Taxpayers in Chicago and other Illinois cities will be paying 66 percent more income tax until 2015. Image: CC wilhemja/Flickr

An Illinois tax increase of 66 percent was approved by the state’s legislature Wednesday. The state of Illinois, reeling from years of fiscal mismanagement, has been looking for ways to narrow a $15 billion budget deficit. The Illinois income tax increase, the largest in the state’s history, is a desperate step to solve budget woes many other states with the same problem continue to avoid.

Illinois tax increase survives 11th-hour vote

With the Illinois tax increase, a state crippled from a budget crisis has taken the bull by the horns. A temporary increase in the Illinois income tax from 3 to 5 percent will be combined with a 2 percent limit on spending increases. Republicans refused en masse to vote for the measure, which was passed Wednesday just hours before a new Illinois General Assembly was sworn in at noon. The last election took a big bite out of the state’s Democratic majority and swept out a group of lame-duck legislators who bore no political consequences by supporting the Illinois tax increase.

Solving the Illinois budget crisis

The Illinois income tax increase was adopted after several other proposed taxes were rejected by Republican lawmakers. A $1-a-pack increase in cigarette taxes to fund school districts didn’t fly. A plan to get an $8.7 billion installment loan, paid off by a portion of the tax increase, also failed. The loan would have been used to immediately pay overdue bills owed to businesses and social-service agencies. Democratic Governor Pat Quinn’s office said the Illinois tax increase will raise $6.8 billion a year. A 2 percent cap on spending growth will proceed in tandem. If that limit is breached the Illinois tax increase is automatically nullified.

Impact of the Illinois tax increase

The Illinois income tax increase to 5 percent is the largest, percentage wise, in the state’s history. But it is still lower than many other midwestern states. Neighboring Iowa’s income tax rate is 6.4 percent, Missouri’s is 6 percent, and Wisconsin’s is 7.5 percent. The tax increase boosts the state income tax for someone formerly paying $1,000 to $1,666. In 2015 the rate drops to 4 percent and that taxpayer’s liability drops to $1,333. The additional tax revenue will balance the state’s budget, but Republicans call it a job-killing hoax that will become permanent.

Sources

Associated Press

Fox News

Reuters

Governor Paterson has been blocked from fixing a budget crisis. Image from Wikimedia Commons.

A recent attempt by New York State Governor David Paterson to furlough state employees has been squashed by a Federal judge after lawsuits were filed against the furloughs. New York State is in the middle of a serious budget crunch and is running the risk of insolvency.  Governor Paterson and legislators reluctantly agreed to put 100,000 state employees on a one-day furlough. It would only have cost each employee one day’s pay, far less than the amount of the average payday loan.

Paterson ordered furlough to ease budget

Currently, New York State is staring down the barrel of a $9 billion budget shortfall.  This does not put the burden squarely on those that would have gone on furlough, but $9 billion is not an amount most state governments have in petty cash. Serious cuts were needed, and this was one of the solutions that David Paterson, as well as the New York State legislature, thought could help ease the burden.

Here comes the Judge

Several unions filed restraining orders against the furloughs after they were announced. New York will run out of money by summer if drastic cuts aren’t made.  U.S. District Court Judge Lawrence Kahn issued a restraining order against Paterson ordering the furlough, though it would have only lasted one day. He said the furlough would do more harm than good. Legislators also opposed the furlough, but grudgingly passed it. Part of the budget cuts would have included canceling a scheduled raise, which union leaders are not willing to give up, according to the New York Times.

New York billions in the hole

New York has one of the worst budget crises around. Few states are that far in the red, and austerity measures are opposed at every turn. Intractable unions, unwilling to work with either business or industry leaders for the good of the whole make it harder to cut expenditures, and taxes are hard enough to get raised as it is.  When a government runs a deficit, it can either cut expenditures, increase revenue or do a combination of both.

We are going to share a real life story of a family who avoided additional hardship after being taken advantage of by a bank, thanks to short  term loans online. Of course we have to change the names of the people who benefited from the online short term loans for privacy reasons. Please read the following story of the Joneses and their experience with big banks and installment loans for people with bad credit.

Economic hardships can be prevented with short term loans

The “Jones Family” got more than one short term loan online in order to squeak by in this harsh economy. Mr. Jones was having trouble making sure that he kept track of all the debit card transactions between himself and his wife. Add automatic deductions to the account and internet purchases and Mr. Jones had a receipt for disaster.

Big bank fees cause big shock to the budget

Mr. Jones had no idea that the big bad bank was going to reorder debits and other deductions to the account in a very strange fashion. After planning a trip for his family for several months, everything seemed to be in place. The Jones family had a great time and had not a clue what was about to happen to them financially. Their budget was going to undergo a radical change without their knowledge or permission.

Fun vacation ruined by bank fees

After a great week of vacation, Mr. Jones finally was able to get online and check the family bank account. Shockingly the bank was claiming they were over drafted by almost $1,000 dollars. Mr. Jones had set up automatic overdraft protection with a secured savings account credit card. There should not have been 10 overdraft fees charged to the account. It was going to take more than one short term loan online to get the Jones out of this budget crisis.

Read the bank’s fine print

Upon close examination of the banking record, it was revealed that there should have been enough cash in the secured credit card account to cover the overdrafts. There was approximately 15 debit charges to the account for various vacation expenses. There was the addition of an early debit for auto insurance to the account for approximately $200. This brings us to the scandalous part of the story.

Bank reordered debits to create unnecessary overdrafts

The bank reordered all the small debits for the vacation that were in “pending” status and put the larger insurance debit first ahead of the others. This was strange since the insurance debit actually accrued after all the small debits in the account. Interestingly enough, the bank reordered the debits to create 10 overdrafts instead of just one. So, to borrow about $100 or so, the bank charged Mr. Jones $350. To say the least, the Jones were outraged.

Overdraft protection ignored by bank

It is bad enough when the bank did not take the money out of the overdraft protection account to cover the insurance payment, but to reorder all the debits for the vacation in order to profit to the tune of $350, that is simply highway robbery. The Jones were not only shocked but extremely upset. Being that the bank would not have any mercy on the Jones, they were forced to obtain short term loans online to make ends-meat while they paid off this outrageous debt.

Banks routinely target families

This is a common tragedy in the United States today. Big banks and financial institutions are taking advantage of working families. They pay the media big bucks to villainize short term loans online but they charge people in excess of 30,000% APR and call it a fee. Short term loans online are definitely a far cheaper alternative than overdraft fees.

Learn from the Jones Family mistakes

If you are like the Joneses you may want to keep better track of your online debit transactions and possibly get a short term loan online before you go on your vacation and pay for everything with cash or at least make sure you have extra money in your bank account. That would have saved the Joneses several hundred dollars and prevented massive headache and anxiety.

Get Your Short Term Loan Online Now!

If you don’t need a short term loan online today you may need one in the future. Please save this page in your bookmarks to come back later. If you need a down payment assistance loan to purchase a vehicle, you should check out VehicleMicroFinancing.com.