Illinois is at a fiscal crossroads. The state’s General Fund has run a budget deficit for each of the past 22 years—a deficit primarily driven by the lack of revenue growth1. And while many like to blame Illinois’ fiscal woes on profligate spending on services, the data simply does not support that position. In fact, after adjusting for inflation, General Fund spending on public services has decreased over the past 23 years, with considerable reductions in critical investments like Higher Education, Healthcare, Public Safety, and Human Services.
Tellingly, Illinois has cut its spending on those core services, despite receiving over $10 billion in federal subsidies through the Coronavirus Aid, Relief, and Economic Security Act and the American Rescue Plan Act. Looking forward, all that federal fiscal relief is expected to be spent by the middle of FY 2024. Further aggravating conditions for working- and middle-class residents, Illinois is noted for having one of the most regressive tax systems in the country, placing a much greater tax burden on low-income workers and middle-class families than on affluent individuals, when tax burden is measured as a percentage of income.
While Illinois and many other states continue to struggle to create fair tax systems that have the capacity to fund vital services for their residents sustainably over time, wealth inequality has grown exponentially over the past 50 years, and now stands at a level the country has not seen in over a century. For instance, from 1963 to 2016, the most recent year in which available wealth data is stratified by percentile, the wealthiest one percent in America saw their aggregate wealth jump from an average of $1.4 million in 1963 to $10.4 million in 2016 —a whopping 742 percent increase. Over that same sequence, folks who had wealth in the 75th percentile saw their wealth grow from just over $110,000 to $368,600—a far more modest increase in both absolute and proportional terms. Moreover, the lower down the income scale one looks, the worse the disparity in wealth becomes.
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