Letter writer John T. Scally (Voice, Feb. 10) does not understand the difference between a reduction in taxable income and a direct tax credit.
He uses the example of real estate taxes of $2,000, which was multiplied by 2 in past years, then deducted from ”total income” to arrive at ”base income.” After deducting ”total exemptions” to arrive at ”net income,”
the tax rate of 3 percent was then applied. Thus, in 1990, the effect of $2,000 in real estate taxes was to save the taxpayer $120 of Illinois state income tax.
In 1991, the amount of the tax credit for $2,000 in real estate taxes is 5 percent of $2,000 or $100. This amount is then added to the Illinois income tax withheld, and is a direct reduction in liability or an increase in refund.
So it is true that the taxpayer receives less of a credit for 1991 than for 1990 for same real estate taxes. However, in this example it is $20 less, not $3,900 less.
The real problem with the new Illinois tax form is that the credit is computed on back page now, then transferred to line 20 on front page. Many taxpayers will probably overlook the credit and not take it. However, an amended return can be filed, IL-1040-X, to correct the mistake.
