SUBSCRIBE to Capitol Fax      Advertise Here      Mobile Version     Exclusive Subscriber Content     Updated Posts    Contact
CapitolFax.com
To subscribe to Capitol Fax, click here.
NFIB “will lead the fight” against Rauner service tax

Tuesday, Jul 22, 2014

* The NFIB’s Kim Clarke Maisch argued forcefully against a sales tax on services in a 2012 Crain’s op-ed

Advocates for higher taxes seem not to have learned from experience. Lawmakers and activists in Springfield have been pushing for years to expand the state sales tax to include services. And with another gaping hole in the budget, the temptation is getting stronger. Crain’s columnist Joe Cahill argued, based on various studies, that the state’s fiscal problems are the result of a “narrow” tax base that exempts “half of the state’s economy” from taxation.

There are two problems with this view: First, it fails to consider the relationship between taxes and economic activity. It is basic economics that higher prices result in lower demand. Higher taxes increase prices and therefore consumer behavior. Even President Barack Obama seems to understand. He thinks that higher energy prices will discourage the consumption of fossil fuels, and that subsidies for green energy that reduce its cost artificially will make it more attractive for consumers. It’s the same theory behind higher cigarette taxes, higher alcohol taxes and higher taxes for people who don’t buy insurance.

The point is that even the cheerleaders for higher taxes know that they change consumer behavior. Where conservatives want lower taxes to encourage consumption, liberals want higher taxes to dampen the demand for products and behaviors they don’t like. Whether that’s the proper role for government — to use the tax code to manipulate personal behavior — is a debate for another day. But there’s really no debate that higher taxes on the service economy will weaken the demand for services.

Mr. Cahill seems to dismiss this theory by stating, “Sorry, but I just don’t believe that Illinoisans will start cutting their own hair if they have to pay sales tax at the barbershop.” He may be right about haircuts, but many border communities for years have complained that folks are going across the state line to buy cheaper gas, cheaper alcohol and cheaper cigarettes. Isn’t it likely that if a service tax comes to Illinois, consumers will seek lower prices where they can find them, including across the border? […]

More than half of all of the jobs in Illinois are provided by small businesses. They can’t wave a magic wand and increase their sales by 6.5 percent, and their customers can’t give themselves a raise. Expanding the sales tax would hurt both groups precisely when we need more consumer activity.

* Joe Cahill followed up after Bruce Rauner unveiled his service tax plan

Mr. Rauner’s proposal to extend the state’s sales tax to services is a common-sense idea that would raise revenue while making the tax base broader and fairer. As I’ve written before, there’s no rational justification for levying sales tax on nail polish but not manicures. […]

A substantial segment of Illinois business, I should add, disagrees with me on this point. They’ll be no more pleased with Mr. Rauner’s stand. Here’s what Kim Maisch, Illinois director of the National Federation of Independent Business, has to say:

“The NFIB and our 11,000 small-business members have long been opposed to a service tax here in Illinois . . . no matter who is pursuing the idea. As we look at Mr. Rauner’s proposal in its entirety, there are certainly items we can also support. However, no matter who the next governor is, NFIB will lead the fight against any legislative effort to bring a service tax to Illinois.”

By opposing a powerful, Republican-leaning interest group on a contentious issue, Mr. Rauner shows a willingness to put the state’s overall welfare ahead of his own short-term political interests. That’s a rare thing in Illinois politics, and he deserves kudos for it.

That NFIB endorsement will be a must watch event. The group has fought tooth and nail against a service tax for decades and now Rauner has opened the door wide.

* By the way, the Illinois Chamber has also fought hard against a service tax over the years. That group is run by Ms. Maisch’s husband Todd Maisch. So far, he’s been very quiet about this Rauner plan, and his group is also in the midst of formulating its endorsements.

- Posted by Rich Miller        


16 Comments
  1. - Oswego Willy - Tuesday, Jul 22, 14 @ 11:25 am:

    Split household?

    To the Post,

    Rauner is going to have to navigate through some usual GOP or Business friendly groups to get to where he needs to be with the voters.

    When the money for these groups isn’t a factor, you go alone, however, money is one thing, lobbying against your proposals until November is another thing.

    Are the Chamber and NFIB going to be seen by Rauner as “part of the problem” in Springfield too(?)


  2. - Not Rich - Tuesday, Jul 22, 14 @ 11:29 am:

    IF, Rauner wins, March-April-and May will be interesting and fun.. It has been a while since we have had an R Gov and the gamesmanship will be great theatre. If the pension reforms blow up courtesy of the Supreme’s then every revenue/tax idea is fair game.


  3. - PublicServant - Tuesday, Jul 22, 14 @ 11:32 am:

    So Rauner supports a tax that hits little guys (including small business owners) much more than his hedge fund buddies, huh? Now there’s a shock.


  4. - steve schnorf - Tuesday, Jul 22, 14 @ 11:35 am:

    so NFIB and the Chamber might endorse Quinn based on objections to Rauner’s tax plan. When pigs fly! Just like the public unions might go with Rauner because of how Quinn has treated them. When HUGE pigs fly!


  5. - walker - Tuesday, Jul 22, 14 @ 11:37 am:

    ===”every revenue/tax idea is fair game”===

    Completely agree, except we are already there. They should have been “fair game” for at least five years now.

    The rejection of the pension reform law would just make an almost impossible situation even worse.


  6. - Yellow Dog Democrat - Tuesday, Jul 22, 14 @ 11:45 am:

    Schnorf:

    NFIB…probably not. Nor Chamber.

    But, the inter tubes are littered with enough quotes from both already that Team Quinn can make plenty of hay.

    It does give Democrats an opportunity to beat up Republicans on taxes.

    Actually, I am surprised my state rep hasn’t already announced his opposition to Rauner’s plan to raise the income tax back to 5% and tax small business out of existence.

    And, every single Republican taking Rauner cash is now tainted…

    “Joe Bob has taken hundreds of thousands from special interests who want to raise our income taxes and increase the sales tax by $600 million a year, driving up the cost of everything from groceries to gasoline.”


  7. - steve schnorf - Tuesday, Jul 22, 14 @ 11:49 am:

    the usual suspects will line up in their regular places and read from the same well-worn scripts they usually do. That isn’t a criticism, it’s reality: Rs endorse Rs, and Ds endorse Ds, and if you fail to take your stand you about have to hope the other guy wins, because your guy expects his enemies to screw him but not his friends, so his wrath could be something to behold.


  8. - Norseman - Tuesday, Jul 22, 14 @ 12:07 pm:

    It always the details that get you in trouble.


  9. - A guy... - Tuesday, Jul 22, 14 @ 12:21 pm:

    Don’t look now, but there is some Shaking up going on now as we speak. NFIB and the Chamber need to look responsive to their members. They’re fighting the good fight. They’ll never endorse Quinn whether Arnold Ziffle flies by or not.


  10. - ZC - Tuesday, Jul 22, 14 @ 12:39 pm:

    Wow that is one weak argument by NFIB above.

    1) “Taxes decrease consumption!” (Well, sure, but an anarchic road warrior state reduces consumption a lot more, except maybe for shotguns and crossbows. You have to tax something if you still believe in public goods at all. Furthermore, this is also a fairness issue where some businesses are inside the tax bubble, and others aren’t, with not much in the way of any coherent theory why. And a broader and less arbitrary base of taxes means you should be able to lower the rates across the board.)

    2) “We don’t believe in using taxes to do that liberal thing where you influence personal behavior” - EXCEPT consumption itself, or other things you happen to like (capital formation / investment by really rich dudes). Slight philosophical tension there.

    3) “Raise our taxes, and we’re leaving the sta–aaaate!” It never gets old. Maybe we need to start a grassroots campaign where every Democratic business owner outside Chicago threatens to relocate to Milwaukee or St Louis if Rauner wins (I realize many Republicans wouldn’t care about a mass Chicago exodus…)


  11. - Formerly Known As... - Tuesday, Jul 22, 14 @ 1:12 pm:

    == When pigs fly! ==

    steve has really been on point these past few days.

    Any day other than April 1st, these groups would go with a “no endorsement” in the race before “Quinn endorsed”.


  12. - Yellow Dog Democrat - Tuesday, Jul 22, 14 @ 1:20 pm:

    @ZC -

    If Team Quinn had any clue what they were doing, that is exactly what they would do.

    According to NFIB, 82% of small business owners oppose service taxes. It will not be hard to convince them that the Rauner Plan opens the door to expanding the sales tax to include everybody else.


  13. - Formerly Known As... - Tuesday, Jul 22, 14 @ 1:24 pm:

    == Mr. Rauner shows a willingness to put the state’s overall welfare ahead of his own short-term political interests ==

    Is that what he did?

    Or did he finally feel pressure to explain how he would address the billions lost from expiration of the tax increase? So he unveiled a recycled idea that addresses only a fraction of the problem in hopes of easing the pressure?


  14. - ZC - Tuesday, Jul 22, 14 @ 1:52 pm:

    YDD,

    Basically agreed, I don’t want to see Rauner win, except that speaking Democrat to Democrat (in this, err, private forum) I would be careful how I frame such attacks, because in a -different- context (one that included a healthy dollop of revenue from income, too, say) something along the lines of what Rauner proposes is (I have been convinced by Ralph Martire) not a bad idea.

    I think we’ve always got to factor (again, as part of the equation) the short-term electoral benefits vs the long-run cost of demonizing policies that could be, properly used, good for the state. We don’t want to go too far down the road the DC Republicans have taken (full-throated opposition to what is, in essence, their own good idea, namely Obamacare / the individual mandate).


  15. - Yellow Dog Democrat - Tuesday, Jul 22, 14 @ 3:54 pm:

    ZC -

    Quinn is down 10 to 15 points and we are just about through the third quarter.

    If he doesn’t start playing some actual offense, completing passes and first downs, there is no “long-run” for
    Pat Quinn.

    If he should manage to win re-election and sales tax modernization once again becomes part of the mix, “we will burn that bridge when we get to it.”

    But I do not see this package of Rauner’s passing anyway. If it does, it will be a structured roll call, and public opinion will be moot.


  16. - facts are stubborn things - Tuesday, Jul 22, 14 @ 5:07 pm:

    service tax is regressive. A progressive income tax would be better overall.


Sorry, comments for this post are now closed.


* Rauner announces new appointments
* Reader comments closed for the weekend
* Unemployment rate falls again, IDES not impressed
* "The Governor’s Axe"
* *** UPDATED x1 - Former aide says report coming *** Quinn shirked final constitutional duty
* Question of the day
* Umm... Huh?
* Unclear on the concept
* Rauner roundup
* Another possible Kirk foe emerges
* *** UPDATED x2 - ACLU responds *** Calm down
* SUBSCRIBERS ONLY - Supplement to today’s edition
* SUBSCRIBERS ONLY - Today's edition of Capitol Fax (use all CAPS in password)
* Yesterday's blog posts

Support CapitolFax.com
Visit our advertisers...

...............

...............

...............

...............

...............

...............


Search This Blog...

Search the 98th General Assembly By Bill Number
(example: HB0001)

Search the 98th General Assembly By Keyword

          
        * Should Microsoft focus on flagships or growth in emerging markets?
        * Tablet lessons Samsung needs to learn this year
        * Samsung developing a wearable sensor to detect strokes
        * Samsung Galaxy Note Edge review rebuttal: Worth the weird
        * Windows Holographic, BlackBerry’s app entitlement, hackers hacking your calls | Pocketnow Weekly 132
        * California DMV changes course, reverses registration policy change for rideshare drivers
        * The Week in iPad Cases: Hard Candy's shock-absorbing case, the latest collection from Rebecca Minkoff, and more

        * Charity Miles Donates Money to Charity Every Time You Run or Bike
        * Drone Makers Struggle to Get New Rules off the Ground
        * Most Popular Space Heater: DeLonghi Oil-Filled
        * How I audited my daily media habits and improved the way I read
        * Try Designer Outlet Stores for Cheaper Prices On Unusual Sizes
        * HoloLens Support For Xbox One And PC Possible
        * Office 2016 Release Slated For Later This Year

        * Emptying the SoxFest notebook
        * White Sox honor, remember Mr. Cub at SoxFest
        * Flowers: 'My job to lose' behind plate for White Sox
        * White Sox add baserunning legend Coleman to staff
        * Rick Hahn, Conquering Hero
        * Memories of '05 championship rekindled at SoxFest
        * Back at home, Samardzija ready to get down to business

        ...............


        Main Menu
        Home
        Illinois
        YouTube
        Pundit rankings
        Obama
        Subscriber Content
        Durbin
        Burris
        Blagojevich Trial
        Advertising
        Updated Posts
        Polls

        Archives
        January 2015
        December 2014
        November 2014
        October 2014
        September 2014
        August 2014
        July 2014
        June 2014
        May 2014
        April 2014
        March 2014
        February 2014
        January 2014
        December 2013
        November 2013
        October 2013
        September 2013
        August 2013
        July 2013
        June 2013
        May 2013
        April 2013
        March 2013
        February 2013
        January 2013
        December 2012
        November 2012
        October 2012
        September 2012
        August 2012
        July 2012
        June 2012
        May 2012
        April 2012
        March 2012
        February 2012
        January 2012
        December 2011
        November 2011
        October 2011
        September 2011
        August 2011
        July 2011
        June 2011
        May 2011
        April 2011
        March 2011
        February 2011
        January 2011
        December 2010
        November 2010
        October 2010
        September 2010
        August 2010
        July 2010
        June 2010
        May 2010
        April 2010
        March 2010
        February 2010
        January 2010
        December 2009
        November 2009
        October 2009
        September 2009
        August 2009
        July 2009
        June 2009
        May 2009
        April 2009
        March 2009
        February 2009
        January 2009
        December 2008
        November 2008
        October 2008
        September 2008
        August 2008
        July 2008
        June 2008
        May 2008
        April 2008
        March 2008
        February 2008
        January 2008
        December 2007
        November 2007
        October 2007
        September 2007
        August 2007
        July 2007
        June 2007
        May 2007
        April 2007
        March 2007
        February 2007
        January 2007
        December 2006
        November 2006
        October 2006
        September 2006
        August 2006
        July 2006
        June 2006
        May 2006
        April 2006
        March 2006
        February 2006
        January 2006
        December 2005
        April 2005
        March 2005
        February 2005
        January 2005
        December 2004
        November 2004
        October 2004

        Blog*Spot Archives
        November 2005
        October 2005
        September 2005
        August 2005
        July 2005
        June 2005
        May 2005

        Syndication

        RSS Feed 2.0
        Comments RSS 2.0
        WordPress

        Loading


        * Illinois 'fracking' off to slow start amid oil-.....
        * Rahm Emanuel thinks that democracy is a "trick"..


        * Obama endorses Emanuel re-election bid in new radio ad
        * Family attorney: Cubs great Ernie Banks died of heart attack
        * Eastern Michigan basketball player and fellow student killed
        * Ex-MLB pitcher Randy Wells opening Illinois sports facility
        * Illinois 'fracking' off to slow start amid oil-price slump
        * Chicago Police find 386 pounds of marijuana in SUV
        * Coal mining simulator coming to Southern Illinois
        * Airlines cancel 85 flights at Chicago's O'Hare amid wet snow
        * Chicago's mayoral candidates address women's issues at forum
        * Chicago mayoral candidates discuss elected school board

        * Statehouse Insider: Gov. Rauner sounding a lot like primary candidate Rauner
        * Veterans voice opinions about future of Oak Ridge war memorial site
        * 85,000 temporary driver's licenses issued to immigrants
        * Proposed Illinois legislation would ban powdered alcohol
        * Quinn leaves office without writing final statement
        * AG Madigan blocks Lottery termination agreement
        * Number of Illinois households on food stamps still rising
        * Numbers of Illinois households on food stamps still rising
        * U of I president concerned about future of higher ed
        * Rauner previews 1st-year priorities: Cut taxes, Medicaid

        * 'Mr. Cub' Ernie Banks dies at 83
        * How CME is looking to buy its way into foreign markets
        * Need to furnish your new office? Look no further
        * Hospitals full of empty beds
        * This hospital system plans radical surgery to solve its vacancy problem


          * Jogger pulled from Belmont Harbor on North Side
          * 2 men, teen wounded in city shootings
          * Well before pothole season, Chicago lists repaving projects
          * Cubs legend Ernie Banks died of heart attack
          * Gary man shot to death at his home
          * South suburban women's basketball player killed in Michigan crash
          * Police seize over $1 million worth of marijuana
          * 11 hurt when Chicago-bound bus crashes near Kenosha


          * Study projects Illinois deficit growing to $14 billion by 2026
          * Chicago Cubs legend Ernie Banks, 1st black player in team history, dies
          * M.E.R.C.Y. Celebrates 15 Years Amid Financial Challenge
          * Springfield Airport Will Make Another Attempt To Add Gambling
          * Potential Pension Case Holdup
          * Listen to State Week - January 23, 2015
          * Art Beat: Pirates, Local Tunes & Movies Galore
          * Speaker Madigan: How Can Illinois Prevent A Sandy Hook?
          * Frerichs Keeping Rutherford Investigation Under Wraps
          * Collecting On Line Sales Tax & A Springfield Manufacturer Expands On WUIS/SJR Business Report


          * Our Opinion: Vision should be a key theme in Springfield mayor's race
          * Bernard Schoenburg: Campaign contribution gets them talking in Ward 7
          * Angie Muhs: SJ-R, WMAY want to involve readers in Springfield primary
          * Andy Shaw: Settle in for a dramatic first act at the Illinois Capitol
          * Quote of the Day: Sunday, Jan. 25, 2015
          * Statehouse Insider: Gov. Rauner sounding a lot like primary candidate Rauner
          * Statehouse Insider: Gov. Rauner sounding a lot like primary candidate Rauner
          * Veterans voice opinions about future of Oak Ridge war memorial site
          * 85,000 temporary driver's licenses issued to immigrants
          * Proposed Illinois legislation would ban powdered alcohol


          * Patsy Bozarth
          * Mary Ann Brooks
          * Rain/snow today in Central Illinois; northeast braces for massive storm
          * Trost name will endure in Philo
          * Storm system moving into Central Illinois; some snow expected
          * New U of I extension director arrives in Effingham
          * Divorces 1/25/15
          * Daily Digest 1/25/15
          * Civil War Timeline: Soldier brothers come together: Part II
          * Employers get creative to find skilled workers


          * City, Cubs to place Banks statue at Daley Plaza
          * Family attorney: Cubs great Ernie Banks died of heart attack
          * Eastern Michigan basketball player and fellow student killed
          * St. Charles grandfather, grandsons honored at Blackhawks game
          * Quinn has led Seattle to record-setting defense

          * Pro-Amnesty House Republican To Deliver Sp...
          * Local legislators invite teachers, student...
          * Illinois congressmen in wide split on immi...
          * Republicans Explain Votes Against Bill to ...
          * Former congressman, Northwestern alum Schn...
          * BREAKING: House Votes To Defund Obama’s Ex...
          * House Passes DHS Funding Bill That Prohibi...
          * House votes to block Obama’s immigration a...
          * Dold: Deporting Immigrant Children is The ...
          * House Votes to Defund Obama’s Immigration ...

          * Republicans scratched “civil rights and hu......
          * Feinstein, Durbin, Gillibrand Applaud New ......

          * White House downplays impact of Netanyahu ......
          * Ex-Obama aide says president not tough eno......
          * Menendez could delay Iran sanctions measur......
          * Senator Graham: Congress should have ‘fina......

          * Mailer in the race for 9th ward Alderman
          * Mailer In the 6th Ward Aldermanic Race
          * John Dillon: 2015: The more things change.
          * Sunday morning in Florida.
          * State Lawmaker Proposes Red Light Camera Ban
          * We’ve moved!
          * In The Lyons Of Fire
          * BGA Backs New State Disclosure Effort
          * Budget Crisis Task Force Examines Illinois’ Debt Woes
          * To Cut Costs, Suburbs Eye Police Dept. Merger


          * Rauner announces “Turnaround Team” - Stellar team to help turn Illinois around
          * Commerce Department to Review Proposals for Enterprise Zones - Program Promotes Job Growth in Communities Across the State
          * Governor Rauner signs Executive Order for Minority and Veteran Empowerment
          * Governor Rauner Announces Second Round of Appointments
          * Representative Duckworth, US Army Iraq Veteran Honored With The Abraham Lincoln Veteran Champion Award




              Hosted by MCS SUBSCRIBE to Capitol Fax Advertise Here Mobile Version Contact Rich Miller