McCaleb: Quinn’s budget plan a double whammy
When is a tax rebate actually a tax hike?
Whenever Gov. Pat Quinn is involved, apparently.
During his budget address last week, Quinn said that he wants to give Illinois homeowners a $500 rebate on their property taxes. He didn’t just mention it once. He said it over and over and over.
As a mere footnote in the same speech, he also mentioned – kind of in passing – that his fiscal 2015 budget kinda, sorta might – OK, will – require making permanent the “temporary,” 67 percent income tax increase passed in 2011.
I’m no mathematician, but I’ll take a shot at crunching these numbers.
The 2011 legislative action that raised the income tax on the state’s workers from 3 percent to 5 percent was scheduled to be rolled back to 3.75 percent Jan. 1.
For a household with taxable income of $40,000 a year, that 1.25 percent rollback would amount to $500, the same amount that Quinn says he wants to give back to homeowners. If that’s all there were to the formula, anyone – or any household – earning more than $40,000 would see a net tax increase next year.
But hold on. With Quinn, it’s never that simple.
What the governor left out of his budget address was that the $500 property tax rebate actually would replace the 5 percent property tax credit that wage earners receive when they file their income taxes.
The average tax credit in Illinois is about $250, so let me crunch those numbers again, using the $250 figure as my base.
You’ll need to give me a minute. ...
OK, I might need a few. ...
Here we go. ...
A household with taxable income of $20,000 annually would save $250 if the 1.25 percent income tax rollback went into effect, about the same amount that the owner of the average Illinois home would see with the property tax rebate. So anyone – or any household – making more than $20,000 annually would see their net taxes increase.
And how many families in Illinois that earn $20,000 a year or less actually own their own home and qualify for Quinn’s rebate?
Of course, McHenry County, on average, is more affluent than the state as a whole. Average income is higher, as are average property values. Census data from 2012 puts McHenry County’s median household income at $77,325. Illinois’ household median was $56,853.
On average in McHenry County, the 5 percent property tax credit that wage earners receive when they file their income taxes – the one Quinn wants to eliminate – is worth much more than the state average of $250.
So essentially, the elimination of both the income tax rollback and the property tax credit will be a double whammy for local residents.
Of course, the political reason for proposing the property tax rebate is to distract Illinoisans from the fact that Quinn wants more of our money.
He’s putting $5 in one pocket and taking $10 out of another.
State Rep. Mike Tryon, R-Crystal Lake, called it a smokescreen.
“That’s exactly what it is,” Tryon told me Friday. “It’s to make you feel good about paying more. It’s to make them [Quinn and lawmakers who will vote for the governor’s plan] feel good about raising your taxes.”
And Quinn’s proposed tax increase doesn’t even take into account Speaker Michael Madigan’s separate proposed increase. But our Editorial Board weighed in on that one today, so I’ll let it speak for me. (See page 11).
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More bad news: Quinn’s budget address wasn’t the only bad news from last week.
A study released by the Commission on Government Forecasting and Accountability said that the savings from the so-called pension reform bill passed by the General Assembly last year are $22.6 billion lower than the $160 billion that was promised.
Also, more than 80 percent of the savings that will be realized won’t occur until 2035-2045.
“The bottom line is, we have a pension reform bill that will not save as much money as we thought,” Rep. David McSweeney, R-Barrington Hills, said. “It is so back-loaded with savings that it will have little impact on the current and immediate financial problems presented by the state’s pension crisis.”
Quinn’s and Madigan’s failed leadership on pension reform is as bad as it has been on the state’s budget and taxes.
When is the election, again?
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Come see me: I’ll be staffing the Northwest Herald’s booth at the Crystal Lake Chamber of Commerce’s Home & Business EXPO from 1 to 3 p.m. today at Crystal Lake South High School.
Stop by and we can talk taxes, pension reform or anything else you’d like.
I promise I’ll be in a better mood than I am writing this column.
Oh, and enjoy today’s weather.
• Dan McCaleb of Crystal Lake is group editor of Shaw Media’s suburban publications, which includes the Northwest Herald. Contact him at 815-526-4603, or by email at email@example.com. Follow him on Twitter at @Dan_McCaleb.