|
INCOME
REPORT SHOWS ILLINOIS STAGGERING ALONG WITH NATION’S WORST INCOME GROWTH
Illinois Policy Institute/Michael
Lucci
Given that Illinoisans have seen the worst
income growth over the recession era it is ironic that lawmakers have
chosen to repeatedly raise income taxes. Illinois’ 32 percent income tax
hike, enacted primarily by Illinois Democrats, will steal nearly an
entire year’s worth of income growth from Illinoisans.
|
|
 Illinois has seen the nation’s worst
personal income growth over the Great Recession era. And the Land of Lincoln
isn’t experiencing any improvement, according to new data from the U.S. Bureau
of Economic Analysis.
Illinois’ income growth is so weak because jobs growth is lagging, paycheck
growth is small and too many wage earners are leaving the state – and taking
their earning power with them.
Illinois’ personal income growth for the first quarter of 2017 was only 0.6
percent, placing Illinois 45th out of 50 states for income growth in the first
quarter.
Illinois’ personal income growth
does not translate directly into gains in real buying power. That’s because
inflation reduces the buying power of a dollar over time. Inflation is running
at 1.9 percent per year, or just under 0.5 percent per quarter.
Therefore, personal income grew by 0.6 percent in Illinois, while at the same
time inflation is running nearly 0.5 percent per quarter. In other words,
Illinois experienced almost no real personal income growth in the first quarter
of 2017.
Furthermore, Illinois was previously tied with Nevada for the worst personal
income growth over the Great Recession era, from the fourth quarter of 2007
through the fourth quarter of 2016. But in the first quarter of 2017, Illinois’
income grew by 0.6 percent while Nevada’s grew by 1.1 percent. As a result, the
tie is likely broken and it is only a matter of time before Illinois is left
clearly standing alone with the worst personal income growth in the U.S. over
the recession era.
Illinois experienced a real personal income growth of only 0.8 percent per year
from the fourth quarter of 2007 through the fourth quarter of 2016.
Economic growth and income growth
are incredibly weak in Illinois, which is one of the primary reasons Illinois
experiences repeated budget crises.
[to top of second column] |
In fact, Moody’s Investors Service pointed to Illinois’ weak income growth as
one of the reasons why Illinois might be downgraded regardless of whether a
budget and tax hike are enacted. Weak income growth means weak tax revenue
growth. In the words of Moody’s analysis:
“The state’s baseline tax collections declined in fiscal 2017, suggesting that
any tax increase may yield less revenue than anticipated in coming months.”
Indeed, data from Illinois’ Commission on Government Forecasting and
Accountability estimate that tax revenues are down year over year. This should
be extremely concerning to policymakers and lawmakers, and it speaks to
Illinois’ extraordinary financial vulnerability that will be exposed in the next
recession.
Given that Illinoisans have seen the worst income growth over the recession era
it is ironic that lawmakers have chosen to repeatedly raise income taxes.
Illinois’ 32 percent income tax hike, enacted primarily by Illinois Democrats,
will steal nearly an entire year’s worth of income growth from Illinoisans. And
the 32 percent income tax hike comes on top of high local burdens in the form of
property taxes and sales taxes, which have also gone up in many parts of the
state.
In short, don’t expect much new spending or economic growth in a state where
incomes are barely growing, and where the little growth that does occur is being
skimmed off the top by government. Illinoisans need a government that is far
more affordable, and one far less determined to raid residents’ income growth
and economic growth.
Click here to respond to the editor about this article
|
