By: Ted Dabrowski and Nick Binotti
Illinois lawmakers know how to take care of themselves and the state’s government class when it comes to the nasty impact of inflation. Government employment contracts include automatic salary increases from year to year. Public pensioners get automatic 3% adjustments annually. The caps on political contributions – the political machine’s bread and butter – are indexed to inflation. Even gas taxes – which funds all kinds of government spending – go up automatically with inflation each year.
But when it comes to ordinary Illinoisans, lawmakers conveniently ignore the full impact of inflation. Take the personal exemption on the state income tax.
For tax year 2023, the exemption will not rise with inflation as it should under current law. That means the exemption will stay at the same level it was the previous year, $2,425, instead of increasing to $2,625. And that means a higher tax bill for all Illinoisans.
Worse, Gov. Pritzker is fighting to have next year’s (tax year 2024) personal exemption reduced from $2,775 to $2,550.
These two backdoor tax hikes will net the state $114 million for tax year 2023 and another $93 million for tax year 2024. Great for the state’s coffers. Bad for taxpayers.
Illinois’ automatic yearly tax hike
When Illinois first introduced the state income tax in July 1969, the personal exemption for single filers was $1,000. That was a significant amount back then because the state income tax rate was only 2.5 percent.
But the value of that deduction slowly eroded as the $1,000 exemption remained unchanged for nearly thirty years. There were a few increases in the late 1990s until the exemption finally settled at $2,000 in the year 2000. In 2007, then-Lt. Gov Pat Quinn complained $2,000 still significantly lagged inflation. Labeling it a “stealth tax,” he said at the time:
“If the personal exemption of $1,000 in 1969 had been properly indexed to inflation, it would be worth $5,544 in today’s dollars…Compared with the current personal exemption of $2,000, that means the exemption’s value in real dollars has dropped by almost two-thirds – and Illinois taxpayers are forking over the difference in their state income tax returns.”
Quinn was right. Not indexing deductions and exemptions to inflation was a hidden yearly tax hike. A tax hike that didn’t require a vote by legislators.
That changed in 2012 under Gov. Quinn when lawmakers finally began to adjust the personal exemption based on inflation. As a result, the original $2,000 exemption has grown to $2,425 today.
That’s better than nothing, but pales in comparison to the taxpayer savings if lawmakers had simply indexed the exemption to inflation since the beginning.
If the original 1969 personal exemption of $1,000 had been indexed to inflation every year since then, the exemption would be $8,130 today.
That failure costs Illinois households hundreds of dollars in extra taxes each year. This year, it will cost the average married couple $565 and single filers $282.
It’s just another example of lawmakers slowly and quietly crushing taxpayers.
Read more from Wirepoints:
- Ted Dabrowski, et al.: Look for Chicago’s pension mess to become worse. That’s a bad sign for taxpayers. – Wirepoints, Taxpayer Pension Alliance in the Chicago Sun-Times*
- Four more Illinois factories close: Lawmakers fiddle as cities burn
- Illinois property tax woes continue: ATTOM says Illinoisans pay nation’s highest rate
- Chicago’s crime numbers must have DNC organizers sweating
Audio and summary 
If this bill passes, say goodbye to local control over all Illinois parks and expect to see open drug and alcohol use, needles, no sanitation and fire hazards, but no ordinary park users.
Yes, IL not periodically increasing the personal exemption on state income tax is a slimy, underhanded example of taxpayer abuse by IL pols.
The annual gas tax increase tied to inflation is slimy, too, given that gas prices tend to increase by themselves over time.
Other items are sold and a sales tax percentage is collected based on the items sold. When items increase because of inflation so does sales tax collected. Why should fuel be different?
Right. The amount of gas tax would increase over time as gas prices inevitably increase due to inflation, greed, etc. However, an inflation tax on the tax is double-dipping.
Most of the gas taxes are not a percentage tax but rather a flat amount per gallon. If the price of gas goes up or down most of the gas taxes stay the same. Now that flat amount is adjusted for inflation. You also have the sales tax component but most of the taxes on fuel were not automatically adjusted for inflation.
Socialism only works till the politicians run out of everyone else’s money
What is going to be fun is when the bill comes due. The only people left in this dump of a state will be people who vote for a living, as all the people who work for a living will have left. Then the freeloaders will get presented with the bill.
Grifters going to grift. Thanks Ted and Nick for getting the truth out there.
But, we’ll never see the significant tax credit we all deserve for our illegal migrant dependents.
Pritzker is a shining example of hypocrisy. When he doubled the gasoline tax (that’s right, he doubled it), he also made sure to index it to Bidenflation, which as we all know was record breaking and non transitory, despite Yellen’s claim. He’s happy to index to inflation when he can harm the taxpayer. When it comes to treating taxpayers consistently and fairly, that’s a hard no according to King Pritzker.
For the gas tax, they really should throw-out the inflation index. Anything that goes up due to government policy is not inflation.
So increasing the minimum wage to 20 dollars an hour shouldn’t be factored in when considering inflation? Government policy is typically the driver of inflation.
“Government policy is typically the driver of inflation”
Inflation is the expansion of the money supply, a side of effect of which is higher prices, which the consumer calls ‘inflation’. So yes you are correct that government policy is a driver of inflation by printing tons of dollars, or letting private banks create credit…but the $20 a hour minimum is a response to the expansion of the money supply, also known as inflation, and is not a cause of inflation.
Speaking of a $20 per hour minimum wage, a very intelligent, business-savvy person I know told me the minimum wage is $0 per hour. I think people supporting a $20 per hour minimum wage are finding this out as companies eliminate the minimum wage workers by automating and otherwise increasing efficiencies.
Minimum wage increases are costly for the employers who rely on lower wage workers. But, the state hasn’t yet indexed its minimum wage increases to increases in the income tax rate. In Illinois I assume government would extract more wealth if it could.
Can someone tell me please what Pritzker has done for the average citizen taxpayer in IL!?
He continues to make us poorer.
NOTHING……BUT TAKE TAKE TAKE
Yes, he gives them abortion on demand, weed stores on every corner, and an EBT card in every migrant’s pocket. It’s difficult to accept to believe, and accept, but this is what normie Illinois resident wants, because the good people have all left and been replaced by liberal Democrats.
We don’t get any exemption in Tennessee….because we don’t have a state income tax.
Michigan does index the exemption and it’s $5400 for the 2023 tax year.
The failure to raise the exemption is regressive. No surprise Illinois rates low on equity.