If only things were so easy. Our department gets allocated $XX,XXX each year for raises. My boss has to split that among eight people. If I were to get a 5% bump like OP recommends, other people would get nothing. Sounds like typical D-grade manager motivation. "Everyone work yourself to death and I might throw you a bone after one year!" I'd rather give up that 5% to have a sane work-life balance. It's common knowle…
If threatening to quit is the only way to get the raise that you (presumably) deserve, then it's probably a good sign that it's time to, you know, actually quit and move to a better opportunity where your contribution is properly valued.
If you want to stay, come back with a better offer and ask your company to match. Be prepared to leave if they don't want to.