Re: Democratic lawmakers push 75% state income tax increase
Illinois Taxes: How Blue Can You Get?
Posted 01/07/2011 07:26 PM ET
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Fiscal Policy: Unimpressed by data showing that businesses, jobs and people flee high-tax states, the Land of Lincoln opts to squeeze the last penny out of taxpayers with a whopping 75% income-tax increase.
Illinois is one of those states losing a congressional seat as a result of the 2010 census. Iowa, Louisiana, Massachusetts, Michigan, Missouri, New Jersey and Pennsylvania will also each lose one. New York and Ohio will each lose two.
California, despite massive illegal immigration, will fail to gain a congressional seat since statehood was granted. Meanwhile, states such as Texas will gain four and Florida two, as populations voted with their feet, seeking residence where the governments seem less entitled to the fruits of taxpayer labor.
Americans for Tax Reform compared the states gaining and losing congressional seats and found that "states gaining seats had significantly lower taxes, less government spending and were more likely to have 'Right to Work' laws in place."
ATR found the average personal income-tax rate in states losing seats was a high 6.05%. That average rate in states gaining seats was a more modest 2.8%. Per capita government spending is also lower: $4,008 for states gaining congressional seats vs. $5,117 for those that aren't.
Undaunted by this information, Illinois lawmakers are considering raising their state's income tax rate to 5.74% from 3%. This increase, Illinois taxpayers are being told, will be only temporary, lasting four years, when the rate will fall back to 3.75%.
Temporary tax hikes are like unicorns ? they exist only in legend. Even if this promise is kept, four years is long enough to drive out more businesses and workers and accelerate Illinois' death spiral into bankruptcy.
The state has a $15 billion budget shortfall. It has arrived at this point by spending like many states in good times like there was no tomorrow and only the next election. Dominated by what some locals call "the People's Republic of Chicago," it's been a laboratory for every socialist idea. Well, that experiment has failed.
Despite putting a moderate Republican in President Obama's old Senate seat, Illinois has become a dark blue states. Chicago is a pre-Detroit socialist paradise where a one-party government has never met a fee or tax it didn't like to raise.
There's talk about closing that budget gap, talk that doesn't include much about cutting spending. And there are no guarantees all the added revenues would go to paying unpaid bills and deficit-reduction. Nor is there much thought being given to the economic impact. Liberals simply refuse to believe that raising taxes affects human behavior.
A report by the Pew Center on the States highlights another Illinois problem, one it shares with other states ? unfunded pension obligations.
As government has grown apace, so has its work force and the promises made to employees that double as a patronage army come election time.
Illinois has set aside barely half ? 54%, to be exact ? of the amount it will need to pay benefits in its five worker pension funds, leaving an unfunded liability of $54.4 billion. Only Kansas, at 59%, and Oklahoma and Rhode Island, at 61% each, come anywhere close. California has a slightly bigger unfunded obligation at $59 billion, but is a much bigger state.
As elsewhere, Illinois' grand poobahs are blaming the economic crisis for the lack of revenues. But it's government meddling, taxing and spending from Washington, D.C., to Springfield, Ill., that have created this crisis, in fact a self-inflicted wound.
We would suggest to states like Illinois that they send delegations to states like Texas to learn how regulatory restraint, fiscal discipline and low taxes contribute to economic growth.
Stop worrying about the distribution of the golden eggs and start worrying about the health of the goose.
http://www.investors.com/NewsAndAna...1926/Illinois-Taxes-How-Blue-Can-You-Get-.htm
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