A few devilish details
Thursday, Mar 19, 2009 - Posted by Rich Miller
* The Taxpayers Federation of Illinois points to something that I had also noticed this morning…
* Sweetened Tea and Coffee Drinks will be taxed as Soft Drinks
* Tax all grooming and hygiene products at the same rate (presumably the high rate)
That means the full sales tax will be expanded to those items. It’s not a huge thing, but in Chicago and Cook County where the sales tax is a hot topic, it won’t go over well.
Also, from TFI, business won’t like this…
* Decouple from the following provisions of the American Recovery and Reinvestment Act
o Deferral of gain recognition from reacquisition of business debt security
o Five year carry-back of net operating losses by small businesses
* I hadn’t noticed this aspect of Gov. Quinn’s proposed “back to school” sales tax holiday for clothes and school supplies…
Pete Gill of the Illinois Retail Merchants Association said the group likes the theory, but not the specifics, of the governor’s proposal for a 10-day sales tax holiday for back-to-school purchases in August.
Gill said a preliminary analysis of the budget indicates Quinn would pay for the holiday by cutting a 1.75 percent “sales tax allowance” for merchants by more than half. Retailers are reimbursed for collecting state sales taxes.
“It hurts retailers and could potentially raise prices,” Gill said.
Retailers are gonna freak out about losing half of their sales tax allowance. In times like these, when retailers are closing in droves, that will be met with super-stiff resistance.
* And this is an interesting point to ponder…
Kim Clarke Maisch, state director of the National Federation of Independent Business in Illinois, said about 85 percent of small-business owners, including in Illinois, pay the individual rather than corporate tax rates.
* No big deal, but some won’t be happy…
Admission to the Illinois State Fair would increase by $2 per person, to $5 for adults and to $2 for children, who have been admitted free in recent years.
* The Trib picks a nit…
A new advisory board will scour the budget for line-item savings. Outsourcing food, janitorial, technology and other services more economically supplied by private employers ought to be a priority. We hoped Quinn would give privatization of these high-cost internal services a push. He can do better. Grade: D+ .
- Speaking at Will - Thursday, Mar 19, 09 @ 10:26 am:
I guess the honeymoon is officially over.
- Out There - Thursday, Mar 19, 09 @ 10:33 am:
GO FOR GOV! Privatize everything you possible can now while the opportunity presents itself.
- Anonymous - Thursday, Mar 19, 09 @ 10:37 am:
Keep in mind that most of the savings from privatization come from the fact that the private companies’ employees are paid less, often a lot less, with fewer benefits and often no health insurance. That’s not necessarily a reason not to privatize, but let’s not assume the savings are due to the “magic” of the private sector. It involves real people losing their jobs and/or seeing a substantial cut in their wages and benefits. It is neither simple nor painless.
- Ghost - Thursday, Mar 19, 09 @ 10:39 am:
Can you simply privatize union jobs? The question is who determines that those outside contracts are actually cheaper? A number of the Ryan and Blago corruption issues (and Snyder) tied into the ability to povide these lucrative priviization contracts.
- VanillaMan - Thursday, Mar 19, 09 @ 10:39 am:
Quinn’s budget is a start for discussion. I like the fact that he recognizes the importance of families - that is a plus, especially for a Democrat. His exemptions and school tax holiday plans are good ways to recreate Illinois as a place for growing families. The State is at a point where it is becoming more like a Pennsylvania which is a dying state, than less like a Georgia. Quinn’s pro-family tax plans are to be supported.
On the other hand, we are still not seeing an improvement in our governments. We have about 7,000 of them, and what we have been witnessing and paying for is an incredible waste, not including fraud and corruption. Illinoians are paying more for the same bad government it has suffered with under Ryan and Blagojevich. No real reforms, no ethics, no efficiencies, and an exploding social services budget consuming every dime thrown into it.
We are suffering through the worst recession since Jimmy Carter, and raising taxes right now is a bad thing to do.
- How Ironic - Thursday, Mar 19, 09 @ 10:40 am:
About the State Fair fee increases. Here is some perspective:
The State Fair is consistently has the lowest or close to the least expensive admissions prices of all State Fairs. The current admissions fee structure is the lowest in the nation, the national average State Fair adult admission price is $8.22 and Illinois charges $3. The last increase was in 1995 when the admissions price was raised $1.
- tanstaafl - Thursday, Mar 19, 09 @ 10:50 am:
Revinue from state fair attendance increase is a drop in the bucket. If 1 million people attended, which is more than have in the past, the increased revenue would be $2 million. This is less than 2 one-hundreths of 1 percent of the deficit.
- wordslinger - Thursday, Mar 19, 09 @ 11:06 am:
Privatization is not always a great deal for taxpayers, as the Trib editorial board must know if it reads the Trib news pages.
- How Ironic - Thursday, Mar 19, 09 @ 11:09 am:
@tanstaafl
The fee increase at the fair isn’t for paying down the state’s debt/budget gap. It is used to help pay for the workers that maintain the fairgrounds and buildings on the fairgrounds. Without the increase, the fairgrounds has to rely on iffy funding from the state.
This increase will go a long way to help pay for self-suffience. Either way, the fee to enter the fairgrounds is still very reasonable.
- Anonymous - Thursday, Mar 19, 09 @ 11:34 am:
Most agencies are already paying a high cost of privatizing services. Only instead of outside vendors reaping the rewards, CMS is bloating.
Most agency’s IT ‘fees’ went up millions of dollars, for worse service, and increased downtime. Equipment and buildings that were bought and paid for now have to be ‘leased’ from CMS for management/administration.
Procurement is messed up. Not buying from the cheapest vendor is costing who knows how much money.
- Out There - Thursday, Mar 19, 09 @ 11:57 am:
Annon 11:34 - “Procurement is messed up. Not buying from the cheapest vendor is costing who knows how much money.” This is so very easy to fix with existing apparatus. Just chose the lowest price.
- HearMeRoar - Thursday, Mar 19, 09 @ 12:09 pm:
That’s not so easy to do when CMS is selecting the vendors and writing the contracts. CMS has become a giant money-laundering operation, allowing otherwise untouchable funds to be sucked into GRF.
- How Ironic - Thursday, Mar 19, 09 @ 12:13 pm:
@ Out There-
That is easier said than done. Have you done Govt procurement, or any procurement before? Many times these services are very complex and it’s not just “lowest bidder” that makes sense. In IT sometimes the low price will get you in the door, but your “service” expenses after the sale are 10X the cost.
Or, in other cases, an artificially low bid is presented to win. After the fact, specs are changed or other products are substitued. Or the vendor is unable to provide said services because they can’t cover the volume of increased demand.
I’ve been on both ends of the equation (supplying products on state bid, and letting bids).
If it were SO EASY, then yes, the “low bid” would alwasys win. But there are occasions where the “low bid” isn’t the least expensive option. Sometimes it is far more expensive.
- Arthur Andersen - Thursday, Mar 19, 09 @ 12:17 pm:
word, you beat me to the punch on that one. IPAM and Hired Truck are just two fine case studies of privitization at work.
- KPK - Thursday, Mar 19, 09 @ 12:23 pm:
I am not sure why Gov. Quinn included the Five year carry-back of net operating losses (NOL) by small businesses as Illinois’ law does not allow a NOL carry-back. I noticed that yesterday as I am a tax accountant and was wondering what he was proposing since law changes effect our planning. What puzzled me most about since Illinois already is decoupled from the NOL is why he did not include the Bonus Depreciation then even though we are already decoupled from that too.
There was a change for 2003 and beyond that was Blago’s (and/or possibly General Assembly’s) doing as a way to raise revenue but say he did not raise taxes. I believe it coincided with the elimination of the $1,000 income exemption for Business returns and the elimination of the Personal Property Replacement Tax Credit for C-Corporations. The credit effectively reduced their tax by about 0.2% at the time.
The law is “for any taxable year ending on or after December 31, 2003, such loss shall be allowed as a net operating loss carryover to each of the 12 taxable years following the taxable year of such loss.” 35 ILCS 5/207(a)(3).
My personal opinion on best way to raise revenue would be to double the income tax to 6% (or possibly up to 6.5%) and completely eliminate the sales tax and other utility taxes. The Sales Tax and Utility taxes combined have trended around 5-10% lower of dollars collected versus Individual Income Taxes. My reasoning is for individuals in recent years State & Local Income Taxes or State & Local Sales Taxes are deductible for Federal Income Tax purposes. A multitude of Illinois residents that use the itemized deductions on their Federal 1040 and are in lower tax brackets (pretty much the middle class) actually pay about the same or more in sales tax as they do income tax. By about doubling the deduction for them on their Federal 1040, they will have a lower Federal Tax liability. Illinois will probably net a bit more than double the income tax collected (once adjusting for Property Tax Credit remaining the same) and reduce associated costs with administering the eliminated taxes. I truly believe the uncollected Sales & Use tax is much higher than everyone thinks as more people are ordering things online. Just looking at the actual numbers in the Budget for FY 2007 & FY 2008 the increase in Individual Income Tax is almost 5 times than the increase in Sales Taxes My theory would be the low-income and senior citizens would pay less tax and the more well off who proportionately spend significantly less on Sales & Use Tax versus income would pay more overall. Also, last I knew Illinois is one of the few states that applies the Sales tax to gasoline on top of the regular taxes. So at current prices we are paying around 15 cents +/- more a gallon.
- thunder1 - Thursday, Mar 19, 09 @ 4:42 pm:
Once again I have yet to read anything about cuts in benefits to our state elected leaders. I want to know if the state representatives and state senators as well as executive leaders will receive the same cuts that the state employees will have to take such as furlough days or cuts in pensions or cuts in health care. Anyone have an answer for me on this?