-- Connecting the dots between our economy, government and business --
Summary and audio linked here.
Chicago’s political leadership is floating a pension buyout program as evidence it is seriously addressing the city’s thirty-six-billion-dollar unfunded pension liability, but Mark Glennon, founder of the Illinois policy research organization Wirepoints, said that the proposal moves debt from one column to another rather than reducing it, and that the broader fiscal picture facing the city continues to deteriorate across every measurable dimension. Audio here.
Expect no retraction or apology. This what they do.
The state’s existing buyout program for its own pensions is the precedent for Chicago, which should be a warning: Look out for similar exaggerated claims and shoddy analysis.
Full interview and summary linked here.
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Mendoza is wrong about the stock market. The S&P 500 earned -4.38% in 2018 with dividends reinvested; this is what matters for the 2018 returns filed in April 2019, not the recent rebound. Also, the federal tax changes should have had no direct impact on Illinois income tax collections because the illinois tax is based on federal adjusted gross income, which did not change. So the big unexpected jump in Illinois tax revenue is a mystery and highly unlikely to be repeated in future years.
I would expect this additional revenue every year. My adjusted gross income changed dramatically, The capping of the SALT deduction and elimination of the exemption made my adjusted gross income $25K higher. At 4.95% tax = $1,200 more in State taxes that I had to pay. I would consider myself middle class so I expect this affected a lot of Illinois residents similarly. The wealthier that lost larger deductions paid even more. This is the most likely reason for the increased revenue. What I’d like to know is if Mendoza is really that stupid or if she’s playing dumb so… Read more »
I thought AGI was calculated before standard and itemized deductions? Maybe the removal of AGI deductions like SEP?
You are correct I was looking at the spreadsheet my accountant put together comparing 2017 to 2018 and used the wrong terms. My 2017-18 AGI amounts were very similar. My taxable income which is after the deductions was substantially different. Lost $9K in deductions because of SALT and lost the standard $16.2K exemption. Federal 2017 effective tax rate 5.9% 2018 effective tax rate 7.3%. For state I don’t have that in front of me but $25K higher taxable income at a flat 4.95% rate is all you need to know.