Dance Band on the Titanic

Dance Band on the TitanicThere’s an old saying that bad news comes in threes. It’s certainly true today for Illinois.

First comes the news that Illinois’ insurance rates under Obamacare are set to skyrocket by 43%-55% at the end of the year. Nothing about the Affordable Care Act (insert your own punch line here) has worked as advertised. The biggest driver of higher costs for the ACA is the radical expansion of Medicaid. Illinois was projected to have had an expansion of Medicaid enrollment in 2014 of some 200,000 people, when in fact the number was more than three times that amount. Think that’s bad? It gets worse. For the first 3 years of the ACA, the Federal government picked up the cost of Medicaid expansion. Starting in 2017, Illinois will be obliged to pick up the tab on 3% of that expansion, capping (heh) at 10% in 2020. That’s going to cost us anywhere from $375-$400 million per year in money we don’t have.

The second bit of bad news is that the Teachers’ Retirement System is meeting today to discuss the possibility of lowering the projected rate of return on its portfolio from its current rate of 7.5%. I’ve written earlier why this will hurt Illinois taxpayers, and won’t repeat myself here. Let’s just say that while such a move would reflect economic reality, that horse left the barn years ago. Most of my clients are pilots for United Airlines, and I know first-hand what it looks like when a pension plan explodes, and it’s not pretty. The same thing’s happening here, only the numbers are bigger and you’re going to be left holding the bag.

Finally, of course, there’s yesterday’s decision by the Illinois Supreme Court ruling against placing an independent map amendment on the November ballot. In a 4-3 decision which followed party lines (who’da thunk?) the Court ruled that Illinois politicians could continue to choose their voters, rather than the other way around. It also shows that the rot and corruption that has infected the Legislature for so long has crept to the judicial branch. Justice Thomas in his dissent said it all:

“The Illinois constitution is meant to prevent tyranny, not to enshrine it… Today a muzzle has been placed on the people of this State, and their voices supplanted with judicial fiat. The whimper you hear is democracy stifled.”

It’s becoming more obvious every day that without wholesale change in the Illinois legislature, the Republican caucus will continue to be nothing more than the dance band on the Titanic.

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Providing Some Breathing Room to Seniors

Property Tax Credit

Click Image to Enlarge

As we search for ways to lower property taxes for everyone, there’s a simple remedy to allow those who live on fixed retirement incomes to gain some relief.

If you take a look at your Illinois income tax return, you’ll see that there’s a credit (a dollar-for-dollar reduction of tax) equal to 5% of your home’s property tax bill that you can claim to reduce your income tax liability. For instance, if your property tax bill is $5,000, you can claim a $250 credit against that liability.

However, the credit is “non-refundable”, which, as is stated in Publication 108 from the Illinois Department of Revenue:

“If your property tax credit exceeds the tax you owe, you may not receive a refund for that amount, and you may not carry unused credit to other years. Your property tax credit may only reduce the tax you owe to zero.”

The problem for most retirees, however, is that since Illinois doesn’t tax retirement income or social security, they don’t pay any state income tax. All retirement income taxed on their Federal returns is shown as a subtraction on their Illinois returns, often leaving them with zero taxable state income. Thus, the credit offers no relief to offset their ever-escalating property tax bill.

I would propose allowing the credit to become refundable for anyone over age 65 whose income Federal adjusted gross income (the starting point for calculating Illinois taxable income) is below $50,000, and when reduced by the subtraction for retirement income results in no state income tax. This would allow those seniors most affected by rising property taxes to gain some measure of relief.

The image at the top of this post is from the tax return of a client of mine whose adjusted gross income in 2015 was a little under $50,000, consisting mostly of a private pension, IRA distributions and social security and who paid over $9,500 in property taxes here in McHenry County. Had the credit been refundable, my client would’ve gotten a state tax refund of $477. Not a lot, but better than a poke in the eye with a sharp stick.

Until we have real property tax relief for everyone, which can only come when we change the way we pay for education in this state, measures such as this will at least help those most in peril of losing their homes some small respite.

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“Mort de la Guerre”

GraveForty years ago while bicycling through eastern France, I took a break and walked into a small grove of trees which grew in the middle of a wheat field. There, sitting in a small clearing was a simple stone, inscribed with the phrase “mort de la guerre”.

There was no name, no date and no means of identification, just a simple stone marking the final resting place of someone who had fallen in defense of Liberty.

Since then, the men and women of the United States armed forces have been sent to the far corners of the world to defend the Liberty that we so often take for granted. It’s only appropriate that we dedicate at least one day a year in remembrance of those who didn’t come back.

This weekend there will be remembrances, parades, and family gatherings. To those of you for whom that family gathering will be to honor one of their own who, in words attributed to Lincoln: “laid so costly a sacrifice upon the altar of Freedom”, we should all offer a silent moment of thanks.

Secretary of State Colin Powell said in 2003:

“Over the years, the United States has sent many of its fine young men and women into great peril to fight for freedom beyond our borders. The only amount of land we have ever asked for in return is enough to bury those that did not return.”

Cemeteries around the world stand as testimony to the price our country has been willing to pay for our freedom. But whether it’s the beautifully manicured grounds at Arlington or Normandy or an anonymous grave in eastern France, our obligation is the same: to remember the cost of freedom and to honor all who were “mort de la guerre”.

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“We cannot solve our problems with the same thinking we used when we created them.” – Albert Einstein

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The Governor’s SOTS Speech, What He Said and What He Didn’t Say

Reboot

Scott Stantis, Chicago Tribune

Every “State of” speech I’ve ever heard follows the same script:

  • A recitation of accomplishments achieved since the previous speech;
  • A shopping list of proposals to be addressed before the next one; and
  • A reminder that those who stand in political opposition to those proposals will be held responsible if those proposals don’t get enacted.

Governor Rauner’s speech yesterday followed the script for the most part, and revealed some interesting insights. Continue reading

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