How will the new tax increases in Illinois affect the STL economy? (St. Louis: rental, insurance)

[1grin_g0]

Originally Posted by RisingAurvandil

They will have 1.2% less income than last year, ceteris paribus.

1.2% may not seem like much, but it's actually quite significant. As an example we can look at a 4 person household with $100,000 in income.

1. let's say 20% goes to the federal government = $20,000
2. mortgage/property taxes/home insurance $1,500 a month = $18,000
3. $500 a month towards retirement = $6,000
4. $600 a month for health insurance = $7,200
5. $500 a month for utilities = $6,000
6. $650 a month for car payment/insurance = $7,800
7. food/gas/clothing/misc essential household items $1,000 a month = $12,000
8. $300 a month student loans = $3,600
9. old Illinois state tax rate 3.75% = $3,750

If you total all of that up it comes to $84,350. That leaves $15,650 left for discretionary spending. I didn't even include child care expenses, car repairs, major home repairs, union dues, medical bills, or credit card debt. Now the state of Illinois comes along and raises tax rates to 4.95%, which equals $1,200 more in taxes. $1,200/$15,650 = 7.67% less in discretionary income for our family of four with income of $100,000. That's 7.67% less that can go towards local businesses, churches, vacations, savings, etc. Also, it's important to remember that IL has a flat tax. Households that make less than $100,000 will get squeezed far worse, meaning that 7.67% number will be much much higher for them.


Nobody is saying that a state shouldn't pay its bills, but you can only squeeze the middle class so far.

[RisingAurvandil]

Originally Posted by 1grin_g0

1.2% may not seem like much, but it's actually quite significant. As an example we can look at a 4 person household with $100,000 in income.

1. let's say 20% goes to the federal government = $20,000
2. mortgage/property taxes/home insurance $1,500 a month = $18,000
3. $500 a month towards retirement = $6,000
4. $600 a month for health insurance = $7,200
5. $500 a month for utilities = $6,000
6. $650 a month for car payment/insurance = $7,800
7. food/gas/clothing/misc essential household items $1,000 a month = $12,000
8. $300 a month student loans = $3,600
9. old Illinois state tax rate 3.75% = $3,750

If you total all of that up it comes to $84,350. That leaves $15,650 left for discretionary spending. I didn't even include child care expenses, car repairs, major home repairs, union dues, medical bills, or credit card debt. Now the state of Illinois comes along and raises tax rates to 4.95%, which equals $1,200 more in taxes. $1,200/$15,650 = 7.67% less in discretionary income for our family of four with income of $100,000. That's 7.67% less that can go towards local businesses, churches, vacations, savings, etc. Also, it's important to remember that IL has a flat tax. Households that make less than $100,000 will get squeezed far worse, meaning that 7.67% number will be much much higher for them.


Nobody is saying that a state shouldn't pay its bills, but you can only squeeze the middle class so far.

But our economy isn't solely based on discretionary pending. Or your single theoretical example.

I stand by my assertion that households will directly lose 1.2% of their income. Slightly less actually, depending on tax deductions. It's that simple. Further assertions are pure guesswork. Furthermore, much of this money will be returned to the area thru state spending, pension outlays, and a reduced burden on future generations.

[1grin_g0]

Originally Posted by RisingAurvandil

But our economy isn't solely based on discretionary pending. Or your single theoretical example.

I stand by my assertion that households will directly lose 1.2% of their income. Slightly less actually, depending on tax deductions. It's that simple. Further assertions are pure guesswork. Furthermore, much of this money will be returned to the area thru state spending, pension outlays, and a reduced burden on future generations.

You say "further assertions are pure guesswork", but then you go on to assert that much of the money will be returned to the area. If you have a source that shows how and where the new tax revenue will be dispersed I'd love to see it. As far as pensions go, you can't even guarantee that the money will stay in the state. Retirees often move out of state. Why would a retiree want to stick around and pay insane Illinois property taxes? You are also asserting that higher taxes now, translates in to a "reduced burden on future generations." We don't know that, there are too many unknown variables. For example, if Illinois continues to lose population, then the tax burden per capita will have to go up or spending will have to be cut.

[RisingAurvandil]

Originally Posted by 1grin_g0

You say "further assertions are pure guesswork", but then you go on to assert that much of the money will be returned to the area. If you have a source that shows how and where the new tax revenue will be dispersed I'd love to see it.

It's quite simple. The state budget is available for anyone to see. You are correct that I'm not providing specific numbers, but I am certain that the state will spend funds on schools, public safety, infrastructure, pensions, debt service, etc. Why? Because that's what every state spends its funds on.

Originally Posted by 1grin_g0

As far as pensions go, you can't even guarantee that the money will stay in the state. Retirees often move out of state. Why would a retiree want to stick around and pay insane Illinois property taxes?

A vast majority of pensioners remain in Illinois. Why? Because Illinois is one of the few states that does not tax retirement income. You want to quantify that with an anecdotal example? It doesn't matter anyway, because the benefits have been earned and are owed regardless of where the pensioner lives. Like any debt, its cheaper to pay earlier.

Originally Posted by 1grin_g0

You are also asserting that higher taxes now, translates in to a "reduced burden on future generations." We don't know that, there are too many unknown variables. For example, if Illinois continues to lose population, then the tax burden per capita will have to go up or spending will have to be cut.

We know that if pensions are funded today, the required contributions will be lower in the future because of compounding capital. If the tax dollars are not used for pensions/debt, then no, it will not reduce the burden on future generations.

As for the population, we have not had an official Census since 2010. Even the estimates are only indicating a tiny drop (-0.2%). And I don't fully trust estimates. In 2009, the estimates showed that StL was growing, yet the actual Census revealed a massive population loss (-8.3%).

[Scottiegal]

Originally Posted by 1grin_g0

1.2% may not seem like much, but it's actually quite significant. As an example we can look at a 4 person household with $100,000 in income.

1. let's say 20% goes to the federal government = $20,000
2. mortgage/property taxes/home insurance $1,500 a month = $18,000
3. $500 a month towards retirement = $6,000
4. $600 a month for health insurance = $7,200
5. $500 a month for utilities = $6,000
6. $650 a month for car payment/insurance = $7,800
7. food/gas/clothing/misc essential household items $1,000 a month = $12,000
8. $300 a month student loans = $3,600
9. old Illinois state tax rate 3.75% = $3,750

If you total all of that up it comes to $84,350. That leaves $15,650 left for discretionary spending. I didn't even include child care expenses, car repairs, major home repairs, union dues, medical bills, or credit card debt. Now the state of Illinois comes along and raises tax rates to 4.95%, which equals $1,200 more in taxes. $1,200/$15,650 = 7.67% less in discretionary income for our family of four with income of $100,000. That's 7.67% less that can go towards local businesses, churches, vacations, savings, etc. Also, it's important to remember that IL has a flat tax. Households that make less than $100,000 will get squeezed far worse, meaning that 7.67% number will be much much higher for them.


Nobody is saying that a state shouldn't pay its bills, but you can only squeeze the middle class so far.

Little number adjustment here...I know no one in Illinois who pays 1,500 for property taxes, mortgage, and insurance. Most of my friends pay between 800-1,500 a month just on property taxes alone, I have heard as high at 34,000 a year.

When we lived in Illinois (three months ago) our health insurance was 900 a month.

[MOforthewin]

[quote=Scottiegal;49165588]Little number adjustment here...I know no one in Illinois who pays 1,500 for property taxes, mortgage, and insurance. Most of my friends pay between 800-1,500 a month just on property taxes alone, I have heard as high at 34,000 a year.

When we lived in Illinois (three months ago) our health insurance was 900 a month.[/QUOTE

WTF. Do they own an apartment complex or something? Our property tax on our house was only $2,000 a year in MO, St. Louis county. Is this thing some 7 bedroom mansion with large swimming pool or something?

[Scottiegal]

the folks who pay 34 grand a year, yes those would be very nice big houses. But just your average 4 bedroom homey type of house I would expect starting at 800 a month. My sister has a four bedroom and her taxes were 1000..they jumped to 1,100. When we lived in a townhouse...and we owned no land mind you our taxes were just under 8 grand.

[Scottiegal]

I should clarity my sister pays that monthly (1,100) , and our townhome (just under 8 grand ) that was the annual tax total.

[RisingAurvandil]

Damn, must be a Chicago thing. I was at dinner earlier and asked my brother about his property taxes. Said he pays $3500/year near Glen Carbon. I'd peg his house in the $150k range.

[MOforthewin]

Originally Posted by RisingAurvandil

Damn, must be a Chicago thing. I was at dinner earlier and asked my brother about his property taxes. Said he pays $3500/year near Glen Carbon. I'd peg his house in the $150k range.

Yikes, that's a lot! Here in Florida though in a lot of areas your property taxes are high. Up in the Tampa area for 200k house you can pay close to 4k a year in a lot of areas.

My new house here in my county we pay about 2k in property taxes and we are considered the cheapest county in the region for taxes and our house is worth around 230k right now. Up in the Tampa area the same house would probably be close to 4 grand in taxes.

Btw do you guys ever see Missouri adding toll roads? Just recently the voters rejected raising the gas taxes to help fund the roads. Can you see them approving toll roads LOL?