Moody’s Investor Services warned Illinois’ Democrat governor’s that his plan to more than double income taxes on the rich could create a bigger state deficit if they leave.
Democrat J.B. Pritzker successfully ran for governor of Illinois on a campaign that it was “Not Impossible” for a state with a $7,871,602,484.87 payment backlog to 91,099 vendors and the worst credit rating in the nation, to cut taxes while implementing a $15 minimum wage, expanding education and healthcare, and still create more jobs.
With Illinois already having the 2nd highest effective property tax rate of 2.32 percent and the 5th highest average sales tax of 8.64 percent, Pritzker was expected on February 20 to ask both Democrat-controlled houses of the state legislature to dump a 3.75 percent flat-rate state income tax for a progressive Fair Tax that would more than double the state income tax rate to 7.65 percent on incomes over $225,000.
Pritzker’s social justice allies claim the Fair Tax regime would also allow 61,700 more students to enroll in public colleges; 22,000 more seniors to get home delivered meals and transportation; 24,000 more admission for addiction treatment; 47,000 more childcare assistance and 7,800 more beds for domestic violence victims.
Moody’s latest credit analysts agree that Illinois public pension plan is 60 percent unfunded with a liability of $234 billion, about $18,281 per resident. But Moody’s warns that with high taxes and anti-business regulations already causing Illinois to suffer the nation’s 3rd highest out-migration at about 275 per day average over the last 5 years, raising taxes risks an meaningful acceleration of the rich leaving for low-tax states.
At least Illinois Gov. Pritzker will several other big tax and spend Democrat governors to commiserate with about the existential financial risks from the rich leaving.
The same day California’s new Democrat Gov. Gavin Newsom announced a record $144.2-billion spending plan last month that included "Cradle-to-Career" free education, new $1-billion earned income tax credit, and $100 million for immigrants fleeing Central America; the State Controller reported a December $4.82-billion tax revenue shortfall. California has lost500,000 taxpayers to domestic outmigration over the last decade.
Democrat Gov. Andrew Cuomo revealed on February 5 that New York’s income tax revenue suffered a $2.3 billion shortfall last year due as wealthy residents fleeing to low-tax states. As the only state losing residents faster than Illinois, Cuomo moaned:
“Tax the rich. Tax the rich. Tax the rich. We did that. God forbid the rich leave.”
Connecticut’s new Democrat Gov. Ned Lamont, who is facing a $1.7 billion deficit and national high unfunded liabilities of $17,418 per resident, will also present his budget proposal on February 20. Lamont’s spokesman stated “we need to explore new and different options” to obtain stability. Republican legislators indicated that Lamont is planning a sales tax increases on groceries and medications. Connecticut is already has the 4th highest domestic outmigration at about 60 residents per day.