-- 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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For their increased revenue estimates, did the IL legislators take into account all of the lost revenue due to a percentage of the affluent moving out of state as a result of all of the upcoming tax and user fee increases? Since they didn’t, the estimates are exaggerated.
Pritzker’s original $3.5B estimate for progressive tax did include an adjustment for that. They assumed that 10% (as best as I now recall) of earners in the top bracket would drop below that bracket by tax avoidance or by leaving. It’s my view that any tax increase without drastic reforms first will entirely backfire in the long run by running off more of the tax base. We are “past the top of the curve.” I think ordinary Illinoisans can judge this issue better than most economists.
Thanks, Mark. However, my guess is that they still underestimated the number of affluent who will be leaving, thereby overestimating the additional revenue to be generated.
Yes, grossly underestimating. Anecdotal evidence says it’s now a torrent. Unfortunately, the only solid data comes from IRS migration numbers and the last they published is for 2016. The recent Bloomberg analysis showing Illinois losses is based on that 2016 data. https://www.bloomberg.com/news/articles/2019-05-24/migration-s-biggest-loser-is-connecticut-as-florida-profits . I think it has gotten far worse but we won’t have the hard data to show it for awhile.
It’s not in IL’s best interest to publish data that makes it look bad and/or that will cause public outcry (try looking up recent salary or pension data). Therefore, IL often delays publishing the data or, when it can get away with it, doesn’t publish it at all.
What percentage of all the pension checks cut in illinos wind up sent to other state economies? It isn’t just people moving, the pension account outflow goes elsewhere for 30 years per retiree!
I believe it’s a quarter although I don’t have a source. Anecdotally its a lot of downstaters whove left for TN, KY, IN.
My best friend from HS (still working) who lives downstate bought a house in Tennessee a few weeks ago. He already knew how hard he and wife would be hit y JB’s new tax plan. His new house has an assessed value of $171K yet property taxes are only 1471 a year. And as he said, he got an automatic 4.95% raise since there’s no state income tax.
I still have half my working life left here. I’m not sure I’m going to make it. There might come a day when I take that major pay cut to move to another state. But I know for certain I will not be retiring here. Hopefully I’m not jumping the ship too late.