Economic Policy

Exploration of the intersection of policy and economic trends, public finance, and economic development

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IGPA Experts use cutting edge social science research methods to analyze public policy. Our independent evidence and analysis is non-partisan, data-driven, and based in the best academic scholarship available.
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The personal income tax

Authors

  • Therese J. McGuire

The personal income tax in Illinois is the single largest revenue generator for the state ($18.3 billion in 2013). The state imposes a single tax rate of 5 percent regardless of the level of taxable income. In this paper, Therese McGuire presents a brief history of the tax, analyzes the tax using economic principles, describes various policy levers available to decision makers, and evaluates two policy package options in terms of their revenue potential and their capacity to contribute to other policy goals.


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Policy Initiative: none

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Making the 2011 tax increase permanent

Authors

In January 2011 Illinois temporarily increased the personal income tax rate from 3 to 5 percent and the corporate rate from 4.8 to 7 percent. In January 2015 the personal rate will fall to 3.75 percent and the corporate rate to 5.25 percent. If rates fall as scheduled, the state will have to find other ways to raise revenue or cut spending to cover an anticipated shortfall of about $5 billion each year.


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Policy Initiative: none

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The "do nothing" option

Authors

The state of Illinois has been on a perilous fiscal course, plagued by annual deficits with no end in sight. Most observers believe that reforms are necessary, but some suggest that the state can continue on the same path without major changes.


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Policy Initiative: none

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Competing goals of budget reforms

Authors

The short papers in the Illinois Budget Policy Toolbox are intended to analyze the pros and cons of alternative tax and spending reforms that help bring the Illinois state budget deficit towards balance.


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Policy Initiative: none

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Overview of the economic and fiscal situation in Illinois

Authors

Despite enormous recent challenges, Illinois’ economy remains relatively healthy compared to other states. In recent recessions, Illinois has a pattern of doing worse than the national average and recovers slowly. Unfortunately, the recession that began in December 2007 and ended in June 2009 hit both the nation and Illinois exceptionally hard, and Illinois’ recovery has lagged the nation’s recovery in profound and disturbing ways.


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Policy Initiative: none

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Efficiency and distributional effects of Illinois gas taxes

Authors

  • Kaveh Nafari

The current fiscal crisis in Illinois affects all parts of the state’s budget. Infrastructure is no exception. For many years Illinois has spent more on highways than it has collected in highway-related revenue. One solution to this problem is to increase the state’s gasoline tax. This report discusses the efficiency and distributional effects of increasing the state’s gas tax, and also compares a gas tax increase to alternative solutions such as increased use of tolls.


Research Area: none

Policy Initiative: none

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Wind power: An opportunity for illinois

Authors

  • Maarten Vrouenraets

The U.S. Clean Power Plan will require states to reduce carbon emissions significantly by 2030. The mandate allows states to decide how to reach this target. Rather than relying on coal-fired power plants, Illinois can build natural gas plants or invest in renewable technology like solar, geothermal or wind. The state’s geography and climate give Illinois a special advantage in the use of wind power.


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Policy Initiative: none

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U.S. Clean Power Plan provides opportunity for significant cuts in state budget deficits

Authors

  • Daniel Karney

The 2014 mid-term election that put Republicans in control of Congress reduced any chance of federal legislative action to limit greenhouse gases such as carbon dioxide from electric power plants. However, the executive branch already has authority from the U.S. Supreme Court to limit emissions under the Clean Air Act. In June 2014, the Obama Administration issued its proposed Clean Power Plan, which sets a specific limit on emissions for each state and then allows each state to decide how to meet its target.


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Policy Initiative: none

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The Fiscal Futures Project progress report and initial results

Authors

  • Nancy Hudspeth

The Fiscal Futures Project began out of concern that the state of Illinois lacks the capacity to project its fiscal demands and revenue streams into the future. Being able to generate long term projections of anticipated expenditures and revenues can help foster more fiscally responsible long term solutions by state lawmakers. The Institute of Government and Public Affairs (IGPA) is building a data driven model that will help project receipts and expenditure demands into the future.


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Policy Initiative: none

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Fiscal Fallout No. 1

Authors

The Illinois state budget has well over 600 individual funds, but most discussion involves only the “General Funds.” The Fiscal Futures Project constructs a more inclusive concept, “Consolidated Funds,” which for FY 2009 covers $61 billion in spending from 380 funds, not just the $35 billion in the four general funds. The consolidated measure presents a better picture of the state’s fiscal situation.


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Policy Initiative: none

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