Question about Obama

[hfojvt]

Since I just got a letter from him today.

In it he says "Throughout my eight years in the Illinois State Senate, I have found common ground with people from both parties and all walks of life ... to pass tax relief for working families ..."

Googling is not helping me. I would like to know what this tax cut did. Admittedly I am a little skeptical about talk of "tax relief", especially bi-partisan tax relief. Republicans typically claim Bush's tax cuts as bi-partisan since 30% or so of Democrats voted for it.

[ProfessorGAC]

1. Boy, You Sure Got Me On This One

The only "tax relief" i can recall would be twofold. First is when they dropped the tax on gasoline when the first big price spike hit in the early "oughts". The second one i recall is the temporary freeze on property taxes.

But, i don't think those accomplished much other than to get reps re-elected.
The Professor

[mopinko]

2. my recollection as well. nt

[hfojvt]

3. Whoops, ITEP has a report, showing nothing to brag about

"Illinois’s tax system earns it the dubious distinction of placing it on the list of the “Terrible Ten” most regressive states in the nation. Even before federal deduction benefits, it asks families in the bottom 20% of the income scale—to pay 2.3 times as great a share of their
earnings in taxes as do the wealthy. By the same measure, middle-income families in Illinois pay 1.8 times as high a share of their income in taxes as the wealthiest families.

“Illinois is one of only six states nationwide that levies a flat personal income tax,” McIntyre said. “The lack of a progressive income tax to offset regressive sales and property taxes is the
most important factor in making the Illinois tax system so regressive....

Tax Regressivity Worsened Since 1989
The study also examined the impact of changes in the regressivity of Illinois taxes since 1989, when the last cycle of state government shortfalls began. The study’s findings include:
# Tax burdens rose very significantly on low- and middle-income families and slightly on high-income families.
# The main causes of increased burdens were regressive rises in sales and excise taxes.
“Not only is the Illinois tax structure regressive, it got significantly worse in the last decade,” said McIntyre."

http://www.itepnet.org/wp2000/il%20pr.pdf

Therein lies the trouble, IMO, it's pretty hard to reach across party lines and do something progressive, like make state taxes more progressive.

[ProfessorGAC]

4. Good Find

I think the gas tax reduction was actually progressive because the cost hurts the people with the least, the most. From a purely theoretical economic view, since everyone saves the same, it's regressive, but it's progressive from a practical view.

Property tax relief almost never ends up being progressive because the poorest citizens seldom own real estate. So, that is nearly always going to be regressive both theoretically and practically.
GAC

[Radical Activist]

5. First

I've lived in southern states that depend exclusively on the sales tax, which is the most regressive. I think Illinois' system is better because it at least relies more on the income tax. Most sales tax increases have been at the local level, not the state level, so Chicago and other cities share more of the blame.

Second, Republicans haven't been in control in Illinois for a long time, so I seriously doubt any tax cut would resemble what Bush did, if that's what you're implying.

[kaleagal]

7. Progressive income tax rate would be better IMO, however...

I remember reading an article in the St. Louis Post Dispatch about that report. (The url doesn't work anymore and it's archived, so you have to pay $2.95 or something to retrieve it.)

Anyway, as I recall, there was a conclusion in there that suggested the biggest problem is that our sales tax needs reforming in order to bring the richest families back in line with the poorer ones. The theory is that rich people don't buy a lot of supplies and equipment to do their own work around the house or take care of their personal business. They hire people to do that for them and that service isn't taxed. The businesses pay the taxes and just pass whatever they can afford to pass on to their clients. I don't know if that is necessarily a good argument for adding sales tax to services rendered. It seems to me that a lot of our small businesses would suffer from it.

Furthermore, that factor could be throwing off the actual percentage of income that is taxed through sales tax on rich families, because if their services are passing on the total cost of sales tax, then the rich people are just paying it indirectly and it's not reflected in the numbers.

However, I believe our state is hurting too much and if you look at the percentage of income the highest income families have left over, it's obvious they could afford to pitch in a bit more in income taxes, even if it's just for a brief period of time to get everything balanced. My condo association has special assessments every now and then if we're coming up short. Maybe they could look at doing something like that with the top 1% or 2%.

[mopinko]

8. the last time they did a special assesment like that

iirc, after a couple years they made it permanent.
rich people also can afford to go shopping where the sales tazes are low. 8 3/4% here in chicago is just crazy.
and property taxes paying for schools really is f'ing upside down.

[davsand]

6. Property taxes are local. Period.

No way to argue it, Property taxes are a local thing in Illinois. They are levied locally and they are distributed locally here in Illinois. The State of Illinois gets exactly squat from property tax revenue.

There have been reforms passed in the last few years that boost the amount of exemptions for property owners who actually reside on the property (the Homestead Limited exemption for anyone who cares.) That went from being $3500 to $5000. Similarly, the over 65 (called the Senior Homestead Limited Exemption) increased in value to $3500.

They did increase the maximum earning limit for the Senior Freeze Exemption (a great needs based program that provides a proportionately increasing exemption as property values rise in the market) to allow for up to $50,000 in household income.

Maybe Obama was part of those reforms? I dunno...

There are state sales taxes, and I am not familiar with how those are distributed beyond carrying a vague opinion from someplace that they are part of the General Revenue for the State of Illinois. Fuel tax is part of that, as is the state sales tax on everything except food and drug items.

My guess is that if you contacted his campaign they could probably tell you chapter and verse what they are talking about in terms of his work on taxes.

Regards!


Laura