According to an analysis by the Illinois Policy Institute, the state's' fragile economy could be facing a perfect storm as the 2020 election season approaches.
The conservative think tank notes that in addition to the typical economic uncertainty that comes along in any presidential election year, Illinois faces additional uncertainty from a progressive tax plan backed by Gov. J.B. Pritzker. According to IPI, the revenue estimates that accompany Pritzker's plan are "overly optimistic," even more so when taking into account diminished tax revenue from the reduced economic activity anticipated in 2020.
While Pritzker contends his plan will address the state's financial woes, IPI's analysis suggests that, when the anticipated economic slowdown is added to the equation, the plan could actually make things worse. Chris Robling, president of Clear Span Strategic, agrees with IPI's assessment.
"It's fairy-tale economics to say graduated income taxes will solve our spending problem," Robling told Prairie State Wire. "In fact, it will tend to justify even more spending."
IPI points to the structure of the progressive tax plan, which leans heavily on a small number of wealthy taxpayers for a large portion of the state's tax revenue. When economic uncertainty increases, even these people will see slower income growth, meaning their tax contributions won't rise to the degree the plan requires to work. Adding that shortfall to the state's pension debt obligations, which currently stand at around $137 billion, pushes the state closer and closer to an economic crisis.
IPI goes further to suggest alternative solutions that it suggests will be more effective in righting Illinois' economic ship, such as a constitutional amendment that caps state spending, along with measures to reform the state's pension system to slow the accrual of future benefits.
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