Moody's recipe for success under Pritzker plan 'nearly impossible for Illinois,' Wirepoints says
Government watchdog website Wirepoints argues that Gov. J.B. Pritzker's proposed progressive income tax system essentially puts Illinois in an impossible situation.
“Look for lawmakers to paint Moody’s recent report on Illinois’ proposed progressive tax scheme as a positive endorsement,” the website wrote. “But if you parse the report’s words closely, the agency gives little room for Illinois to operate. In fact, Moody’s requirements for a credit-positive outcome for the tax are nearly impossible for Illinois to achieve.”
At a minimum, Moody’s reported that for the new tax to have a positive impact on the state’s long-troubled financial standing, it would need to yield substantial net revenue, not cause new damage to the economy and address the state’s retirement benefit liabilities.
“The problem is the state can’t accomplish all three of those things at the same time, not without major, structural reforms,” Wirepoints wrote. “Illinois is in simply too big of a fiscal hole.”
According to the website, the state’s portfolio includes at least a $1 billion to 3 billion operating deficit, upwards of $6 billion in unpaid bills, and underfunded retirement costs of at least $8 billion.
“To raise that amount of money, any progressive income tax that politicians create would have to hit the middle class along with the state’s wealthy taxpayers,” Wirepoints continued. “And those billions will all go to pay down old debts, not fund new services. That’s not a good way to encourage people to stay in Illinois.”
Critics argue that none of the tenets of the progressive tax would come close to meeting those parameters. For starters, the new system is only expected to generate in the neighborhood of $3.4 billion in additional funding.
Wirepoints also countered the notion that the tax will only affect the most affluent Illinoisans, as Pritzker and supporters of the plan have assured everyone from day one.
“A damaged economy is inevitable due to the amount of money tax-hike proponents will have to raise," the website's article stated. There simply isn’t enough money in Illinois’ top income brackets for lawmakers to only hit the rich.”