Income tax decrease helps consumers, could hurt state
If you live in Illinois, expect a break on your income taxes.
As of January 1st, 2015, the Illinois state income tax dropped from 5% to 3.75%, which will add an extra $1,100 to many paychecks per year.
“I think it will be nice because I’m going to have more money to spend on textbooks,” said college student Stephanie West.
While workers will see a boost in their bottom line, political expert John Jackson of the Paul Simon Institute says that many state agencies could be going broke.
“It leaves a huge hole in a budget that was already out of balance,” said John Jackson. “The loss in the six months of this fiscal year that are left will be about $2 billion.”
Jackson says state leaders are banking on the old adage that “The more you make, the more you spend” holds true so they can recoup money through sales tax.
“It won’t come anywhere close to closing that gap,” said Jackson. “Everybody will notice some increase, clearly it’s a help to consumers in that sense, but you can do the arithmetic pretty quickly and see a fairly small slice of that is going to come back.”
Illinois Governor-elect Bruce Rauner says he wants to broaden Illinois sales tax base, but at this point there’s no pending legislation.