ranking could plummet in the coming years.
The Tax Foundation’s 2017 State Business Tax Climate Index—which
takes corporate, individual income, sales, unemployment insurance, and property
tax rates into account—ranked Illinois at No. 23. The state’s simple flat
income tax earned a top 10 rank, but sky-high property tax rates came in at No.
46.
Meanwhile, Illinois’ deficit
could be as high as $16.9 billion, reported Capitol Fax. This ever-growing debt problem
amounts to a taxpayer burden of at least $45,500 per Illinois taxpayer,
according to Truth in Accounting. And while Standard &
Poor’s Global Ratings (S&P) downgraded Illinois’ debt again (to BBB from
BBB+) and assigned it a negative outlook, lawmakers still aren’t any closer to
agreeing on a state budget. S&P’s negative outlook means the state could be
downgraded again in the near future, unless lawmakers enact real reforms to
balance budgets, reform spending, and rein in pension costs.
In the meantime, given the size
of the state’s deficit, lawmakers will likely turn to an array of tax hikes to
solve the problem. Options on the table could include a tax on services, an
income tax hike, a tax on retirement income, elimination of tax incentives for
business, and a progressive income tax. The latter, however, would be harder to
pass because it would require a constitutional amendment.
Gov. Rauner has said he would
negotiate tax increases, but only after the economic reforms from his
turnaround agenda are enacted. This conflict, of course, has been at the heart
of the budget stalemate.
