Pritzker's Proposed Top Marginal Tax Rate was 896,508%
That masked man struck even harder than I had thought.
On yesterday’s post on income taxes in Illinois and other states, commenter Boris pointed out something I had missed. He stated what I had written about Illinois governor Pritzker’s proposal for the top marginal tax rate to be 7.99% and then added:
It’s worse than that. It’s 7.99% on all your income if your income is over that line.
So for a married couple, going from $999,999 to $1,000,001 (to be safe; not sure how exactly $1 million is treated) increases tax liability from $70,935 to $79,900.
I still haven’t figured out who thought it was a good idea to have a discontinuity in the assessed tax like that and why everyone played along.
This is so important that it deserves a post of its own.
First, thanks to Boris. I checked his math and he’s right. I did add the pennies.
So the 1,000,001th dollar that puts the married couple over the line causes the couple to pay $79,900.08 in income tax. That’s an increase of $8,965.08.
So the marginal tax rate on that 1,000,001th dollar would be 896,508%.
I’m guessing that in reality there are at least a couple of tax writers on the Democratic staff in Springfield, IL who would have seen this. What would have been interesting, though, and fortunately we won’t see it, would have been what they did when they discovered it.