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Time for a rethink?

Friday, Mar 27, 2009

* My Sun-Times column looks at the governor’s tax increase from a somewhat different angle

Gov. Pat Quinn’s income tax increase plan may be good public policy, but it’s probably very bad politics.

The governor wants to shield low- and moderate-income working families by tripling the state income tax’s personal exemptions, from $2,000 to $6,000, while increasing the income tax rate by a point and a half.

Too many numbers can make the eyes glaze over, but try to stay with me a few more seconds.

Under Quinn’s plan, a family of four with an adjusted gross income of $30,000 would receive a $390 tax cut. A single person making $30,000 would be hit with a $240 tax increase. A family of four with a $56,000 annual income would pay no extra taxes. A single mother with one child who makes $56K would pay $420 more. Etc.

Clear?

No?

I can relate.

It’s complicated. And complicated tax proposals can scare the daylights out of your average, everyday state legislator.

Heck, even when things aren’t complicated, the voters can often draw the wrong conclusion.

For instance, Ohio has cut its income tax rates by 21 percent since 2005. Yet, a new statewide poll taken by Hart Research Associates discovered that a mere 8 percent of Ohioans knew their income taxes had been reduced. A third of Ohioans actually thought their taxes had increased. The rest either didn’t know or figured their tax rates were about the same.

Ohioans aren’t especially stupid or ignorant, and that poll result isn’t really all that surprising.

Lots of people believed their income taxes were raised by former President Bill Clinton, even though his first-term tax increases focused on the wealthy. People are (rightfully) cynical and just don’t pay very close attention to the news, or, apparently, their pay stubs. They see the words “tax increase,” and figure they’ve been dinged.

Meanwhile, much of the “person on the street” reporting since Quinn unveiled his tax idea has focused on angry, worried folks who were certain that their taxes would increase so high that they’d have to get another job or cut way back on essentials in order to stay even. Many probably have little or nothing to worry about. But you’d never know it by their reactions or the reporting.

And because our current income tax rate is just 3 percent, Quinn’s 1.5 percentage point increase turns out to be a whopping 50 percent increase. “Quinn proposes 50 percent tax increase” is an incredibly scary headline, regardless of the real-life impact on taxpayer pocketbooks.

So, if people will cynically believe that their tax burden will increase regardless of the facts, and the media misreports the tax proposal in the first place, and potential political opponents will undoubtedly take full advantage of all that cynicism, ignorance, anger and confusion, what incentive does the average state legislator have to vote for Quinn’s plan?

Quinn says he’s willing to lose the election in order to do what’s right. But how many legislators will follow him off that cliff?

Because Quinn’s tax increase includes the exemption “reform,” it doesn’t raise much money to patch the state’s gaping budget deficit. So, there’s a lot of talk in Springfield of cutting Quinn’s tax increase way back, forgetting about the exemption reform and raising about the same amount of cash.

Some are willing to phase in the exemption reform over a few years. Others have suggested borrowing money to close the deficit and paying it back with a possible tax increase down the road.

There are sound policy reasons to do what Quinn wants to do. But political reality in Chicago and Cook County — where voters are already super-hostile to any talk of tax increases — means the governor’s idea could use a major rethink.

Thoughts?

- Posted by Rich Miller        

65 Comments
  1. - fedup dem - Friday, Mar 27, 09 @ 8:59 am:

    One of the reasons why voters think they are being taken to the cleaners on these tax increases even if their own taxes are not being raised is that the news media fails miserably in doing its job to inform them of the truth. As a result the electorate is easily misled by propraganda and outright lies.


  2. - George - Friday, Mar 27, 09 @ 9:03 am:

    I think the roll-out killed Quinn. As you say, it is all about perception.

    Somehow, the Trib got some leak that it was going to be a “50% Tax Increase!!”. And all the talk about exemptions doesn’t help people who don’t know what the heck an exemption is.

    Quinn should have come out from the start (before the leak) and framed it as - all income below the poverty level would be tax free, no matter who you are… taxes shouldn’t get in the way of food, housing, or medicine… etc…

    That is easier to understand than “we are raising your exemption from $2,000 to $6,000″.

    They tried to do a little bit of messaging on the “taxes will only go up for a family of 4 over $60,000/year” line, but didn’t hammer it home enough in quick soundbites.

    But it doesn’t help when the newspapers (especially the Trib) deliberately try to create confusion on the issue.


  3. - VanillaMan - Friday, Mar 27, 09 @ 9:03 am:

    It isn’t just about a tax increase. It is about the poor quality of state government we have witnessed since 2002. Budget fights, intra-Democratic civil wars, health care promises unkept, ethics reform unkept, two governors driven out of office due to corruption - the second one, instead of cleaning up Springfield, took us to the cleaners.

    We’ve watched this government play games with the balanced budget requirement by not counting billions in bills, kicking multi-billion dollar cans down the road in order to live for today. Watched Blagojevich show up on television after being publically humiliated. Watched Blagojevich nominate Roland Burris who is now facing possible perjury charges.

    We have a freak show for a government, and now they want to charge us more! We are getting ripped off at the tax rates we are paying now.

    The politicians can pretend that all of these horrible experiences over the past six years is over - but we haven’t seen a change! What we are now seeing is a real fiscal crisis, after years of hearing a “little boy who cried wolf” kind of political crisis generated by a governor out of control.

    Excuse us for being cynical, but we have real reasons to be cynical. No, we don’t want our taxes raised. We want good government - first!


  4. - You Go Boy - Friday, Mar 27, 09 @ 9:04 am:

    No question your analysis is correct - the vast majority despise the thought of higher taxes. I tilt at windmills (no, beer doesn’t help, its true), but most people would hold their nose and accept it IF they thought good would be done with it rather than increase the fortunes of the movers and shakers of this state. Pol’s loathe raising taxes usually for the wrong reason - it will hurt their re-election chances. If we were much tougher on Waste, Fraud and Abuse, necessary tax increases would be less toxic. W,F, and A will not eliminate the gap, but it is right and proper to attend to it, and if proper execution of discipline is applied, it may deter it. Don Quixote, where art thou??


  5. - George - Friday, Mar 27, 09 @ 9:05 am:

    Unfortunately VanillaMan, you can’t have first, then second. It all needs to be done at the same time.


  6. - Fan of the Game - Friday, Mar 27, 09 @ 9:11 am:

    ===Gov. Pat Quinn’s income tax increase plan may be good public policy, but it’s probably very bad politics.===

    And isn’t that sad that when public servants actually try to serve, they are thwarted by the politics of the situatiion?

    We keep insisting that we have public officials who are competent and ethical and work for the public good. Yet those who act in such ways are often trampled by those who are more politically “attuned.”

    The best case is to have a person who can enact policies that float and has the accumen to navigate the political waters. Those people are few and far between. And in the long run, I think, the political machinations tend to erode the good policy tendencies.


  7. - siriusly - Friday, Mar 27, 09 @ 9:11 am:

    Gov Quinn’s mistakes started with his staffing decisions. He kept Blago’s policy & budget people in charge (John Filan and Ginger Ostro) but his new people don’t have the same message & media management skills as Vlago’s did. This budget may have Quinn’s name on it but it is really Vlago’s 7th.


  8. - Cassandra - Friday, Mar 27, 09 @ 9:14 am:

    I think Quinn needs to run on a platform that is not centered around the I had the courage to raise taxes theme. And if the legislature waters down the tax increase significantly, he’ll look bad in the 2010 primary. Maybe he would have done better to start lower and have the legislature raise the rate. Seems like some rich liberal Democrats (the ones who wouldn’t be noticeably affected by a 100+ percent state income tax increase) got a-hold of him and he wasn’t smart enough to think it through politically. On to 2010 anyway. I think we have ourselves a lame duck.


  9. - Ghost - Friday, Mar 27, 09 @ 9:14 am:

    The first problem is the constitutional flat tax lock. Quinn is trying to implement a functionaly progressive tax under an outdate tax system. Unfortunetly that makes a mess of things.

    I think the solution Quinn came up with is functionaly a good concept, but I agree selling it very hard.

    At the end of the day many areas of our State governemnt have been cut too much. We lack the services for farmers, and regualtors for banking etc that we should have etc. he whining about goverment being big and inefficient is just talking points. Right now Illinois is wasting more money covering up for a lack of adequate personnel. See the recent problme with the ISP crime labs bein short of needed employees.

    For years we have focused so much on the “fairness” of taxes that we have gotten away from the idea of paying the true cost of goverenment. We need to pay the expenses based on the actual costs, not just what we want to pay. No more robbing peter to pay paul in government operations. We are so enamored of the idea that governemnt is big and bloated that we let Blago overly reduce govt and then privaize huge chunks of work, at greater cost, through contracts, vendors, outsourcing etc. We need to stop thinking of Govt in stereotypes as big and unneeded, and start realizing our society is dependent on governemtn for regualtion, protection and support. We need to stop looking for magic funding an using sin taxes built on the poor. We need to pay the true cost of govt and stop hoping to get something for nothing.


  10. - VanillaMan - Friday, Mar 27, 09 @ 9:17 am:

    Unfortunately VanillaMan, you can’t have first, then second. It all needs to be done at the same time.

    How about freakin’ trying? We aren’t even seeing an attempt here. Our statewide officials would rather face us with their spin, than each other, aren’t they? That is because they know each other’s BS, understand the political chaos they face, and have circled the wagons. And who, are their attackers? We are! The folks who paid for the damn wagons!

    When a government has proven itself unable to function, I do not want it raising the prices it charges us to continue performing so incompetently.

    Quinn is out there mouthing ethical reforms that require constitutional changes, so in effect, he is really just mouthing truths without effective action - aka -wasteO’time. Do you hear the Illinois Democrats, you know, the guys in charge, echoing these truths enough to believe they might actually try something to improve our government?

    Me neither.

    Instead, they think they have us over a barrel, claiming that the “end is near”, holding a gun to our heads and demanding more to perform our public service. Considering how well they do their jobs, it is like being held up by the Three Stooges.

    Not another dime until someone over there at the Capitol demonstrates an attempt to change what is obviously wrong in our state government.


  11. - Fan of the Game - Friday, Mar 27, 09 @ 9:21 am:

    ===- Ghost - For years we have focused so much on the “fairness” of taxes that we have gotten away from the idea of paying the true cost of goverenment. We need to pay the expenses based on the actual costs, not just what we want to pay.===

    I agree, but we also need to rethink what we want government to do. Do we want government to be as big as it is?


  12. - Tom Joad - Friday, Mar 27, 09 @ 9:21 am:

    The Ohio tax reduction was less than one per cent of the state income tax. This was part of a revenue neutral gross receipts tax that was phased in over 5 years. This was not like Quinn’s plan.
    The final tax plan will not be a 4.5% tax on individuals. This will be cut down to 4%, the exemptions phased in, and a source for more bonding will be passed. Whether it is using the cigarette tax increase, a shift to the streamlined sales tax to allow more out of state revenue or bundling small sales tax increases for a dedicated bond source, a tax increase will pass this Spring.


  13. - Red - Friday, Mar 27, 09 @ 9:25 am:

    Facts are facts. Illinois is broke and we need to raise money. The Governor’s proposed tax increase is modest and I am offended by the media’s atttempt to incite fear. Isn’t it time for Illinois to have a leader who has the courage to do the right thing even though it’s unpopular?


  14. - George - Friday, Mar 27, 09 @ 9:25 am:

    Tom - you may have been right on until you said the sales tax.

    Ain’t no way no how we are going to see another sales tax increase.


  15. - Legaleagle - Friday, Mar 27, 09 @ 9:31 am:

    Right on, Vanillaman! Right now I am not willing to entrust one more nickel to those running the state - they will fritter it away on patronage, new entitlements that we cannot afford, pork, and corruption. The way to increase tax revenues is to create an economic climate in Illinois that encourages job creation. Quinn’s doubletalk on all this makes me even more nervous. Didn’t he run with Blago on a “no-new-income-tax” pledge? Why should we trust him?


  16. - Concerned Observer - Friday, Mar 27, 09 @ 9:32 am:

    To fedup dem and Red:

    While I don’t disagree with the fact that “the media” can improve in many, many ways…Illinois’ problems aren’t the fault of “the media”, they’re the fault of bad decisions made by “the government”.


  17. - Wumpus - Friday, Mar 27, 09 @ 9:35 am:

    What Finger in the Wind, Quinn needs to realize is that everything is perception. People have negative connotations of many state workers. People think all the money goes to Chicago and their corruption (regardless of truth). People don’t want to pay more into that screwy system. People see a state dominated by Chicago politicians and know “da CHicago Way” cannot be too far behind. People are cynical and deservedly so.

    Why should a single person, no kids get a hike when they are less likely to be dependent on additional state services?


  18. - wordslinger - Friday, Mar 27, 09 @ 9:35 am:

    I don’t think you could borrow on the credit markets. Who would buy bonds for operating expenses? Plus, the structural deficit would be in place for the next fiscal and you’d have to borrow again.

    I think Quinn would be well-served, and is obligated, quite frankly, to present a no-tax-increase budget.

    Right now, he’s being pounded on his tax increase proposal by folks who don’t have the guts or responsibility to propose a reasonable alternative. Give them what they want; a no-tax-increase budget that makes the planned pension contribution, pays back old bills and gets the state on a 30-day payment cycle.

    After all the yelling and crying is over, we can get serious.


  19. - Third Generation Chicago Native - Friday, Mar 27, 09 @ 9:36 am:

    ==Red

    Your are right we are broke and we have to do something about it.

    The sales tax in Chicago/Cook County is so high that many of us drive to make bigger purchases to save on sales tax.

    Quinn should have come out and said, before the Tribune put the scare to folks, that he is trying to make tax paying fair and modify it to do this.
    Also he needs to stop with the third airport in Peotone. Most people worried about tax increases aren’t doing a lot of flying anyhow, and this is just a thorn in their sides. Isn’t there a better place to put a third Airport? do we really need one?


  20. - Ken - Friday, Mar 27, 09 @ 9:43 am:

    Cut some of the wasteful spending made by Blagojevich and approved by the democrats.
    Now, they are crying for more revenue, when they knew this day would come. The surprise was the depth of the recession.
    These democrats ares the same people that approved and allowed Blagojevich to issue millions in debt on a bet the market would work. The made a bad bet and lost. Now, the taxpayers are suppose to pay for their mess. The government is putting people like Madoff in jail for similar financial shenagians.


  21. - Rich Miller - Friday, Mar 27, 09 @ 9:51 am:

    Ken, I really don’t believe that you know what you’re talking about. Madoff? What?


  22. - dupage dan - Friday, Mar 27, 09 @ 9:51 am:

    George,

    There are many things that gov’t can do to increase constituents confidence in their elected officials. We need someone who can articulate a well thought out plan that lays out what is going on and how to address it. Right now there is a proposed budget that doesn’t address the issues and a tax increase that won’t begin to to bring in the revenue that is needed. More of the kick the problem down the road that VM mentions.

    As for your “all income below the poverty line would be tax free” comment, what do you mean by that? Do you mean that you won’t pay any taxes - income, gas, sales, property, license/plate, etc etc? Which taxes are you going to forgive? What stake does anybody at that income level have in our state/country if they pay no taxes at all? People should pay taxes proportional to their income. It is only fair. If you think that people who have higher paying jobs and more personal wealth are going to work hard to pay for someone elses services in an unfair system you are mistaken. Raise taxes unfairly to the rich (I am not one of them, I am a lowly state employee) and you see revenues drop. Jack Kennedy knew this, so did Bill Clinton. History has proven this time and again. That’s why what is happening is so worrisome. We are in a monstrous hole and can’t find the way out. Raising taxes in a recession will not solve the problem(s).


  23. - ValleyGal - Friday, Mar 27, 09 @ 9:58 am:

    VanillaMan is right - not one more nickel until they can prove they know how to spend it. Yes, the state’s broke; yes, services are being cut. That’s too bad but not one more nickel. That’s the attitude many people have after all these years of feeling screwed over by the two governors and years of legislative infighting, corruption and lies.

    I do believe I read some headlines early on about Quinn’s proposed 1.5 percent increase which stood until word got out that we pay 3 percent now so that’s not 1.5 percent increase, it’s 50 percent.

    Either way, not one more nickel.


  24. - Cassandra - Friday, Mar 27, 09 @ 10:03 am:

    Cutting “waste” is an awfully vague prescription for fixing the budget and one person’s government waste is another person’s mandatory expenditure. And this is a Democratic administration. Most of them, when they are at home, believe that waste and corruption are simply the price you pay for the privilege of having a government. Massive patronage, nepotism, and cronyism, overpaid government employees, over the top salary increases, porky, squiffy contracts….we’re lucky to have ‘em. As to ethics…well, ethics smethics. Maybe someday. Too busy now.

    Having said all that, you’d think Quinn would try a little harder on the government sacrifice and waste elimination side. His 1 billion plus cuts are vague and speculative. His bailout is based on a tax hit that primarily affects the middle class, borrowing, pie in the sky demands on employee unions which he must know are unlikely to fly, and corporate tax increase proposals which the private sector will swat aside like a pesky spring fly.

    But other than Quinn’s voluntary pay cut (spare me…keep the money) where is the real sacrifice.
    It’s isnt there, except for us middle class shmucks.


  25. - wordslinger - Friday, Mar 27, 09 @ 10:06 am:

    What’s so hard to understand? The proposal is 1.5 percentage points, or 50% based on the current 3%.

    Check your paystub — what % is going to federal taxes? FICA? Medicare? What % of your take home pay is going to property taxes?

    There are nifty little buttons on most calculators that will do the ciphering for you if you treat them right.


  26. - Rich Miller - Friday, Mar 27, 09 @ 10:12 am:

    ===What’s so hard to understand? ===

    You can understand it. I can understand it. Will the average Joe/Jane understand it? Highly improbable.


  27. - Rich Miller - Friday, Mar 27, 09 @ 10:14 am:

    ValleyGal, until you can tell us where to cut $12.4 billion, can the canned rhetoric, please. Sheesh. How many times can you say “not one more nickel” in a comment?


  28. - Ken - Friday, Mar 27, 09 @ 10:17 am:

    Yes Rich, Madoff. He took money from people, promeised them they would get something in return and then spent the money on something else.
    Blagojevich and democrats, for example, took money from gas taxes, spent it on something else, social programs, and now there is no money.


  29. - Rich Miller - Friday, Mar 27, 09 @ 10:20 am:

    That’s pretty simple-minded analysis, dude. And wrong. RRB took gas tax money and spent it on social programs? Where?


  30. - Rich Miller - Friday, Mar 27, 09 @ 10:21 am:

    …Unless you’re referring to the sales tax on gasoline, which has ALWAYS gone into the General Revenue Fund like all other sales taxes.


  31. - dupage dan - Friday, Mar 27, 09 @ 10:22 am:

    Wordslinger,

    Read Rish’s piece again to understand what he meant by the confusion. It stems from the formula that is proposed to make sure that lower income people w/certain conditions (multi member family, etc) don’t have to pay additional taxes. I certainly had no trouble figuring it out but many people hear “50% tax increase, listen to the MSM, freak out and vote the current crop of bums out.


  32. - Tom Joad - Friday, Mar 27, 09 @ 10:22 am:

    All those who oppose the Quinn tax proposal, can you tell us what cuts you would make to balance the budget? It is easy to say “cut waste.” That alone will not balance the budet and get us out of debt.
    What is the rest of your proposal?


  33. - dupage dan - Friday, Mar 27, 09 @ 10:23 am:

    Sorry about the misspell on Rich’s name. Who is Rish?


  34. - Levois - Friday, Mar 27, 09 @ 10:27 am:

    How is it 50% when the rate is only going up by one and a half percentage point? Someone isn’t doing the math!


  35. - Dan S, a Voter, Taxpayer and Cubs Fan - Friday, Mar 27, 09 @ 10:27 am:

    VanillaMan is absolutely correct. These “public servants” must stop playing these childish games and get to work. Start completely over on the budget. EVERYONE gets zero dollars until they can account for what is absolutely needed. Every line item must be justified or not appropriated.


  36. - wordslinger - Friday, Mar 27, 09 @ 10:35 am:

    Dan, zero-based budgeting was a gimmick Carter trotted out in the ‘76 election. Once he got in, it took him about 20 mintues to figure out that 90% of the federal budget was debt service, defense and formula-driven spending mandated by law.

    Taking defense out, of course, you’ll find that 90% of the state budget is the same. It’s K-12, DHS, Medicare and public safety. Start whacking.


  37. - dupage dan - Friday, Mar 27, 09 @ 10:37 am:

    If you looked at what is happening to the agency I work for you would see very little waste of the type typically mentioned. We have endured 6+ years of dwindling budgets and cost cutting. Important positions have gone unfilled and efficiency has been hurt as a result. I can’t speak about other agencies and what waste may exist there. The agency I work for is small and has little give due to many small offices around the state. Back in Edgar’s day we economized by moving into state facilities so we don’t even pay rent anymore. There ain’t much more that can be cut.

    Cutting waste has always been the mantra for those who may not know the entire picture. I have worked in the private sector in manufacturing and have worked in non-profit orgs before coming to the state. Waste doesn’t just occur in gov’t. It is pervasive. Rich has made it clear you won’t reduce the deficit significantly by cutting payroll. Assets have been sold to pay for operating expenses. It is a horrific mess. Cutting waste ain’t gonna do it.

    There have been many discussions here and elsewhere about how to fix this. Viable short term solutions don’t seem to exist. The problem is acute. Short of the state winning its’ own lottery many times over I don’t see relief any time soon. The state will raise taxes but I will be surprised if revenues match expectations.

    Go against the grain. Drastically lower taxes so that businesses/employers flow to the state from elsewhere. Create a better business climate. As the country comes out of the recession Illinois would be better poised to reap the benefits.

    Not a short term solution but tried and true nonetheless.


  38. - dupage dan - Friday, Mar 27, 09 @ 10:41 am:

    Levois,

    The current state income tax rate is 3% of gross income. If you raise that by 50% the tax rate will then be 4.5%. That is an increase of 1.5%. That is half again what 3% is. In other words, a 50% tax increase. Get it?


  39. - Yellow Dog Democrat - Friday, Mar 27, 09 @ 10:44 am:

    Rich -

    Pat Quinn is right that Illinois’ tax system is regressive.

    Pat Quinn is WRONG that raising the personal exemption makes it LESS regressive.

    As you point out, it just increases the proportion of taxes paid by people without children, and provides a bigger tax break for those with kids.

    Now, you can certainly argue that making the tax code more kid-friendly is good public policy.

    But an equally valid argument is that a FAIR tax policy asks those with kids and larger families to pay MORE.

    After all, MAJOR chunks of the state budget only provide a DIRECT benefit to those with children. Like K-12 education, KidCare & FamilyCare, etc.

    At the end of the day, increasing the personal exemption does benefit low-income families with children. But it also benefits the Pritzkers of the world who have children too.

    And I don’t think raising taxes on three single workers who make $16,000 a year (by $80 each) so that the Pritzkers can get a $240 per child tax break makes much sense. And THAT is what Quinn’s approach essentially does.

    What makes much more sense and would make the tax code less regressive is increasing the IL Earned Income Tax Credit, bringing Illinois more into line with neighboring states, easing the tax burden on ALL low-income workers instead of just those with kids, and costing the state’s tax coffers FAR less.


  40. - Conservative Republican - Friday, Mar 27, 09 @ 10:47 am:

    One major problem with the Illinois income tax and the proposals to increase it is, as a flat tax, taxpayers are deprived of the opportunity to take the scope of deductions available to them as federal taxpayers. As a result, oftentimes taxpayers with plentiful federal tax deductions (mortgage interest payments, property taxes, charitable deductions, etc) pay a net tax check to Illinois in April that is in a higher amount than the net due to the federal government (also largely due to salary withholding decisions made in the prior years). Although such taxpayers pay more net taxes to the fed than the state, it kind of grinds when one is writing out a larger check to the state at tax time. This syndrome would be augmented by the proposed tax increases.


  41. - Madison County Watcher - Friday, Mar 27, 09 @ 10:50 am:

    I remember just 10 years ago, when the General Assembly was fighting about whether $1 billion was too much money to put into a “rainy day” fund. I think GRyan wanted the money for Illinois First, and everyone was squabbling over the gift of a balanced budget that Edgar had left the state.

    George and Rod might have been personally corrupt, but the General Assembly went along with the 10 or 11 budgets that have since left our state in this condition.

    VanillaMan is right, and maybe it’s time for the constituencies that back those that have governed us into this mess to start sacrificing, as well.

    Instead, the state will now just raise the taxes on the constituencies that didn’t put us into this mess. What a sad truth, and it doesn’t put us any closer to solving the structural problems the state is facing.


  42. - Yellow Dog Democrat - Friday, Mar 27, 09 @ 10:52 am:

    === VanillaMan is right - not one more nickel until they can prove they know how to spend it. ===

    Fine, but let’s apply that logic to EVERYTHING:

    - Let’s eliminate the $1.7 BILLION in corporate tax breaks Illinois currently hands out until these companies can PROVE to us that there’s a reciprocal public benefit.

    - Let’s eliminate the $2.4 BILLION the governor proposes spending at the Department at Commerce and Economic Opportunity for the same reason.

    - Let’s eliminate the more than $1 BILLION we currently spend at the Department of Corrections, since doubling the number of people we incarcerate since 1975 and lengthening sentences clearly hasn’t made us any safer.

    If we take these steps, we can avoid a tax increase AND ensure our state pensions are fully funded.

    Come on Republicans! Who’s with me?!?


  43. - VanillaMan - Friday, Mar 27, 09 @ 10:53 am:

    Look at the bright side!
    We have only one party in power. The other party is hardly a factor. SO, all the Democrats have to do is - something! That is, show us that they are sincere before they raise our taxes. Why is this so hard for them to do?

    Yeah, it means they will have to step on some of their constituent’s toes, and they would rather stomp on our toes because we haven’t stomped back at them. We are good people! We have a lot of patience. We’ve been sitting around patiently for a decade, watching this Soap Opera of National Embarrassment and being laughed at in at least 51 different languages.

    Time is up! Sorry the economy has imploded while you people dithered! You had ten long years to give us hope before it has come to this, and nothing has happened folks!

    A government that cannot govern has no reason to believe that it’s citizens will happily cough up more of their wages during a recession when they are tightening their belts.

    That is also a fact, Jack!

    We understand why the Democrats are spinning crazily for a tax increase. On the other hand, why can’t the Democrats understand that we are fed up and even if we weren’t economically melting down, we would want their heads? The Democrats are delusional in thinking that our anger towards Springfield is simply a matter of 1.5% income tax increase.

    It is watching a capitol full of failures telling us to trust them when they say they really need more of our money at a time when we have lost thousands in our future income.

    It isn’t just the math, it is the damn attitude!


  44. - Yellow Dog Democrat - Friday, Mar 27, 09 @ 11:00 am:

    === The current state income tax rate is 3% of gross income. If you raise that by 50% the tax rate will then be 4.5%. That is an increase of 1.5%. That is half again what 3% is. In other words, a 50% tax increase. Get it? ===

    Dan -

    Grammatically speaking, it’s either “a 50% increase in the income tax rate” or “a 1.5% income tax increase.”

    The percentage is an adjective, which modifies the following noun.

    Its correct to use “50%” to describe the RATE increase, but the absolute value of the increase is only 1.5%.

    Make sense?


  45. - wordslinger - Friday, Mar 27, 09 @ 11:05 am:

    YDD, grammatically speaking, no.

    The proposal is a 50% income tax rate increase from 3% to 4.5%, or a 1.5 percentage point (not percent) income tax rate increase from 3% to 4.5%.


  46. - Rarely Posts - Friday, Mar 27, 09 @ 11:05 am:

    The statement that Illinois’ rate is “just 3 percent” is correct but misleading. Illinois taxes federal gross income, while almost every other state’s tax is on federal TAXABLE income. The main difference is that Illinois does not give you the benefit of any federal deductions such as charitable deductions, mortgage interest, sales taxes, or the federal standard deduction. So comparing Illinois’ tax rate of 3% to other states’ rates, when they tax on a much lower base, is a misleading comparison.


  47. - Truthful James - Friday, Mar 27, 09 @ 11:09 am:

    The governor may be on the right track but on the wrong train.

    To pay for an emergency (created by his own party’s six year misrule he wants a permanent increase in a tax rate plus many, many, many fee increases (a tax by any other name…)

    Let’s do real capital planning on a five year basis, not a game of musical earmarks hidden by the use of current revenue sources. A five year Capital Improvement Program, updated and extended annually, funded by a specific tax levied for that purpose and no other. We call that a state wide property tax used to pay tax exempt bonds issued for those specific purposes (against Federal and State law to divert.) Free up the current receipts from income and sales taxes for current operating expenses.

    Politicians slaver over the thought of an increase on the books without an expiration date in any tax rate. After we solve an emergency, it is the gift from the taxpayers that keeps on giving, It is the reelection crutch they all want and need.


  48. - wordslinger - Friday, Mar 27, 09 @ 11:17 am:

    –We call that a state wide property tax..–

    TJ, not judging the merits of your proposal, but I think the name of your revenue source needs a little work. The Red-Hot Poker Where The Moon Don’t Shine Tax might be a bit more politically palatable in this state.


  49. - VanillaMan - Friday, Mar 27, 09 @ 11:22 am:

    YDD - I am not a straw man for you to use to make those of us who want better government to appear foolish.

    We are not the ones who caused this mess, and as good citizens, are demanding those who did nothing while our state budget collapse, to pay the price - not us.


  50. - dupage dan - Friday, Mar 27, 09 @ 11:24 am:

    YDD Oh, I didn’t realize it was an english lesson. Sorry, but I thought we were discussing taxes, not semantics. Besides, Levois was asking about the math, not the english.


  51. - Rich Miller - Friday, Mar 27, 09 @ 11:24 am:

    ===We are not the ones who caused this mess, and as good citizens, are demanding those who did nothing while our state budget collapse, to pay the price - not us.===

    What?

    The citizenry has elected every one of our legislators and governors for a very long time now. These people just didn’t descend from Mars.

    Therefore, to extend your logic, they should pay the price.


  52. - dupage dan - Friday, Mar 27, 09 @ 11:37 am:

    VM,

    Someone may beat me to it but I’ll say it anyway. Of course, we are the ones who caused this mess. We elected these people. Someone will then say, “I didn’t vote for RodB”. While that may be true (it certainly is in my case), it doesn’t matter. These are our elected representatives. If they don’t do the right job it is our responsibility to work to get them voted out of office. I am not so naive to think that is easy but it is the system we have.

    As far as having those who caused this problem pay for this, how will that work? Are you suggesting we garnishee their wages? Confiscate their assets? Put ‘em to work on a chain gang? Can we realistically solve this horrific mess by “making them all pay”? They can be removed from office by their constituents and replaced but that won’t put a dime into the general fund.


  53. - VanillaMan - Friday, Mar 27, 09 @ 12:25 pm:

    Sorry. I disagree.
    As voters, we depended upon two political parties to provide us with our choices for elected offices. In many parts of Illinois, there is only one choice on the ballot.

    It is wrong to blame our elected officials for the decisions they made in our name, but it is OK to blame everyone? Nah, it doesn’t work that way.

    The Illinois Democratic Party has had near total control over Illinois for a decade. (Or, am I missing some GOP statewide office holders?) After a decade, they still couldn’t come to a consensus other than raising our taxes, or playing budget games with our balanced budget requirement? What did they think would happen? How long did they think they could play these games? Gee, everyone knew this was going to end. I remember hearing President Jones clearly stating his belief that Illinois didn’t have a spending problem - it has a revenue problem. That was a few years ago.

    One of the things we discovered about the Illinois Democratic Party through it’s impeached governor, Rod Blagojevich, was that even with a gubernatorial cap on income tax increases and solid majorities in both houses, the Party had no interest in budgetary discression. They fingerpointed as the cost of living could somehow justified their expensive government expansions and budgetary destruction.

    We are not to blame for this. Promises were made to gain votes to secure an even stronger majority for the Illinois Democratic Party in both houses, but the only thing they delivered were unpaid bills, exhausted credit ratings, and now tax increases. Voters never approved of these things.

    Blame is not to be spread around, or in the end, nothing is learned and we repeat the mistakes.


  54. - Secret Square - Friday, Mar 27, 09 @ 1:11 pm:

    This may sound like an incredibly naive and obvious question, but what is the purpose of passing massive “capital bills” that require extraordinary funding sources every few years for dozens of construction projects, instead of just budgeting for a few construction projects every year? Where is it written that all infrastructure projects have to be done at the same time?


  55. - Rambler - Friday, Mar 27, 09 @ 1:12 pm:

    Rich,
    In your syndicated column you may have miscalculated the revenue shortfall associated with the expansion of the exemption. You said,
    “Quinn’s tax exemption reform proposal took a tax hike that could’ve raised almost $6 billion down to only about $2.5 billion.”
    It seems like the shortfall should be
    $4000 times 0.045 times the number of people, about 12.9 million, which equals $2.3 billion per year instead of 6 - 2.5 = $3.5 billion.
    You may have done the calculation assuming no exemption instead of the current $2000 exemption, resulting in a number that’s 50% too high.
    Even so — if that’s correct — it’s still a substantial amount.


  56. - Rich Miller - Friday, Mar 27, 09 @ 1:14 pm:

    ===what is the purpose of passing massive “capital bills”===

    Because the federal government does transportation bills every so many years, which require state and local matches. Because we’ve drained the Road Fund and because we otherwise don’t have the cash on hand, it requires a massive bill.


  57. - Rich Miller - Friday, Mar 27, 09 @ 1:17 pm:

    Rambler, rather than using population, check the annual state receipts for personal income taxes and divide by three (for each percentage point). Then use that number to calculate the approximate ballpark revenue from a 1.5 point increase.


  58. - Secret Square - Friday, Mar 27, 09 @ 1:23 pm:

    Ok Rich, thanks. If someone like me who tends to be more aware of the inner workings of state government than the average bear failed to grasp the connection there, chances are the average citizen doesn’t get it either.


  59. - Rambler - Friday, Mar 27, 09 @ 1:42 pm:

    OK, the personal income tax raised $10.32 billion in FY 2008, so assuming no change in the exemption the increase to 4.5% would raise an additional $5.16 billion.
    With regard to the shortfall due to the change in the exemption, I’m still not sure how it can be higher than $4000 (the difference due to the change) times 4.5% times the number of residents, as I calculated previously.


  60. - Six Degrees of Separation - Friday, Mar 27, 09 @ 1:46 pm:

    We call that a state wide property tax used to pay tax exempt bonds issued for those specific purposes (against Federal and State law to divert.) Free up the current receipts from income and sales taxes for current operating expenses.

    Instead of creating a shell game to cover another shell game, why not end the diversions of the road fund (which could fully fund a good-sized transportation capital plan including roads and transit) and use property and sales tax revenue to cover the holes in the general fund and to fund school and building capital projects. Keep the apples with the apples and the oranges with the oranges.


  61. - Ghost - Friday, Mar 27, 09 @ 1:57 pm:

    Fan === I agree, but we also need to rethink what we want government to do. Do we want government to be as big as it is? ===

    I would agree. Instead of just tossing out we need cuts, we would be better served by actually saying, Governemtn does X, I do not think we should have or need goverenment to do x so lets eliminate it. We need to move away from the sterotypicial generalization of government is too big so it just needs to find wasy to reduce itself. lets look for what we dont want, and discuss whetehr that is a real cut. With that discussions we need to recognize that we need to pay the actual costs.

    Ill start, lets get rid of CMS.


  62. - disgusted - Friday, Mar 27, 09 @ 2:40 pm:

    Budgets are supposed to be designed from the ground up. Each and every State agency should have to justify its existence and service…and move towards self sufficiency through fees and /or donations and grants, etc or cut expenses accordingly. Axe unneeded services. I went through a highway toll in a very low traffic area with a quarter charge…what? just close the toll place down or charge what you need to to at least pay to keep the lights on and pay the people employed….with some left over to pay for the road. And if people wont pay the toll, then get rid of the toll booth. After sitting on budget committees for both D and R parties, agency directors and university presidents always talk about expenses but never about the revenue side or what they have considered in terms of generating revenues. For example all these white collar crime folks including impeached governors ….who are going to be writing books and doing talk shows….how about they PAY for their estimated $40-50,000 a year stay at Illinois finest (& preferably the Joliet) prison. Farmers pay no Illinois sales tax—well if that is too much to tackle, at least charge a State of Illinois infrastructure fee all each of their grain trucks annually or something to recoup the damage the rest of the citizens pay for in road damage and clean up of chemical spills etc etc. Pension contracts are contracts, whether we agree or they were poorly structured, they are still contracts…drastically change what we negotiate going forward and the pension contributions will become manageable…but this is money we legally owe. Bonding to get out of it…bad money after bad money, we have to pay or buy out current pensions and move on.
    Simple and uncomplicated is truly what we need….agreed Quinn is not executing reforms, just drudging up old fixes that no one wants or can understand.


  63. - Ghost - Friday, Mar 27, 09 @ 3:59 pm:

    disgusted, why must an agency be self sufficient from fees or be cut? Of course your position technically feeds back on itself. All governemtn agencies are alreayd self sufficient by use of fees, one of these fees is taxes.

    So you want the police to be given motiviation to tak in money… how much should they charge you to process evdience from the brugarly at your home? How much should you have to pay for them to look for your stolen car? How about the fee you should pay every time they arrest a criminal, or drug dealer etc.

    Do you really want every state agency sending you a bill or fee charge for the services they provide?


  64. - curly - Friday, Mar 27, 09 @ 4:07 pm:

    “not one more nickel”

    chirp, chirp, chirp


  65. - Truthful James - Friday, Mar 27, 09 @ 4:46 pm:

    wordslinger — Not shell game within a shell game. There are three types of capital projects: new projects, improvements and extensions, repairs and replacements. Each needs to be accounted for separately.

    The new projects need to be identified in a Capital Project program. Unless emergencies intervene they should be part of a five year program set at a certain level per year and funded by State of Illinois Bonds. The Program will be updated annually and extended out one year each time by the executive and approved by the legislature. This is the ideal area to be funded by property tax supported General Obligation Bonds.

    It is hard to judge the total property valuations in the State on a current basis. The last published totals were for 2006 and were above $331 billion. A millage rate of ten cents per $100 EAV would support a 450 Million 5 year Bond issue at a cost of $50 per 150K house. On a 29 year basis at the same rate that millage would support a $4 Billion plus bond issue.

    $50 bucks a year I refuse to describe a “only $50″ but a governor might be able to sell that easier than a 50% increase in the income tax rate.

    Now we come to the second and third categories, improvements and extensions, repairs and replacements. One again a program needs to be written for a rolling five year period and funding needs — again in the absence of an emergency — to be assigned (prioritized). Here is where the motor tax should be sequestered and applied.. To a great extent it can be allocated based on the the counties from which it was collected, but modified to a certain extent based a formula for miles of state roads, for instance.

    Doing it this way the State can achieve transparency and a measure of equity., something perhaps that the taxpayers may more greatly desire than the legislators themselves.


Sorry, comments for this post are now closed.


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