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  #831  
Old 11-07-2018, 05:01 PM
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Originally Posted by campbell View Post
I'm pretty sure New Yorkers and/or Connecticutians (Connecticutters?) are the highest taxed.

and....

https://taxfoundation.org/publicatio...rden-rankings/

I'm right! NY #1, CT #2! Woo!

Of course, our per capita public debt ... oh wait, that's also superhigh for CT, not as much for NY.

Anyway, yes, those are old data, but I don't have anything more recent. So if you want to escape taxes, don't come to NY/CT. and if you don't want to have the overhang of those pensions.... well, Wisconsin is pretty good
I am not sure what that means. The tax burden is defined as "State - Local tax burden as a percent of state revenue." I assume that means income taxes, which understates the total tax burden.

I doubt that includes property taxes, sales taxes, sin taxes on liquor and gaming, toll roads, gas taxes, and whatever else they tax. The toll roads alone gross 1.4Billion in Illinois (from 2017 annual report). The toll roads actually turn a profit, and a recent law prevents the profit from helping the state treasury. Instead, the toll authority gets to keep the profit, and they use it build more toll booths. Go figure.

So given that Illinois was north of 11% on your list to NY's 12.7%, I still got to believe that Illinois makes up the difference on the additional taxes.
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  #832  
Old 11-07-2018, 05:14 PM
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Are you assuming NY and CT don't have property taxes, sales taxes, and gas taxes?
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  #833  
Old 11-07-2018, 05:19 PM
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Are you assuming NY and CT don't have property taxes, sales taxes, and gas taxes?
Probably not, but an analysis of "which is the most heavily taxed state" which omits those taxes is going to give an incomplete picture because the revenue share from those things varies significantly from one state to the next.
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  #834  
Old 11-07-2018, 05:22 PM
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https://www.usatoday.com/story/money...xes/350963002/

IL is 5th.

This, of course, ignores the financial state of the State - which IL certainly is one of the leaders in ruin...

Plus, IL has a flat income tax rate - which all of the states above it have a progressive tax - and the new governor wants to institute a progressive tax.
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  #835  
Old 11-07-2018, 05:36 PM
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Here's the methodology:

Quote:
A state’s state-local tax burden is the total amount residents of that state pay in state and local taxes, even if some of those payments go to out-of-state jurisdictions. Our measure expresses this tax burden as a proportion of total state income. This means that two broad statistics are needed to make the calculation for each state: total state and local taxes paid by state residents (what we call the tax burden) and total state income.
Not personal income, but state income. also, they look at someone like me, who lives in NY, but works in CT, as having all my CT taxes (sales & income tax) credited to the NY tax burden.

the reason they have to do this is if you look at state/local tax revenues on a per capita basis, you will see something really weird:
https://taxfoundation.org/state-loca...r-capita-2018/

North Dakota is #1 because of this:

Quote:
Many people are surprised to see North Dakota as the state with the highest collections per capita, but this leads to an important conversation about the strengths and limitations of different ways to measure taxes. Taxes can be evaluated according to their marginal rates, effective rates, tax burdens, collections, and so on. While per capita measurements allow comparison across states with different populations, they do not show who is actually bearing the economic cost of the tax (the tax incidence or tax burden).

In the case of North Dakota, because the state relies so heavily on severance tax revenue from oil extraction—and therefore “exports” a substantial share of its taxes to residents of other states—total tax collections per capita are an especially poor representation of the actual tax burden that falls on North Dakota residents.

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  #836  
Old 11-08-2018, 11:03 AM
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https://fixedincome.fidelity.com/ftg..._110.1#new_tab

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S&P explains itself on divergent Chicago and Illinois sales tax ratings

Spoiler:
CHICAGO – It’s all about the underlying structural features of the bonds. That's what S&P Global Ratings says in a report explaining why Illinois’ sales-tax backed paper took a more punishing hit than Chicago’s securitization bonds after the rating agency revised its criteria for priority-lien tax revenue credits.

Chicago’s sales tax securitization bonds sold through its Sales Tax Securitization Corp. sunk just one notch to AA-minus, with a rating capped by the new criteria to four notches above Chicago's BBB-plus general obligation rating. The state’s Build Illinois bonds took a five-notch downgrade BBB, only one notch above the state’s BBB-minus GO rating.

The rating actions – on Oct. 23 for the city and Oct. 30 for the state – followed the revised criteria published by S&P on Oct. 22 that link priority-lien bonds to the ratings of their sponsoring government.

“While both ratings are constrained by the GO rating of their respective obligors, the difference between the number of notches the priority rating can rise above the GO is based on the structure of the bonds,” said the report authored by lead Chicago analyst Carol Spain and lead Illinois analyst Gabriel Petek.

The rationale behind the overall change in the criteria is driven by the rating agency’s belief that an issuer’s general credit profile may suggest a diminished capacity to make all payments, including debt service, even in situations where pledged revenues feature a statutory or contractual lien or are superior to other claims.

“Our priority lien ratings factor in the fundamental credit quality of the obligor, not solely the revenue stream pledged to the bonds,” S&P wrote.

S&P has 1,300 ratings that fall under the revised criteria and testing suggests that 15%-25% of the ratings would not change, 40%-50% would rise or fall one notch, 15%-25% two notches, and 10%-20% three or more notches, with the majority of these changes limited to three notches. The rating agency moved quickly on the Chicago and Illinois ratings because both had deals in the works.

Under the new criteria, priority lien ratings are capped at four notches above the obligor but the notch distinction is based on a review of the underlying strength of the tax lien bonds structure and insulation from its obligor operating risks.

Both the Build Illinois bonds – a more traditional sales tax revenue bond structure – and the securitization – a true sale of pledged revenues to a bankruptcy-remote special entity – enjoy strong debt service coverage ratios, a broad tax base, low volatility in collections, and would warrant higher underlying ratings, S&P said.

The Build Illinois bonds are only one notch above Illinois GOs because there’s no lockbox on the revenues or “meaningful” limitation on the use of revenues.

“Finally, the issuer is a state—in this case, Illinois—which retains ultimate discretion over the allocation of its tax revenues,” S&P wrote.

Analysts don’t expect the state to divert pledged revenues in violation of its own laws should its liquidity strains escalate, but the state’s past violations when it delayed pension payments give them pause. “This, in our opinion, supports the view that Illinois could possibly delay or reduce payments,” analysts wrote.

The legal enhancements of the STSC bonds allowed for the four-notch rating above Chicago's — the highest possible under S&P's new criteria — because they provide additional protections against the city’s own operation strains.

Characteristics that can warrant the wider notch distinction include cases where revenues are neither legally nor practically available for operations, include a sale or transfer or revenues to a limited-purpose entity authorized by state law, pledged revenues' control is independent of the obligor's, the issuer is a limited-purpose entity, and a legal opinion exists that pledged revenue would not be considered part of the obligor's estate in a bankruptcy.

Those features are built into the state’s 2017 legislation that authorized the securitization bonds for home rule units and the city’s ordinance. The pledged revenues also flow directly from the state to the corporation or its trustee.

S&P considered linking the STSC rating to the state as collector and distributor of the pledged revenue but in the end analysts concluded the likelihood the state would interfere with home rule sales taxes is remote.

IHS Markit (INFO) said it observed a 35 basis point widening of Build Illinois spreads on a 2032 maturity last Friday compared to trading levels prior to the downgrade.


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  #837  
Old 11-09-2018, 12:32 PM
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https://www.ilnews.org/news/state_po...social#new_tab

Quote:
Pritzker inherits fiscal mess while groups warn of disaster

Spoiler:
The incoming administration inherits a fiscal mess that some experts have said is beyond repair.

“One metaphor that comes to mind is some people have the best seats on the Titanic,” said Bill Bergman, research director at Truth in Accounting.

Bergman said the state is saddled with more than $200 billion of unfunded state employee retirement liabilities and more than $7 billion in backlogged bills.

After a 15-point victory over incumbent Gov. Bruce Rauner, Gov.-elect J.B. Pritzker said Tuesday that he wants “responsible budgets.”

Bergman said that could be code for tax increases. Pritzker said during the campaign that he wanted to lower taxes for the middle class, but repeatedly refused to say who would have to pay more to straighten out the state's financial problems and fund his plans for new spending.

“One of the challenges facing any – quote – responsible budget – unquote – looking ahead is the possibility that raising taxes and raising tax rates is like squeezing blood from a stone if people are leaving because they’re concerned about future tax increases,” Bergman said.

Bergman said Illinois has led the nation in outbound migration because “taxpayers aren’t stupid.”

Illinois had a temporary tax increase that kicked in in 2011. It scaled back in 2015, the year Rauner took office. Lawmakers then passed a budget that was billions in the red, which Rauner vetoed. That began a historic two-and-a-half year budget impasse. Only after lawmakers gathered enough votes to override Rauner’s budget veto and pass a permanent tax increase in 2017 did the impasse end. Rauner then enacted a budget in 2018 that used all of the revenue from the $5 billion income tax increase he had vetoed. That budget still was unbalanced, despite the additional revenue.

On the campaign trail, Pritzker blamed Rauner for the budget impasse, even though Democrats were responsible for holding things up for part of that time.

Pritzker also campaigned on ushering in a progressive income tax, also known as a graduated income tax, where the rates differ on how much the taxpayer makes a year. Pritzker called it a fair tax, saying it should increase taxes on the wealthy and cut taxes for the middle class. He refused to provide details about what the rate structure would look like despite repeated questions.

The state is constitutionally required to tax income at a flat tax rate, right now 4.95 percent, that is set by the legislature. To make the rates tiered, 60 percent of voters would need to approve a constitutional amendment.

Financial analysis website Wirepoints crunched numbers on Pritzker’s proposed initiatives and estimated the extra cost to the state would be $10.7 billion annually, on top of the backlogged bills and pension debt. To pay for that with a tiered income tax rate structure, Wirepoints estimated that only increasing taxes on income over $1 million would require a rate of 24.3 percent. Even when including higher taxes for those making $150,000 or more a year, Wirepoints found the rate would need to be 13.6 percent, higher than the tax rate in California for income over $1 million.

Wirepoints Founder Mark Glennon said the outcome of Illinois’ election – which also gave Democrats, who have mostly backed the idea of a progressive income tax, strong one-party control over the legislature – likely means the issues of the state’s horrible finances won’t be addressed.

“It will be a question of how much further do we need to get to look like Detroit or Puerto Rico before people start demanding real reforms,” Glennon said.

Bergman said there is one silver lining in having one-party rule: Accountability.

“As opposed to blaming gridlock and the lack of a budget, now we have accountability more clearly identified and that may be a positive,” Bergman said.

Bergman said tax increases could repel residents to other states.


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  #838  
Old 11-12-2018, 05:13 PM
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https://www.chicagobusiness.com/greg...adline#new_tab

Quote:
Pritzker tips hand a bit on first budget
The governor-elect won’t push a light version of a graduated tax, preferring gambling, legal pot and sports-betting revenues. But a capital plan will come soon, as will a minimum-wage hike.

Spoiler:
J.B. Pritzker is dropping some hints about what’s likely to be in his first state budget, but the governor-elect still isn’t committing to much definite except giving full details in his February speech.

In a phone interview, Pritzker said the spending plan will be balanced and indicated he wants it passed on time by late spring. "Passing a budget is going to be a top priority," he said.

One thing that won’t be in the budget is an ersatz version of the graduated income tax, one that raises rates but then effectively eliminates them for most taxpayers by sharply increasing deductions. Pritzker had appeared to be leaning in that direction earlier in the year, suggesting it would be a good way to pursue change before a needed constitutional amendment authorizing a graduated tax can be implemented. But now, “That’s not something I’ll pursue,” Pritzker said.

Instead, the budget likely will rely on revenues from legalizing the recreational sale of marijuana products, expanded legal gambling and sports betting, Pritzker said. But “efficiencies in state government” will be part of the package, too, he added.

The Chicago Democrat said he’s also “looking seriously” at an idea from the Center for Tax & Budget Accountability to issue a large pension obligation bond issue and use it to pay down billions of dollars of pension debt more quickly than the state now is scheduled to do, hopefully saving money in the long run by paring interest costs.

Pritzker said many details will be resolved by his transition financial team, which includes former Illinois Comptroller Dan Hynes, Civic Federation President Laurence Msall, former Senate GOP Leader Christine Radogno and CTBA chief Ralph Martire.

Other early priorities will include raising the minimum wage to $15 an hour after a transition period, "lowering the cost of health care"—Pritzker has proposed allowing anyone to buy into the Medicare system—and expanded aid for college students. Pritzker said the minimum-wage hike would include a feature designed to “relieve the burden on small business."

Also on the list for "early in our administration": a big capital program for roads, bridges, transit and related work. The new governor is under some pressure to raise gasoline taxes to pay for such work, but did not indicate where he would end up.


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  #839  
Old 11-20-2018, 05:44 PM
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http://www.wirepoints.com/despite-5b...ture-deficits/


Quote:
Despite $5B tax hike, Illinois forecasts billions in future deficits
Spoiler:
The Illinois Governor’s Office of Management and Budget (GOMB) has released its five-year budget projections. The forecast, not surprisingly, is alarming. Spending continues to outpace revenues by a large margin.

Despite last year’s 32 percent tax hike ($5 billion yearly), GOMB expects Illinois to maintain average budget deficits of about $3 billion over the next five years.

Those projections actually undersell the trouble Illinois is in. GOMB’s deficits are based on the state’s phony accounting. The state’s budget doesn’t properly account for the state’s true retirement costs and significantly underreports what’s needed to keep those liabilities from growing (at least another $3 billion annually).

Regardless of their size, the consequences of Illinois’ future deficits will be an escalating pile of unpaid bills. By 2024, GOMB projects a total of $24 billion in unpaid bills, equalling more than half of the state’s annual revenue. That’s higher than the $16 billion in bills owed at the height of the budget impasse.





Dire…or not dire enough

This is Rauner’s last budget projection before leaving office, so some could argue that the above predictions are too dire. But there’s little in GOMB’s projections that could be said to be exaggerated. After all, Illinois has run deficits for years and the state hasn’t had a truly balanced budget since 2001. Even before Gov. Bruce Rauner took office in 2015, the state had already run an unpaid bill backlog of as high as $9 billion.

On the revenue side, GOMB says it used a “pessimistic economic forecast scenario” that factored the potential for a recession. Considering the state of the markets and Illinois’ recent history of anemic economic growth, that’s not an unreasonable assumption.

And on the expenditure side, GOMB didn’t include “any significant reforms or spending controls.” That’s also not unreasonable seeing as lawmakers have refused to change their spending habits during the last three years.

On top of rapidly growing operational expenditures, Illinois has other costs contributing to the deficit. GOMB projects over $2 billion dollars in annual debt payments to pay down bonds issued for capital, pensions and unpaid bills. And newly-owed back pay due to state AFSCME workers will add another $200 million a year in additional costs.

Plus, it’s likely GOMB is underestimating spending. Illinois’ priorities are likely to change dramatically under Gov.-elect J.B. Pritzker’s administration. Wirepoints has outlined Pritzker’s multi-billion spending promises and how he might fund them in What Pritzker’s progressive tax rates will probably look like.

Pritzker will find himself in a difficult position when he takes office. With at least a $3 billion deficit as his budget base, it’s hard to see how he’ll follow through on many of his promises.

The bottom line of GOMB’s forecast is clear: Illinois will be in worse shape than ever despite record tax revenues.

It’s impossible to see how this can continue without dramatic spending reforms – or an eventual fiscal crash.


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  #840  
Old 11-23-2018, 11:11 AM
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UNPAID BILLS

http://www.wirepoints.com/seen-prope...ase-quicktake/

Quote:
Seen properly, Illinois’ bill backlog is 1.2 billion worse since tax increase - Quicktake
Spoiler:
If you thought last year’s tax increase would reduce Illinois’ backlog of unpaid bills, you were wrong.

It’s gotten worse by $1.2 billion if you ignore the results of borrowing to pay off that debt, as you should.

The tax increase went into effect July 1, 2017. The bill backlog on that day was $14.7 billion. Today, it’s $7.1 billion. That’s an improvement of $7.6 billion.

But $8.8 billion of that improvement had nothing to do with the tax increase. We borrowed $6 billion through a bond offering and applied it against the bill backlog. Some of those payments triggered automatic additional federal reimbursements, which also were applied against the backlog, taking the total bond impact to $8.8 billion.

That $8.8 billion alone should have our balance down to $5.9 billion today, but the balance is $7.1 billion today — $1.2 billion worse than it should be given the results of the bond offering.

The state is taking in more than $5 billion per year because of the tax increase – at least for now (the longer term damage to the tax base caused by more flight remains to unfold). While it’s certainly fair to say our bill backlog would be worse without that new money, it’s important to keep that in perspective: The tax increase it simply didn’t result in any reduction in unpaid bills. It was the same story with the temporary income tax increase that expired in January 2015. It was supposed to reduce the bill backlog, but didn’t.

And the pile of unpaid bills will reach $24 billion in five years, according to a new projection released last week.

Keep in mind that our bill backlog isn’t a good index of how well the state is doing. It’s just one of many accounts. Those other accounts included unfunded pension liabilities and bonded debt. To aggregate all those accounts you have to look at the state’s actual financial statements.


From our earlier article linked here
They show a far worse picture, with the state losing roughly $10 billion per year over the last ten years. The new tax increase won’t end those losses. See the new article by my colleagues, Ted and John, on projected five-year structural budget deficits.

It’s a bottomless pit without many drastic, structural reforms.

–Mark Glennon is founder of Wirepoints.


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