Bruce Rauner’s Win & Your Personal Finances
November 06, 2014

With the election of Bruce Rauner to the Illinois governor’s mansion, Republicans have won the office for the first time in more than a decade.

It is well known that Rauner did avoid answering a lot of key questions while he was campaigning over the past year, but there were several areas that he did venture into that we can expect to see some change in the weeks to come. What does Rauner in office mean for you and personal finances?

Pension reform. As we are aware, pension costs are soaring, and the $100-billion shortfall is one of the primary factors in the state’s low debt rating and rising concerns about solvency. Rauner has said he will cut pension benefits to fix the problem with a new retirement program.  This will most likely mean a type of “defined contribution plan” that will cost taxpayers much less. On Rauner’s side are Speaker Mike Madigan and Mayor Rahm Emanuel so expect this to be on the table.  As a taxpayer, don’t expect the impact to flow through to you anytime soon, as there will be considerable funds, up to $100 billion, needed to make these plans ‘whole’ before they can be closed or converted to 401(k)-type defined contribution plans.

Repealing the state’s personal income tax increase and freezing property taxes. This means reducing our personal income taxes from 5 percent to 3.75 percent. These changes are part of Rauner’s jobs and economic plan known as “Bring Back Blueprint.” What does this mean for you? More money in your pocket.

Repealing the state’s corporate tax rate increaseThis means more money for corporations, which should flow through in higher returns for stocks of IL-based companies. It could also result in more job growth as this cut lures more companies to Illinois–or at least prevents existing ones from leaving.

This all sounds very good, but if Rauner wants to cut the state’s income tax rate, he will have to make offsetting cuts in the state budget which comes at a political cost. He also has to deal with the Democrats in the state legislature who may not want to help the agenda and may even try to sabotage his efforts.

Before you start counting the flow of savings to your wallet, it is probably best to wait and see.

Photo courtesy of Disclaimer: The views expressed in this article are the opinions of the author and should not be interpreted as individualized investment advice. Investment objectives, risk tolerances and the financial situation of individual investors may vary. Please consult your financial and tax advisers before investing.

Susan Templeton

November 2014