I am writing to correct a mistake in John Scally`s Feb. 10 letter. He complained that due to a change in Illinois income tax law, a person who pays $2,000 in real estate taxes had their state tax credit reduced from $4,000 in 1990 to $100 in 1991. He figured this by multiplying the real estate taxes by 2 for 1990 and by 5 percent for 1991.
I believe Mr. Scally is confusing the difference between a tax deduction and a tax credit.
In 1990, we were entitled to double our real estate taxes for a tax deduction. In 1991, we are entitled to multiply our real estate taxes by 5 percent for a tax credit. As a result, his hypothetical homeowner would have had his 1990 taxes reduced by $120 ($4,000 tax deduction multiplied by the 3 percent tax rate) compared to $100 ($2,000 multiplied by 5 percent).
Yes, we are getting shafted, but by a lesser amount. And I do agree with his complaint that the Illinois tax booklet did not highlight this change. At least that is one thing the federal government does.
