On Tuesday (or so), we will know the results on the Illinois “Fair Tax” proposal. More interesting, however, will be what happens next year in Springfield. Regardless of whether the Fair Tax passes or not, Illinois taxes will be going up. The state has had billions of dollars of unpaid bills for a decade (don’t try this at home) and an unpaid pension deficit of either $137 billion or $240 billion (depending on whom you believe).
Governor J.B. Pritzker sent his Lieutenant Governor out last month to say (threaten-?) that if the Fair Tax was not passed, the flat rate state income state would go up from 4.95% to 5.95%, and the Governor said it would be the Republicans’ fault. So, taxes are going up. The real question is what happens after the increase. Will the legislature and the governor use the extra money to finally pay the unpaid bills and pay down the unfunded pension liability? Or will they all of a sudden say that Illinois has lots of unmet needs (besides paying its bills and funding its pension promises) and that the money needs to be used for new programs and expanded benefits?
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