Hello friends, this is Jonathan Carroll, State Representative to Illinois’ 57th District. Thank you for visiting my blog. In my latest email update, sent earlier today, I promised you a further explanation of my recent State and Local Tax Deduction bill, House Bill 4237. This legislation is quickly gaining bipartisan support, with both Republicans and Democrats signing on as co-sponsors. This represents just one of my many efforts to join with my colleagues from across the aisle, and provide much needed tax relief to Illinois residents. It is only through cooperation and honest debate that we will raise this state up, and I’m willing to work with anyone who has good ideas for Illinois. If you want to see the language of the bill, I’ll provide you a link: HB4237
Nobody likes higher taxes, that much is evident. Back in October, I was another Northbrook resident cringing at the sight of his property tax bill. Since coming to office, I’ve learned about the plentiful and helpful services these pay for, but I realize that people are still hurting from the tax burden. That is why I was incredibly disappointed to see that our federal government passed through that ramshackle tax bill in the late hours of the evening. Hidden among the half-scanned, handwritten notes in margins, and hundreds of pages it was comprised of, was a very pernicious clause that put a maximum cap on Americans’ ability to deduct their state and local taxes. They capped this deduction at $10,000 annually.
This exemption was introduced over 100 years ago, and helped alleviate the impact of federal taxes on states that paid higher tax rates. The State and Local Tax deduction, or SALT deduction as it became more commonly known, was introduced with the understanding that these higher tax states already paid more in federal taxes. Illinois, like New York, California, and others, are actually what are called net contributors to the federal government. We pay more in taxes than we receive. That is why I was disappointed in Washington when this bill passed both houses. The elimination of the SALT deduction is going to be a blow to Illinois residents, and I took it as my duty to help soften the impact on my state.
The bill that followed, HB4237, will mirror similar legislation coming out of other net contributing states, in that it finds a legal work around for the $10,000 cap. We will be setting up the Illinois Education Excellence Fund, which people can donate to. This will serve a few purposes. The General Assembly will be able to appropriate grants made from the funds received that will be directly funneled into helping to pay for schools and, ideally, shifting some pressure off of property taxes. The money raised to the fund will be strictly earmarked for educational purposes, specifically early childhood education, elementary and secondary education, higher education, and a few other education related costs. This will help alleviate problems in our underfunded public schools, without a general tax increase. Any money donated by Illinois residents to the Illinois Education Excellence Fund will be deducted from your State Income Tax, and count as federally tax deductible, as would any other charitable donations, thus circumventing this cap.
I’ve heard some voices that claim this bill would only benefit the wealthy who can afford these donations. Let me counteract this with some facts. In 2015, the average Illinois SALT deduction was $12,500. This would mean that the average taxpayer just saw a $2,500 increase in their federal tax liability. That is the average, so many people rely on this deduction. Additionally, 85% of Illinoisans that take advantage of the SALT deduction have a household income of less than $200,000 per year. The vast majority of the people who use this are in the middle class. When you multiply the number of people using it by the average deduction, it is estimated that this would equate to somewhere between $5 and $6 billion dollar increase by way of eliminating what was formerly deductible! That was not something I could sit idly and watch happen to Illinois.
Whew! Thanks for bearing with me on this one. While the intricacies of tax code may not be exhilarating for everyone, I knew that this was too important to leave unexplained. As I mentioned in the email update, HB4237 passed the Illinois House of Representatives with an overwhelming vote of 93 to 15. Our State Senator, Julie Morrison, has sponsored it in the Senate, and it is currently in the Assignments Committee. You can follow its progress in the link I provided for you in the first paragraph. I have high hopes for this bill passing, it has 23 sponsors in the House, several of which are Republicans. Many Republicans also voted in favor of this bill. The Governor has not indicated that he has any problems with the bill. Regardless, I’ll be working with my colleagues in the Senate to make sure that it passes through there as well. We have to fight to bring real tax relief to Illinois. We have to invest in our children’s education, as they will be the future of our great state. I am proud of the fact that I’m endeavoring to do both.