Illinois offers ample tax breaks but pays the price
The state of Illinois gives back more than $9.4 billion in cash and tax credits to individuals and businesses, the Better Government Association (BGA) reported after analyzing tax data to show the impact such tax breaks have on residents and the state's budget.
As it illuminated a variety of money-saving categories, or loopholes, in the state’s tax code, BGA reported residents of all socioeconomic backgrounds can take advantage of no fewer than 257 different tax breaks. While citizens and businesses “earn” back cash or tax credits, the state itself sacrifices that amount — dollars that theoretically could have served to spark and refuel the flickering embers of the beleaguered state budget, the watchdog group argues. All together, four denoted categories account for billions in lost revenue for the state.
BGA said the last election cycle's focus on President Donald Trump’s "aggressive and unrepentant tax avoidance," points to “a broader debate about the fairness and wisdom of tax codes riddled with special breaks."
BGA found that the state pays out more in tax breaks for individuals than businesses.
“Business tax breaks are typically fraught with the most controversy, but collectively they cost $1.8 billion in fiscal 2015, less than 20 percent of the potential revenue that the state has chosen to forego,” according to the watchdog group.
Surpassing that figure was more than $2 billion in tax breaks to senior citizens. All retirement income is exempt from state income tax.
Based on information obtained from the Illinois State Comptroller’s Office, BGA created an interactive graphic to help consumers visualize how the state disburses its tax expenditures.
At 66.68 percent, just an iota over two-thirds of all of Illinois’ tax expenditures goes to individuals. The next-largest chunk goes to corporations, at 18.96 percent — just shy of a fifth of the total. About 9.79 percent is denoted as “other;" while the smallest proportion, 4.57 percent, is credited or returned to charitable organizations.
“There are specially targeted breaks for business, breaks for the wealthy, breaks for the poor, breaks for mom and pop and breaks for grandma and grandpa,” BGA stated, acknowledging that the tax exemptions are fiercely “protected by deep-seated constituencies that can render any attempt at reform a minefield for political leaders.”
The Illinois tax system contains so many advantages for taxpayers that what ought to be a clear-cut procedure grows ever more complicated. Hence the tax credit system remains a slightly contentious tug-of-war, with one department’s outlay becoming a household’s pocket change until it enters back into the cycle of Illinois’ swirling economy.
BGA explained that for incoming cash, Illinois’ “prime revenue generator” remains income tax — with individuals levied at 3.75 percent and businesses (corporations) at 5.25 percent — also observing that sales tax is a significant source of state revenue.
BGA is a watchdog group working to “shine a light on government” in Illinois by holding public officials accountable and promoting reform through investigative journalism, civic engagement and advocacy.
BGA regularly publishes articles about government pensions, salary and accountability, campaign finances, taxes and spending, justice, education and transportation, and environment and health. Its five core pillars are to investigate, litigate, educate, advocate and communicate for better government in Illinois.
Both nonprofit and nonpartisan, BGA makes it a point not to accept donations from any government agencies or political groups. The group has engaged more than 15,000 citizens to date and saved an estimated $50 million in taxpayer costs according to its website. The BGA is partly funded by the Robert R. McCormick Foundation.
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