For starters, it left Illinois stuck with its long-standing, flat rate income tax. This outcome was something other than desirable, given the central role this flat rate income tax has played in driving Illinois’ incessant, and substantial, General Fund deficits.
How substantial? Current estimates are the General Fund deficit will reach $13 billion by the end of FY 2022 — which means Illinois won’t have the revenue needed to cover almost half of anticipated FY 2022 expenditures on services. That’s a real cause for concern, given over 95 percent of all General Fund spending on services goes to the four, core areas of education, health care, human services, and public safety.
Sure, a portion of this deficit will resolve itself once the revenue shortfalls caused by the pandemic end. That said, the crux of Illinois’ fiscal problems have nothing to do with COVID-19, and everything to do with structural flaws in the state’s tax policy — the flat rate income tax being key among them.
Author(s): Ralph Martire
Publication Date: 12 February 2021
Publication Site: Daily Herald