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The tax provisions in the “Build Back Better Act” proposed in the House Ways and Means Committee would result in long-run GDP dropping by more than $2 for every $1 in new tax revenue, according to the nonpartisan Washington-based Tax Foundation.

“It is important to consider the economic impacts, which include reduced economic output, wages, and jobs,” writes the foundation’s Garrett Watson.

We estimate that the Ways and Means tax plan would reduce long-run GDP by 0.98 percent, which in today’s dollars amounts to about $332 billion of lost output annually. We estimate the plan would in the long run raise about $152 billion annually in new tax revenue, conventionally estimated in today’s dollars, meaning for every $1 in revenue raised, economic output would fall by $2.18.”

According to the foundation, starting with a 0.09 percent drop in GDP in the first year (about $20 billion) and building to a 0.64 percent drop in GDP by 2031 (about $212 billion), the plan would result in a cumulative GDP loss of nearly $1.2 trillion from 2022 through 2031, as shown in the following Figure.

The Ways and Means tax plan reduces economic output by reducing the after-tax return to investment opportunities for firms and the incentive to work through higher tax rates on labor income. More than half of the plan’s economic impact is due to increasing the tax burden on corporations, which is the most economically costly way to raise revenue.

The report notes that even before accounting for a smaller economy, taxpayers earning less than $400,000 would see lower after-tax incomes due to higher corporate taxes and higher taxes levied on nicotine and cigarettes.

Overall, the plan would reduce average after-tax income per filer by $171 in 2031, on a conventional basis, and by $971 per filer in the long run on a dynamic basis. That is, the economic harm of the plan would reduce after-tax incomes by about $800 per filer on average each year.

The report concludes, “The economic harm caused by the tax increases would claw back some of the plan’s expanded tax credits aimed at low- and middle-income families. For those in the bottom 20 percent, it would reduce the average net benefit of the plan per filer from $341 to $233, a 30 percent reduction.”

Source: https://taxfoundation.org/house-tax-plan-impact/

General Assembly Retirement System Creates Taxpayer-Funded Millionaires

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“The surest way to wealth during the Covid economy is to have an Illinois state government pension,” said Matthew Schultz, executive director of the Taxpayers Education Foundation (TEF). “TEF has analyzed the six major pension funds, and the first study we are going to release is about the worst offender: GARS, (the General Assembly Retirement System).”

“GARS is filled with former Illinois politicians who are absolutely raking in the money! According to our report, 246 taxpayer-subsidized pensioners within the system will receive payouts of at least a million dollars over their lifetime. This is because, on average, retirees within the system only pay 5.4% of this amount into the system. In other words, for every $5.40 spent on their pension, retired politicians will receive a guaranteed $100 during their lifetime.”

“Besides direct contributions into the fund, there are two other notable forms of funding, investment revenue, and money taken from taxpayers. However, what is often not understood about the fund is that the overwhelming majority of its cash influx comes directly from taxpayers.”

“In the year 2018, politicians paid $1,284,707 into their own pension systems. $5,140,250 came from investment income, and a whopping $21,721,000 was paid by taxpayers. Basic calculations tell us that for every dollar added to the fund from either politicians or investments, taxpayers added $3.38.”

“In just a few years, the situation has greatly changed. According to our latest numbers, politicians have deposited, $1,205,930 less than the year before. Following the trend, investment income has been slashed to $2,581,064. Meanwhile, as Illinois residents continue to suffer from economic hardship brought about by statewide lockdowns, Illinois taxpayers paid into GARS an astounding $25,754,000. Now, for every dollar added to the fund from either politicians or investments, taxpayers added $6.80.”

gars revenue 2021
gars funding

“Thanks to the iron grip on taxpayers’ wallets during the politician-inflicted slump, the fund has improved its position. The fund now has 16.50% of the assets required to make retired politicians millionaires. It only needs $319,263,796 more, mostly from taxpayers. This, assumes of course that the situation doesn’t get any worse.”

“To give an example of the pensioners within the fund, here is a list of some. Keep in mind, these are only the pensions from GARS, and do not include other pensions they may be receiving.”

“James Edgar (R), famous for playing a part in breaking the already broken pension system, receives an annual pension of $181,230. He only paid $164,657 into the system, and is estimated to receive $4,771,192 by the time he is 85 years old. His annual pension, like every GARS pension, is subject to a compound 3% cost of living adjustment increase every year. It is the driving force behind the Illinois pension crisis, and why Mr. Edgar’s lifetime payout is so enormous.”

“Former governor, Patrick J. Quinn Jr. (D), the so-called “reform” governor, currently receives an annual pension of $149,882. He has received a total pension to date of $694,733. His estimated lifetime pension payout is $3,255,658.”

“According to estimates, the average GARS recipient receives $61,027 annually, with an estimated lifetime payout of $1,420,329. The average years ‘employed’ in this part time job is 14.8 years before retirement.

average gars

“In GARS, there are 221 recipients who are estimated to collect over $50,000 a year in GARS pensions annually, 76 of whom receive $100,000 or more annually, and one-member, lucky Edward F. Petka, receives over $200,000 annually. There are only 427 members within the fund at this time.”

gars over time

“While GARS is the smallest of the six major pension funds, its it a microcosm of the greater Illinois government pension crisis. The pension system is skewed to give out enormous payouts with little employee input. The system has no money, and is not kept afloat by brilliant investors but by frantic grabs at taxpayer dollars at the expense of the rest of the Illinois state budget. It is a system that has already blasted past its breaking point.”


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A new report by the nonpartisan, Washington-based Tax Foundation on combined federal and state corporate taxes for 2021 shows that Illinois has one of the highest federal/state corporate tax rates in the country.

On a scale of 1-50, with the higher numbers being worst, Illinois is fifth-highest in the country with a combined federal/state corporate tax rate of 28.5 percent.

According to the foundation, “The state with the highest combined corporate income tax rate is New Jersey, with a combined rate of 30.1 percent. Corporations in Alaska, California, Illinois, Iowa, Maine, Minnesota, and Pennsylvania face combined corporate income tax rates at or above 28 percent. Six states—Ohio, Nevada, South Dakota, Texas, Washington, and Wyoming—face no state corporate income tax and only pay the federal tax rate of 21 percent.”

“The State of Illinois is at a huge economic disadvantage,” said Jim Tobin, economist and president of Taxpayers United of America (TUA). “Companies, big and small are fleeing to states with lower taxes.”

“Illinois Governor Jay Robert ‘J. B.’ Pritzker and his like-minded miscreants in the Democrat-controlled general assembly are trying every trick in the book to raise Illinois taxes even further. Fortunately, our organization, working with local taxpayer organizations, has helped hold the line,but they will keep trying to raise taxes.”

“It’s time for Illinois taxpayers to wake up and throw out the tax-and-spend politicians. Illinois has its own swamp, and it’s located in Springfield.” Source:https://taxfoundation.org/state-corporate-taxes-corporate-profits-2021/?utm_source=Tax+Foundation+Newsletters&utm_campaign=897ea710b1-EMAIL_CAMPAIGN_2019_10_17_07_28_COPY_02&utm_medium=email&utm_term=0_8387957ec9-897ea710b1-427663433&mc_cid=897ea710b1&mc_eid=5739982070