American Rescue Plan FAQ: Illinois
Release: July 12, 2021
On March 11, 2021, the Biden Administration secured passage of the American Rescue Plan Act (“ARPA”), which provides fiscal relief designed to counter economic issues created by the pandemic. ARPA is considerable in size and provides a total of $1.9 trillion in federal aid for state and local governments to use to support the provision of various core public services such as healthcare, human services, and education, as well as to infrastructure.
Given the significant federal aid flowing through ARPA, CTBA has compiled the following answers to some of the most frequently asked questions about that legislation and how it will impact Illinois.
Fully Funding the EBF: Volume III
Release: March 16, 2021
In the FY 2022 General Fund budget proposal the Governor announced in February, K-12 funding under the Evidence-Based Funding formula (EBF) is once again held level with FY 2020, in nominal, non-inflation adjusted dollars. While that is certainly better than being cut from FY 2020 levels in nominal dollars, it represents a step backward. By not providing additional new funding for the EBF, the state is extending the time it would take to fully fund the EBF by two years – if the state continues to put in a minimum of $300 million yearly beginning in FY 2023. That two year extension would mean extending the timeline to more than four times longer than what is required by statute.
This update is the third installment in the Fully Funding the EBF Series.
Increasing the Income Tax Rate
Release: February 16, 2021
Without new revenue available from the proposed Fair Tax, short-term borrowing, Federal Aid, and cutting some expenditures has allowed Illinois to hold on during the current fiscal year. But this is a short-term solution, and not a sustainable solution in tackling the long-term fiscal woes of Illinois. In our new short report, “Increasing the Income Tax Rate: One Method for Addressing Illinois’ Long-term Fiscal Problems” CTBA analyzes potential benefits of increasing the income tax rate, while ensuring that any increase in the income tax address the regressivity of a flat rate income tax structure through refundable tax credits.
Illinois Should Decouple from Federal CARES Act Tax Breaks
Release: February 2, 2021
Part of the federal economic stimulus created under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, involved increasing the tax relief businesses could claim under the existing net operating loss and excess business loss tax breaks. Among other things, the Cares Act made these tax cuts retroactive, meaning businesses can claim losses and reduce their tax liability for years in which the pandemic had no impact on their profitability. CTBA provides reasoning for supporting decoupling from Federal CARES Act Tax Breaks.
Analysis of Berkeley Research Group Graduated Rate Income Tax Impact Report
Release: October 21, 2020
In early August, the Illinois Chamber of Commerce issued a press release arguing against ratification of the proposed amendment to the Illinois Constitution that will permit the state to utilize a graduated rate structure for its income tax. According to the Illinois Chamber, such ratification, coupled with implementation of the specific graduated rate structure identified in P.A.101-0008, which is called the “Fair Tax” by proponents, would “somehow” shrink the Illinois economy, and disproportionately harm women and minorities. But the press release based these claims on largely unsubstantiated findings contained in an Executive Summary of the report, “Illinois’ Proposed Graduated Income Tax: Impacting Jobs and the Economy,” which the Illinois Chamber paid the Berkeley Research Group (BRG) to produce.
Unfortunately, the Executive Summary does not provide much in the way of support for the conclusions it reaches, nor does it regularly cite its sources, or even provide insight into the model BRG used to reach its conclusions which is particularly problematic in this instance, given that the main findings contained in the Executive Summary are contrary to prior research on migration, tax burden, and the economy.
CTBA decided to reached out to both the BRG and the Illinois Chamber to request a copy of the full report, however, neither the Illinois Chamber nor BRG was willing to make the full report available to either CTBA or the public. CTBA chose to respond to the BRG Executive Summary released by the Illinois Chamber anyway. To find out more about how, when compared to the body of research conducted by credible sources in the relevant areas, the Key Findings presented in the Executive Summary are revealed to be either inaccurate or misleading, please read CTBA’s new Issue Brief, “Analysis of Berkeley Research Group Graduated Rate Income Tax Impact Report.”