Rockford Taxpayers Can’t Catch a Break

By on October 6, 2021   /   Latest  

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Winnebago County increased property taxes by nearly $1 million for the 2021 tax year despite Rockford’s effort to keep taxes stable. While this tax increase was made in daylight, several tax increases have been heaped upon taxpayers under the cover of the corrupt and massive Illinois State government.

“Rockford taxpayers have been tolerating some of the highest tax rates in the state and the country,” stated Val W. Zimnicki of Taxpayers United of America. “Now they have state bureaucrats dumping on them as well.”

“Now that Gov. J. B. Pritzker signed SB508 into law, the state can sneak in new property taxes. Specifically, SB508 allows the state to increase this year’s property tax by the amount of refunds due to adjustments from last year.”

“So, when I get my senior discount, the amount I save is covered by everyone else in my district. A classic ‘redistribution of wealth’. That phrase, redistribution of wealth, is a misnomer. It conveniently leads one to believe that only the wealthy are negatively affected by it when, in reality, it affects the middle class by supplanting the tax burden to them.”

“The big guy in Springfield also keeps reducing the amount of revenue collected by the state income-tax that is returned to the local district. When Local Government Distributive Fund (LGDF) was enacted, the amount was set at 10% of the total state income-tax revenue collected to be returned to the local governments. Pritzker just decreased it to 6.06%! Bureaucrats want nothing else but to see property tax increases to offset this.

“Which brings us to the $64 million question: why are bureaucrats so despite to raise our taxes? Their own benefit, that’s what.  Many government employees are paid lavish salaries using our property taxes, which in turn sets their starting state pension. Furthermore, pension plans in the Illinois Municipal Retirement System are primarily funded with property taxes.”

The pensions and salaries of the local government retirees take the biggest bite out of the property-tax revenue pie. The government schools impose the greatest property tax hikes. Approximately 58.8% of property-tax increases went to the government schools.

“Rockford area government pensioners are bleeding the area’s taxpayers dry. How can a Winnebago County retiree soak the taxpayers for more than $5 million in property taxes? Simply by retiring at the age of 57 with an annual pension of $175,970. Winnebago County retiree Paul A. Logli did just that and will collect $5,074,976 over a normal lifetime.

“Retired Rockford teacher, Alan S. Brown, began draining taxpayers at the age of 55. His current annual pension is $194,493 and will accumulate to a stunning $5,322,245 when he reaches 85 years of age.”

“Kishwaukee College’s David Louis is on track to collect $4,735,522 by age 85, thanks to his constitutionally protected 3% cost of living adjustment (COLA) on his current annual pension of $197,577.”

“There are no quick fixes for Illinois’ dire financial situation, although the solutions are painfully obvious: stop adding new hires to the same broken system and place them in a defined contribution plan like a 401(k), increase the amount that government employees contribute to their own pension, get a referendum on the ballot to end the 3% compounded COLA.”

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FEDERAL JUDGE STRIKES DOWN ARPA’S TAX MANDATE

By on October 4, 2021   /   Latest  

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Federal Judge Gregory Van Tatenhove gave Kentucky and Tennessee an important legal victory when he ruled that the American Rescue Plan Act (ARPA)’s restrictions on state fiscal autonomy were unconstitutional and enjoined (blocked) the enforcement of those provisions against both states, according to the nonpartisan Washington-based Tax Foundation. The judge held that the ARPA provision, which limited states’ authority to cut taxes if they accepted their share of the $195.3 billion in state Fiscal Recovery Funds provided under the bill, was unduly coercive and therefore unconstitutional.

“In issuing a permanent injunction against the mandate, Judge Van Tatenhove focused exclusively on the coercion argument,” writes the foundation’s Jared Walczak  “The ruling acknowledges that the states ‘may very well be correct’ about the other three grounds but refrained from anticipating additional questions of constitutional law when, in the court’s opinion, answering only one would suffice.”

The judge noted that the federal government can offer conditioned funds to states, but this power comes with limits. The government can prohibit the direct use of ARPA funds to facilitate tax cuts if it so chooses, but difficulties arise when Congress goes beyond conditioning the direct use of the funds to putting broad limits on “indirect” use which implicates a wide range of state fiscal choices.

Kentucky and Tennessee cases show, that “refusing to accede to the conditions set out in the [law] is not a realistic option.”

The power to tax is central to state governmental authority, a principle that has been affirmed by the Supreme Court going all the way back to Gibbons v. Ogden (1824). However, Congress’s restriction of this crucial aspect of our system of fiscal federalism exceeded the powers afforded the federal government by the U.S. Constitution.

The foundation states that the law’s provision is simultaneously coercive and ambiguous, and are the most likely grounds for rulings against the Tax Mandate.

“The Kentucky and Tennessee case, like the Ohio one before it, only affects the states named as plaintiffs. In his opinion, the judge notes that the coercive elements are universally present, but he nonetheless restricts the scope of the injunction to the plaintiff states, declining to issue a nationwide injunction.”

The foundation concludes, “The process is far from over, but Friday’s ruling is a major development.”

“This is as important ruling and precedent,” said Jim Tobin, president of Taxpayers United of America. “The ruling cuts down the outrageous condition that prevented states from cutting taxes if they accepted Fiscal Recovery Funds.”

Source: https://taxfoundation.org/american-rescue-plan-tax-cuts-federal-judge/

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“BUILD BACK BETTER ACT” HARMFUL AND A MONEY-LOSER

By on September 28, 2021   /   Illinois, Latest  

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The tax provisions in the “Build Back Better Act” proposed in the House Ways and Means Committee would result in long-run GDP dropping by more than $2 for every $1 in new tax revenue, according to the nonpartisan Washington-based Tax Foundation.

“It is important to consider the economic impacts, which include reduced economic output, wages, and jobs,” writes the foundation’s Garrett Watson.

“We estimate that the Ways and Means tax plan would reduce long-run GDP by 0.98 percent, which in today’s dollars amounts to about $332 billion of lost output annually. We estimate the plan would in the long run raise about $152 billion annually in new tax revenue, conventionally estimated in today’s dollars, meaning for every $1 in revenue raised, economic output would fall by $2.18.”

According to the foundation, starting with a 0.09 percent drop in GDP in the first year (about $20 billion) and building to a 0.64 percent drop in GDP by 2031 (about $212 billion), the plan would result in a cumulative GDP loss of nearly $1.2 trillion from 2022 through 2031, as shown in the following Figure.

The Ways and Means tax plan reduces economic output by reducing the after-tax return to investment opportunities for firms and the incentive to work through higher tax rates on labor income. More than half of the plan’s economic impact is due to increasing the tax burden on corporations, which is the most economically costly way to raise revenue.

The report notes that even before accounting for a smaller economy, taxpayers earning less than $400,000 would see lower after-tax incomes due to higher corporate taxes and higher taxes levied on nicotine and cigarettes.

Overall, the plan would reduce average after-tax income per filer by $171 in 2031, on a conventional basis, and by $971 per filer in the long run on a dynamic basis. That is, the economic harm of the plan would reduce after-tax incomes by about $800 per filer on average each year.

The report concludes, “The economic harm caused by the tax increases would claw back some of the plan’s expanded tax credits aimed at low- and middle-income families. For those in the bottom 20 percent, it would reduce the average net benefit of the plan per filer from $341 to $233, a 30 percent reduction.”

Source: https://taxfoundation.org/house-tax-plan-impact/

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