Does Illinois need to raise taxes?

Background Information

  • Illinois is currently around $6.9 billion dollars in debt
  • The current taxpayer burden (the amount each Illinois citizen would need to pay in order for it to be paid off) is $14,300
  • New Governor in office (Bruce Rauner), new staff, new budget
  • Is raising taxes the only way that the state can pay off its debt?
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$6.9 Billion Dollars in Debt

How did we get here?

  • Excessive borrowing
  • Not paying bills
  • Compiling interest on old bills (since 2003, IL has paid 1 billion dollars of interest on unpaid bills)
  • Spending more money than the state brings in

A major contributor to this debt: Underfunded Pension System

  • Pension underfunding accounts for $5.3 billion of the total $6.9 billion dollars of debt (for this fiscal year)
  • However, our pension system is in total, $111 billion dollars in debt
  • Pension system in the most underfunded pension system in the country

Five years ago when the debt was $2.9 billion dollars..

Illinoisans are paying for more government than they receive..

  • Instead of paying for education, new roadways, healthcare, etc. revenues are being used to pay off old financial neglect

Is Raising taxes our only option?

  • Raising taxes is not the only option to raise revenues and pay off the debt
  • Although it would explicitly create more revenue, it ultimately slows down the economy
  • When taxes are raised, people have less money to spend on recreational activities, they stop spending money at local businesses, economy is slowed
  • When the economy is stimulated, people have more money to spend on recreational activities, increasing the prosperity of businesses, which expands them, creating more jobs.
  • When there are more jobs, there are usually more people working them, which means less people collecting unemployment and welfare, which reduces state spending for welfare programs
  • There are a ton of different kinds of taxes collected including personal income tax, sales tax, property tax, user fees, social security tax, excise tax, etc.
  • With all these taxes being collected, the average American spends about 29.2% of their yearly income on just taxes.
  • Can cut spending (making sure not to overspend at all), begin paying off bills, and reallocate funds to begin to cut down the debt
  • Current budget plan is a balanced budget, involves lots of cuts but no raised taxes
  • Raising taxes also lowers the morale of citizens. No one really wants to pay higher taxes.
  • Gallup Poll
Illinois Debt Crisis
:24-2:10

Conclusion

-The state of Illinois does not need to raise taxes in order to cut down the debt

-Taxes have been raised in the past and it has not diminished or really even help cut down the debt

-January 1, 2011 one point the income tax increased from 3-5% in Illinois

-Over the course of 4 years, this tax increase generated 30 billion dollars of new revenue

-However, the debt still grew

-January 1, 2015 income taxes decreased once again

-Spending was cut and funds were reallocated, and a balanced budget was proposed with no new tax increases

-The debt can and will be reduced but the state's previous mistakes and careless actions (in reference to neglecting bills and giving money when there was no money to give) will require all citizens to sacrifice and live with the budget cuts until the deficit decreases