By the Illinois Policy Institute
Illinois’ economic outlook is worse one year after the 2017 income tax hike
One year after Illinois politicians hiked the state income tax, the U.S. economy is booming, but new research from the Illinois Policy Institute shows that Illinois isn’t enjoying the growth the rest of the country is experiencing.
The Illinois Policy Institute found that in the year since the income tax hike, Illinois’ jobs growth dropped to 0.74 percent. However, in the rest of the U.S., jobs growth remained steady at about 1.6 percent.
Illinois lawmakers passed a 32 percent income tax hike – over Gov. Bruce Rauner’s veto – on July 7, 2017. They promised the $5 billion tax hike would put Illinois on a better fiscal path, but data reveal the tax hike has not accomplished what lawmakers claimed it would.
In addition to weaker jobs growth than the rest of the country, Illinois has also seen an increase in the length of time the average Illinoisan is unemployed.
Illinoisans were unemployed two weeks longer on average after the 2017 income tax hike (an average of 12 weeks). In the rest of the U.S., unemployment duration remained unchanged at 9 weeks throughout the year.
“Looking back over the last year, it’s clear that the tax hike did more harm than good and will make our economy and jobs problems worse,” said Orphe Divounguy, chief economist at the Illinois Policy Institute. “Lawmakers have been eyeing another tax hike, which would be detrimental to the state. Instead of turning again to tax hikes, the conversation needs to focus on reforms that grow Illinois’ economy and rein in the growth in government spending.”
Key findings and statistics from the Illinois Policy Institute:
– Illinoisans were unemployed two weeks longer on average after the 2017 income tax hike (an average of 12 weeks). In the rest of the U.S., unemployment duration remained unchanged at 9 weeks throughout the year.
– In the year since the income tax hike, Illinois’ jobs growth dropped to 0.74 percent. This compares to the rest of the U.S., which saw jobs growth remain steady at about 1.6 percent.
– The tax hike took $5 billion out of taxpayers’ pockets.
– Illinois lawmakers claimed the 2017 income tax hike would balance the fiscal year 2018 budget they passed in tandem with the tax hike.
– But the budget ended fiscal year 2018 with a $590 million deficit, according to the Governor’s Office of Management and Budget.
– The fiscal year 2019 budget is also expected to be as much as $1.5 billion out of balance.
– When lawmakers passed the $5 billion income tax hike, Illinois had the lowest credit rating of any state in the nation, one notch above junk. Illinois’ rating has not improved since then.
– All major credit rating agencies have agreed that neither budget since the tax hike have done anything to address the largest drivers of the state’s poor credit rating: pensions and the bill backlog. Illinois’ credit rating remains the lowest in the nation.
Illinois issued bonds to pay down its backlog of bills, which still sits at $7 billion.
The Illinois Policy Institute is a think tank that promotes smaller government and free market principles. To view the full analysis, visit: illin.is/jobs
By the Illinois Policy Institute