Posted on 05/15/2018 2:03:25 PM PDT by InvisibleChurch
Illinois homeowners, who already pay some of the nation's highest property taxes, should pay about 40 percent more for the next three decades to wipe out the state's crippling pension debt, according to a trio of economists at the Federal Reserve Bank of Chicago.
The economists argue that paying off the state's $129.1 billion in unfunded pension obligations cannot be done with revenue from new taxes such as a tax on marijuana sales or on financial transactions.
Would you pay 40 percent more in property taxes if it would wipe out the state's crippling pension debt? Yes No See results vote online survey
"In our view, Illinois' best option is to impose a statewide residential property tax," they wrote, in part because it would be fair: "Illinois residents who have benefited most from the past services of governmental employees are more likely to be homeowners, so it seems reasonable that they should pay a larger share of the costs."
They are proposing a statewide tax of 1 percent of a home's value. Under their plan, the tax bill on a $500,000 house would go from about $11,600 to $16,600, an increase of $5,000, paid each year for 30 years.
The economists—Thomas Haasl, Rick Mattoon and Thomas Walstrum—calculated that a property tax equal to 1 percent of a home's value could plug the state's pension gap in 30 years.
Illinois homeowners pay an average of 2.32 percent of their home value in property tax every year, which according to WalletHub is second only to New Jersey's 2.40 percent.
(Excerpt) Read more at chicagobusiness.com ...
I kinda rather enjoy watching these wacko leftists implement their agenda (locally) bc watching the experiment implode is entertaining.
Too bad real people have to suffer (look at Venezuela), but what can I do?
What is the starting salary for BS in TN? Just asking...GGiven the student loan situation starting salaries might be hugely important going forward.
In IL, we were not taxed to death...actually until recently IL income taxes were not near the highest in US. But family (both spouses) born and raised here...
If you need a job because the job market has been soft for 8* years, would you not move to IL? If you have family in IL, homes, friends schools, etc...it is easier said than done to leave.
I wish taxpayers would hunt down the “long gone” pols and tax them...heck...tar and feather them too. I just think it is really obnoxious to stereotype all residents of a given state, be it IL, CA, OR, NY etc. and basically say they deserve it as if they wanted it. I can assure you we did not.
As I said, I lived in Knoxville for nearly 4 years...I like the state, but no state is perfect. There were no jobs there for us so we moved...
but I donn’t stereotype or judge people living in various states...
I really don’t know the starting salary for BS.
I have been self employed for 30 years.
Of course, you are not to blame.
But your past and present politicians are to blame.
And as such, they are fare game here.
And you are right that every state has its positives
and negatives.
The “state of IL” can’t go bankrupt. But all counties, municipalities and special districts can. Property taxes are for them. Even the Tollway authority and McPier can go bankrupt.
I did a little research on this subject. "The employer paying everything" is not true with many pensions. For many pensions both government and private, both employer and employee contribute toward the employees's pension fund. The problem with many governments (state and local) is that the employer (the government) decides to contribute much less than what they promised. In researching the Commonwealth of PA pension system, we see that it was designed to have an employee contribution of 6.25% and state contribution of 9.5% . The employee has no choice but to contribute, as he should. However, the state was allowed to renege or shortchange its original (9.5%) commitment over and over again. This is the primary reason the PA pension system is in trouble. I would guess that other government pension systems are in trouble for the same reason.
Again, for the PA state government pension system, the normal cost is borne by the employer, which pays about 9.5 percent of payroll, and employees who pay 6.25 percent of each paycheck.
From 1999 through 2008, employer contributions averaged 2.56% - considerably less than the 9.5% promised.
This is typical of our government NOT keeping its promises.
Not exactly the same thing but our Social Security system ran a surplus for years due to baby boomer contributions. What did our government do with those surpluses? They spent them and replaced them with IOUs. And now we wonder why the SS trust fund is in trouble.
Welcome to the servant class.
I wouldn’t stop at 5%.
I'm not saying Dallas isn't liberal (or Houston or San Antonio), but you've obviously never been to Austin...
Just take their property. Added bonus, throw them in jail. They deserve nothing better.
Love ND..Actually, I lived in Fargo for several years...2 of my kids were born there :) Wonderful people and country :)
My son went to UND up in Grand Forks too—one of his kids was born there.
As I want to buy a farmette, ND might be a bit too far north for me to do that, but I really appreciate the thoughtful reply and probs should look at ND more closely from a retirement/farmette standpoint...Oh, I know some have mentioned the “Banana Belt” in MT too, so there may be some warmer regions of WY and ND too :)
Just take their property. Added bonus, throw them in jail. They deserve nothing better.
But your past and present politicians are to blame.
And as such, they are fare game here.
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Agreed! Would say that much like the country nationally, we here in the Blue states feel powerless at times...And believe me I am plotting my escape as I type...but just like being in the US when Barry was Pres and ruining our way of life, many considered leaving US, but it is not that easy...
I just don’t lie some of the smarmy comments that come across the transom on FR regarding those of us living in Blue states...
I do appreciate your reasoned reply here. Thanks you.
I want a law that says if you’re a govt lackey, as most of them are, you MUST reside in the tax hell that pays you....no moving...
I’m 64 and hub is 65...I have told him that at the rate they keep increasing our property taxes we’ll have to say goodbye to our forever house because we just won’t be able to afford the taxes..
Economists are sometimes good at figuring out, after the fact, that something went wrong in the economy and we now have a recession, or inflation, or shortages of toilet paper as a result.
They are notoriously unable to predict with any degree of accuracy or timing what effect a general tax increase will have. Some will say it helps put more money in circulation; others will say that's bunk: it's not the government's money to begin with, so you have to look at the effects on those paying the tax, too.
What could happen over time, if Illinois were to follow through with this 30-year penalty for owning property in the state is a proportionate drop in real estate prices as the state's population ages and retirees move to Florida and Texas and other places where they can live in relative luxury cheaply.
Existing home prices will likely be impacted by an across-the-board fixed percentage property tax increase. The delicate balance of sellers and buyers would have to tip. More sellers than buyers means lower selling prices. A ten percent drop in home prices would mean a commensurate drop in property taxes collected, if assessments are made honestly. (In Illinois? Is that even possible?)
There are lots of economists who doubt the Laffer Curve because it goes against their political leanings. They dismiss it, call it "trickle-down" and refuse to concede that the Reagan tax cuts generated billions in additional tax revenue than expected simply by lowering federal income tax rates. (Of course, the budget deficit increased during those years also, due to the Democrats going on a spending spree while they were still in control of Congress.)
Should Illinois implement the 1% tax proposal, we could see proof that the Laffer Curve is a valid model, even at the state level.
Too bad for the public employees. Tough luck.
Reminds me of why I consider most ‘economists’ to be TOTAL IDIOTS.
In this example, the people who have the means, simply move out of state...thereby dumping an even much larger burden on ‘the poor’. Death-cycle. Too bad these ‘economists’ have never heard of ‘Detroit’.
Ah, so there IS a weather component. Tough weathee keeps lazy lefties out!
The taxpayers flee; that is what is killing NJ. Employers (taxpayers themselves) bolt, and individuals either follow the jobs or lose their homes to tax defaults. The borders are kept open so Americans can sell their homes to Asians as they flee NJ.
Chris Christie did a great job of exposing public employee costs; now we understand we are simply renting our homes from the teachers’ unions - and young Americans have no interest in doing this.
Too - funny....pay more for 3 decades....at which time they are told the pensions came into some extra cash and went way up because the workers deserved it so now it will take another 5 decades to fund it properly....
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