Methodology and Assumptions

Property Taxes
The equalized assessed value for property tax purposes is calculated by multiplying the property value entered by the user by the appropriate assessment percentage, then multiplying by the most recent state multiplier.  If the user indicates that they receive the homeowner exemption, 5,000 in EAV is subtracted; this is the exemption for all counties except Cook and is the minimum exemption in Cook.  From the zip code entered an aggregate municipal tax rate is assigned from an Illinois Department of Revenue (IDOR) property tax rate table, and the tax amount is calculated by multiplying the rate by the computed EAV.  The user then has the opportunity to refine the results by entering their actual composite tax rate and exact amount of their property taxes from their most recent tax bill.

Reductions to property taxes are made according to the rules specified in each proposal.  For example, HB750 reduces property taxes by 12.5% on average, so the current taxes are reduced by that percentage.

Income Taxes
Income taxes are computed on a simplified basis, using only Adjusted Gross Income (AGI) and number of personal exemptions, without attempting to account for additional deductions or credits, with the exception of the Earned Income Credit (EIC) and the Property Tax Credit.  The income figure entered is assumed to be AGI and the user is reminded to check their tax form and enter the correct figure.  That figure is then used to subtract the personal exemption amount, which is the number of exemptions multiplied by $2,000.  The individual tax rate of 3% is then applied to the resulting taxable income to arrive at current state income taxes, before credits. 

For property owners, 5% of property taxes paid are deducted from this to produce the final state income tax amount.

There is a field for users to enter the amount of the Federal EIC from their tax form if they received the credit.  The state credit is 5% of the federal, so the amount entered is multiplied by 5% and the resulting credit is subtracted from the current state income tax figure.

Changes to income taxes are computed in similar fashion.  For instance, the Houlihan 2007 Plan changes both the tax rate and the amount of the personal exemption, increases the state EIC to 30% of the federal and eliminates the property tax credit.  The AGI is therefore adjusted by multiplying the number of personal exemptions by $6,000, and a tax rate of 4.5% is applied to the result to produce the proposed income tax.  For users eligible for the EIC, the Federal EIC is multiplied by 30% and subtracted from the income tax owed.  No credit for property taxes is deducted.

Several of the plans propose taxing retirement income above a specified threshold.  This tax is calculated using the amount above the threshold, the personal exemption deduction and the rate as proposed.   These calculations are only applied for the proposals and not current tax, as retirement income is not currently subject to state income tax in Illinois.

Sales and Gross Receipts Taxes
These estimates are based on the Consumer Expenditure Survey 2005 average consumption by detailed category, by income groupings.  For each tax – state, state imposed local, local food and drugs, proposed expansions to services, and gross receipts – a consumption total is computed by adding the figures for each consumption category subject to the tax.  A consumption total is computed for each income group, and then the tax paid is calculated by applying the appropriate rate from the IDOR sales tax rate table to the consumption total.  When the user enters income, they are assigned the total consumption tax from the income group within which the income amount falls. 

An income of $75,000, for example, falls into the category of $70,000 to $79,999.  From the CES average consumption amounts for categories subject to the combined general merchandise tax (e.g. food away from home, apparel, audio and visual equipment, reading, tobacco products, etc.) a total consumption figure is computed and then the appropriate rate is applied.

Data Sources
Bureau of Labor Statistics Consumer Expenditure Survey, 2005.  http://www.bls.gov/cex/                                                                                       Illinois Department of Revenue Sales Tax Rate Machine Readable File, effective 01/01/2007.  www.revenue.state.il.us/Publications/Sales/                                                                                                                                                                       Illinois Department of Revenue 2004 Property Tax Statistics Table 10: Principle Aggregate Rates of County Seats and Cities with 10,000 or More in Population.  http://tax.illinois.gov/Publications/LocalGovernment/Ptaxstats/2004/                                                                                  Illinois State Board of Education School District data for 2004-2005.