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What do they do now?

Tuesday, Jul 22, 2014

* Last week’s most interesting reaction to Bruce Rauner’s service tax proposal

Senate Republican Leader Christine Radogno (R-Lemont):

    “The contrast in this election has never been more clear. Bruce Rauner wants to lower your income taxes while Pat Quinn wants to raise them 67%. Bruce Rauner wants to freeze your property taxes while Pat Quinn lets them rise. There’s only one candidate who has a vision to create jobs and turn Illinois into a growth economy, and that’s Bruce Rauner.”

House Republican Leader Jim Durkin (R-Western Springs):

    “Middle-class families across Illinois are struggling under the Quinn-Madigan policies of higher income taxes, higher property taxes, and burdensome regulations. Bruce Rauner’s plan offers the citizens of Illinois a new direction of lower taxes, high-paying jobs and real opportunities for growth.”

That’s the first time those two have supported a tax hike since the little-remembered candy tax, which funded part of the 2009 capital bill.

And they didn’t just support a service tax. As Rauner has said, he wants to step down the 5 percent income tax to 3 percent in four years.

And as we’ve discussed before, the problem is that the tax hike is scheduled to roll back to 3.75 percent on January 1st - before he’s inaugurated (assuming he is, that is). So, to avoid the huge fiscal cliff created by the current state budget, those tax rates are gonna have to go up. Maybe not all the way up to 5 percent, but up, nonetheless.

It’s tough to implement something as big as a new service tax right away. It takes time to ramp up to that sort of thing. Income taxes are a different matter. Businesses already have the software and personnel in place to handle changes to that rate. Service companies have never paid sales tax, though, so that couldn’t be imposed immediately. So, you can’t count on a service tax to replace any income tax revenue during the final six months of the current fiscal year.

* Rauner made it pretty clear yesterday that rates will have to go up after he’s inaugurated. Our commenter 47th Ward showed once again the other day why he won the Golden Horseshoe award last year...

Has he told Durkin and Radogno yet? Because he’s going to need an awful lot of GOP votes to raise the income tax back up to 5%.

* I expect that the Democrats will cooperate with Rauner if he’s elected, but only so far. After years of going it alone, they’re gonna want a substantial number of Republican votes on any tax bill.

And after complaining bitterly about the tax hike for years and basing their members’ campaigns on opposition to the 5 percent rate, and with their caucuses full of people who’ve been able to avoid hard votes on actual governance, the two GOP legislative leaders are now in quite an interesting little box here.

* Meanwhile, Rep. David Harris (R-Arlington Heights) sent out a helpful press release yesterday…

State Representative David Harris (R-Arlington Heights) today introduced House Bill 6289. HB 6289 makes two key changes related to state revenue and fees.

First, the bill includes corporate income generated in the outer continental shelf. This income is currently excluded from corporate income, and this exclusion is often called the “Big Oil Loophole.” Governor Quinn proposed making this change back in the 2013 legislative session, and GOP gubernatorial candidate Bruce Rauner has made it part of his campaign’s “Corporate Welfare Reform” agenda.

The second key change in the bill is to reduce the filing fee for a new Limited Liability Company (LLC) to $75 from the current $500 fee, which is the highest in the nation. HB 6289 also reduces the fee for a series LLC to $125 from the current $750. Governor Quinn made reducing the LLC fee part of his 2014 Budget Message, and Mr. Rauner called for reduction of the LLC fees in his campaign’s “Jobs and Growth” agenda.

“The State of Illinois has serious financial problems facing it, and it needs to encourage job growth within our State,” said Harris. “HB 6289 raises revenue by closing what many perceive to be a tax loophole, and it significantly lessens the financial burden that companies bear in starting a company in our State.

“Even though the legislature is currently out of session, I hope that the two gubernatorial candidates can agree that HB 6289 moves our State’s tax and fee policies in the right direction and that each of them can support HB 6289 or a similar bill in the 2015 session no matter who wins in November.”

Good idea by Harris.

- Posted by Rich Miller        

  1. - RMWStanford - Tuesday, Jul 22, 14 @ 9:36 am:

    Both of Harris proposals have merit, the state needs not only an overhaul of its tax system and spending but we also need to reduce the fees for starting business and the amount of paper work/ unneeded regulation

  2. - wordslinger - Tuesday, Jul 22, 14 @ 9:37 am:

    Apparently, the campaign strategy is tax cuts, while the governing proposal is tax increases.

    If it works, it’s genius.

  3. - Grandson of Man - Tuesday, Jul 22, 14 @ 9:39 am:

    “The contrast in this election has never been more clear.”

    Not so much anymore. To his credit, Rauner realizes the state will have a gaping hole without the income tax increase revenue.

    Will the likes of the Club for Growth and AFP now give Rauner some kind of failing grade for tax purity? I would like to see reactions from some of these organizations.

  4. - SAP - Tuesday, Jul 22, 14 @ 9:44 am:

    The Outer Continental Shelf idea goes back, at least, to the early days of the Blagojevich (shudder) administration. Glad to see it has picked up an R vote in all those years.

  5. - Oswego Willy - Tuesday, Jul 22, 14 @ 9:48 am:

    “Tom Hagen” better do the “magic” needed to get the GOP votes to increase the income tax, to step the income tax…down…for a released plan that may have a deficit of $5-6 Billion, (with a ‘B’) so conservatives like Breen or Ives might like raft vote very much, because Bruce agrees with the socially if not fiscally…

    The Rauner cake has no room for conservatives; now include fiscal ones too.

    I supported the reinstating the current level, and step down, at the time the GA was in session to address these issues. Now, with no legislative avenue in sight, Rauner needs a GA to pass his income tax plan, after allowing this rate to sunset.

    Why all this talk about conservatives? Well, if the Rauner cake dismisses all conservatives of all stripes, will the. “Anyone but Quinn” be enough to have conservatives, all types, to bite against their better self for Rauner.

    Rauner’s error is that he shouldn’t have allowed the rate to sunset, or call into districts, and actually give cover to GOP members, so when he rolled out this plan with these fiscal issues and income tax challenges, Rauner could at least have, “I had your back before, I’ll have it again “, not the Tom Hagen style of, ” I’ll make you an offer you can’t refuse.”

    If you are a conservative GOP member, and a main stream party, Reagan Rule member, Rauner’s handling of all this, including the tax plan, revenues, and that posturing and calling on the sun setting, how will you feel when Durkin or the SGOP Leadership has to decide to vote against what they themselves have been railing against…in the name of Bruce Rauner a few short weeks ago.

    Need more frosting and sugar for that cake.

  6. - PublicServant - Tuesday, Jul 22, 14 @ 10:07 am:

    ===offers a new direction===

    New direction, yes. New income tax rate, no. We’ll go there tomorrow. Today, however, and in the near term, we’re thinking the 5% income tax rate is the direction we’re headed. Can someone maybe ask Durk and Rad if they’re going to vote for that when it comes up? I mean, that’s Bruce’s plan right?

  7. - Anon - Tuesday, Jul 22, 14 @ 10:16 am:

    THE OPERATING GOP PRINCIPLE: When Democrats raise the income tax, that’s destroying the state economy. When Republicans do it, that’s different.

    I can’t wait to see how many conservatives who have taken the ATR no-tax-hike pledge end up voting to increase the income tax. I guess it’s only a lie when Dems do it.

  8. - steve schnorf - Tuesday, Jul 22, 14 @ 10:19 am:

    Good move by Dave Harris; adds another piece to the puzzle. I guess I DON’T read Radogno and Durkin’s remarks as saying “we will put votes on raising the income tax back up to 5% after Jan 1.” Also, will their commitment stand if Governor Quinn is re-elected, if he decides he wants to go back to 5% and step it back down?

  9. - Anon - Tuesday, Jul 22, 14 @ 10:38 am:

    If Rauner had told voters before the primary about his intention to raise the income tax, I wonder if he still would’ve beaten Dillard?

  10. - Jimmy - Tuesday, Jul 22, 14 @ 10:39 am:

    You have to wonder how supporting $677 million in new taxes helps elect Republicans?

  11. - 47th Ward - Tuesday, Jul 22, 14 @ 10:45 am:

    ===I guess I DON’T read Radogno and Durkin’s remarks as saying “we will put votes on raising the income tax back up to 5% after Jan 1.”===

    That’s right Steve, they haven’t made that commitment yet, at least not in public and I’m not sure Rauner has even asked them yet. It’s a bit premature after all.

    But for Rauner to imply (if not assume) the return to higher income tax rates (>3.75) means he will need to persuade Durkin and Radogno to put lots of votes on a bill to re-raise the income tax. It’s sort of like predicting an awkward moment in Rauner’s future.

    But again, you are correct. Neither Durkin or Radogno has pledged any support for Rauner’s idea. Hopefully they’ll start getting questions about this subject soon and maybe we’ll learn more about where the GOP will be if Rauner wins the race.

    Pass the popcorn.

  12. - steve schnorf - Tuesday, Jul 22, 14 @ 10:55 am:

    and where they will be if he loses

  13. - Yellow Dog Democrat - Tuesday, Jul 22, 14 @ 10:56 am:

    Oh, c’mon Schnorf.

    Radogno has been on record supporting a phase out for some time.

    If either Radogno or Durkin objected to a phase-out, they would and should have said so.

    Nope. Rest assured, they were well aware what was in the plan before it was made public and given the chance to “object.” I put that in quotes because both caucuses are starved for cash, so they aren’t gonna poke Rauner at all.

    What is a GOP candidate in a targeted race to do?

    Reporter: “Do you support Bruce Rauner’s plan to extend the Quinn tax to 2019?”

    GOP Candidate: “Are you bleeping kidding?”

    Reporter: “What about 27 new sales tax increases?”

    GOP Candidate: “I have to get off the phone now and go throw up.”

    Headline: “Statehouse Hopefuls Oppose Rauner Tax Increases”

  14. - Ahoy! - Tuesday, Jul 22, 14 @ 10:57 am:

    reducing the cost barrier to businesses in Illinois is an extremely good idea. It should be the start of fixing current fee, taxes and policies that are disadvantages to Illinois businesses. No matter who wins and no matter what the tax rate is, we need more jobs, income and wealth in Illinois.

  15. - Anonymous - Tuesday, Jul 22, 14 @ 10:59 am:

    Very good proposals by Rep David Harris. Not sure it makes all that much money, but it’s good in concept and direction.

    Pretty strange for Radogno to laud Rauner for wanting to “lower taxes”, when in fact he came out proposing “raising taxes”, using her own post-sunset definition. That’s pretty far from committing her support for any move back up to 5%.

  16. - G'Kar - Tuesday, Jul 22, 14 @ 10:59 am:

    IRT Rauner’s new service taxes, what guarantee, assuming he is elected, that the Democrats would support them?

  17. - 47th Ward - Tuesday, Jul 22, 14 @ 11:03 am:

    ===and where they will be if he loses===

    I think we know where they’ll be if Rauner loses, the same place they’ve been since 2011. It’s only interesting if Rauner wins, to watch certain GOP Reps and Senators spin their way into voting to extend the Quinncome Tax.

    The verbal gymnastics should be Olympic quality. I mean, if Rauner wins.

  18. - Norseman - Tuesday, Jul 22, 14 @ 11:06 am:

    Whether the GOP leaders agreed to put votes on the board in their statements or not is irrelevant. If Raunervich does get elected, they will have to do this to help him with his vision. The Democrats will expect it. We all know the mess that will result if they allow the revenue to drop precipitously.

  19. - Precinct Captain - Tuesday, Jul 22, 14 @ 11:06 am:

    If these LLC fees are major impediments to creating your business, your business wasn’t going to create any jobs in the first place.

  20. - Oswego Willy - Tuesday, Jul 22, 14 @ 11:16 am:

    - 47th Ward - and - steve schnorf - are On It.

    Can’t really say they are “for it” and commit, and then if Quinn wins, be on the record for Quinn to come and ask for votes.

    There is no united, “all in” front going on. Lots of Rauner making his statements, and just no refuting them by the GOP GA.

    This is very telling too.

    ===If Raunervich does get elected, they will have to do this to help him with his vision. The Democrats will expect it. We all know the mess that will result if they allow the revenue to drop precipitously.===

    Yep. The theatre will be overshadowed by the possibly of Billions of debt Rauner’s plan will incur, or the cuts needed to be voted on to make his plan work.

  21. - walker - Tuesday, Jul 22, 14 @ 11:23 am:

    Comments lauding D. Harris, bafflement with Radogno, at 10:59 above are mine.

  22. - Anon - Tuesday, Jul 22, 14 @ 11:24 am:

    Raising the tax rate from 3.75% to 5% would be a 33% hike in the Quinncome tax. Any Republicans in favor of boosting the income tax by 33%, please punch your green buttons.

  23. - Formerly Known As... - Tuesday, Jul 22, 14 @ 11:25 am:

    I read his comments a bit differently than most yesterday. Then again, I could be wrong. It wouldn’t be the first time.

    Rauner’s comments, to me, signaled a realistic approach. He was saying, “Look, I prefer we follow current law and get that tax rate down to 3.75 before gradually taking it back down to 3. I also realize that in reality many Dems want it to stay at 5 and might have something to say about that. That is reality and I am willing to deal with it.”

    I did not interpret it as him saying, “I want us to higher than 3.75 or maybe even keep it at 5″.

    If Rauner means to say that -he wants- something above 3.75 as a matter of his own personal preference, then I believe it was an unforced error on his part at this stage in the race. If Rauner means that he is a realistic individual who wants to reassure everyone he is open to rational thought and compromise, then it was ideal.

    There is a gulf in meaning between the two approaches.

  24. - LCP45 - Tuesday, Jul 22, 14 @ 11:32 am:

    Yes…today is the day that the campaign for Governor really started…pass the popcorn indeed…

  25. - 47th Ward - Tuesday, Jul 22, 14 @ 11:34 am:

    ===There is a gulf in meaning between the two approaches.===

    Well, you are right that Rauner hasn’t been crystal clear in what he is proposing as far as “phasing out the income tax.”

    But (assuming he wins) he’ll be facing a $4 billion shortfall in the current budget and potentially an $8 billion hole in FY16. Expanded sales taxes aren’t going to fill that hole even if they produce every penny he estimated and even if he could get that revenue on-line in a year.

    So reading between the lines, it seems clear to me he’s proposing raising the rate to something north of 3.75% initially, and phasing it down over four years to a floor of 3% in 2019.

    But don’t worry, he said he’d fill us in on the details eventually.

  26. - Jimbo - Tuesday, Jul 22, 14 @ 11:36 am:

    At this point I’m looking forward to the look on his supporters’ faces when he tries to raise the rates back to 5% after his innauguration and instituting his service tax. At least in that first year our taxes would be higher than Quinn proposes. Way to get rid of that taxandspender Quinn guys.

    The big problem with his ideas, is he relies on magically growing the economy to make up for the rate cuts. It is pure fantasy. No folks he doesn’t have the magic governor skills to grow GSP by 20% per year.

  27. - Jimbo - Tuesday, Jul 22, 14 @ 11:41 am:

    Though it seems his supporters may believe he does. If that’s the case, I understand why they want to vote for him. If I believed someone capable of that, I’d vote for them too. It’s impossible though. Illinois follows the rest of the country into and out of recessions. It always has. We aren’t dead last because we have bad governance, it is because our economy is geared the way it is. We felt the effects of great recession latest, and we’ll be recovering from it last. It is just the way it is folks.

  28. - Chicago Cynic - Tuesday, Jul 22, 14 @ 11:49 am:

    Those wondering where he’s getting the phase out approach and what the numbers really are should take a look at this doc from the Civic Federation. It’s all in there including the phase out (they go to 4, not 3) over four years.

  29. - DuPage - Tuesday, Jul 22, 14 @ 12:11 pm:

    Rauner wants to keep the higher level of income tax. We don’t need Rauner for that, Quinn already wants that.
    Rauner wants a new tax on services. Quinn does not.
    Rauner wants to tax pensions and social security. Quinn does not.

    The tax issue seems to have flip-flopped in a hurry. Rauner and lower taxes have become an oxymoron.

  30. - Rudy - Tuesday, Jul 22, 14 @ 12:17 pm:

    they’re planting those 2010 magic beans again

    As Mark Brown said in this week’s column: “the promise I found the most stunning was the property tax freeze. Where did that come from?”

    (Late night campaign session)

    Schrimpf: we need 3 bullet points: 1) income tax– expires; 2) service tax–but not for child care; 3) property tax–what do we say about property tax?

    Voice: “how about a freeze?”

    Rauner: “Yeah,that’s it, a freeze, I love it!”

    Schrimpf: “But the legislature would have to….”

    Rauner: “I don’t care if the legislature doesn’t do it. It’s popular! It’s simple! Put it in there!”

    Today, from leader Radogno: “Rauner wants a property tax freeze, while Quinn wants to raise your property taxes.”

    they can almost taste the patronage

  31. - VanillaMan - Tuesday, Jul 22, 14 @ 1:00 pm:

    Polls must show that Rauner can make this gamble. What we’ve seen him doing is moving towards the political center since the nomination.

    He is becoming a governor as opportunity presents itself. Quinn is letting Rauner step right into office even before the election.

    Rauner almost lost the nomination due to his partisan stands. Now that he has the nomination, he intends to win as the alternative to Quinn, not as a right wing ideologue.

    The voters that favor shaking up Springfield, don’t favor anarchy. Rauner’s softened tones are designed to appeal to those with second doubts.

    Regarding the old GOP - those guys have been losing since 1998. They are out of business. Rauner is the new game for them. Period. You go with what works.

    Run as tax haters - govern as budget balancers.

  32. - Michelle Flaherty - Tuesday, Jul 22, 14 @ 1:33 pm:

    Whoops. The prospect of voting for a Rauner tax hike probably wasn’t what the Senate GOP had in mind when members filed SR1265:

  33. - Chicago Cynic - Tuesday, Jul 22, 14 @ 2:27 pm:

    Excellent point Michelle Flaherty.

  34. - Yellow Dog Democrat - Tuesday, Jul 22, 14 @ 2:30 pm:

    Well said, Vanillaman.

    Although I don’t think it is as much about polls as intuition..

  35. - Demoralized - Tuesday, Jul 22, 14 @ 3:41 pm:

    The tea party types must be going nuts over this kind of talk. Raises taxes? That’s an abomination in their world.

  36. - Formerly Known As... - Tuesday, Jul 22, 14 @ 3:56 pm:

    == So reading between the lines ==

    We are all reading between the lines together at this point, @47th. Your reading could just as easily turn out to be right when we eventually see what he had in mind.

    If he actually meant that he wants an income tax rate above 3.75 next year, it could turn out to be a big mistake mentioning that at this point in the campaign. But if he means that he will be a realistic governor who works with both parties on big issues like the budget, it could turn out to be good timing as he moves towards the center.

  37. - Yellow Dog Democrat - Tuesday, Jul 22, 14 @ 4:03 pm:

    47 & FKA:

    I don’t think it requires reading between the lines.

    When I open with 5% and you counter with “well, I really prefer 3.75 percent but I understand this is a negotiation”, you are not asking, expecting or insisting the other guy agree to 3.75%.

    I am all
    Giving the other side the benefit of the doubt, but here there is no doubt.

  38. - facts are stubborn things - Tuesday, Jul 22, 14 @ 4:29 pm:

    run to the right in the Republican primary and then in the general election come back towards the middle. Say one thing and do another….that is what it is all about. The low information voter eats it up. We get what we collectively deserve and ask for.

  39. - Anon - Tuesday, Jul 22, 14 @ 6:44 pm:

    Republicans all co-sponsored a bill in 2011-12 providing for immediate repeal if the entire Quinncome tax hike. If it could be safely repealed in 2012, then how could those same Republicans vote to extend it in 2015?

  40. - Yellow Dog Democrat - Tuesday, Jul 22, 14 @ 7:00 pm:

    Facts are stubborn things:

    1. The phrase “low information voters” is redundant.

    2. Taxing business services isn’t running to the middle. That is to the left of most House Democrats.

  41. - Michelle Flaherty - Tuesday, Jul 22, 14 @ 7:21 pm:

    Rauner should self-fund the first 1/2 percentage point rollback to show he’s serious.

  42. - Yellow Dog Democrat - Wednesday, Jul 23, 14 @ 8:04 am:



    That was funny.

    Look, I would give credit to Rauner if he were proposing a service tax expansion as an alternative to taxes on goods, or as an alternative to slashing services for our most vulnerable citizens.

    But Rauner is proposing a service tax as an alternative to a millionaire’s tax, and he STILL plans on slashing public education and care for the elderly, disabled and abused kids.

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