* Senate Republican Leader Christine Radogno says the Democrats should just go it alone on a cigarette tax hike to help patch Medicaid’s gaping funding hole if that’s what they want to do…
“The problem is that it is a revenue solution to a spending problem. We’re looking for money rather than looking at the spending side, and it’s that default position that has gotten us exactly into the mess we’re in,” Radogno told a City Club of Chicago audience.
Noting that Democrats, who control the General Assembly, last year passed a state income tax increase without any Republican support, Radogno said, “They can pass the cigarette tax increase on their own if that’s what they want to do.”
Sounds good. Let’s see the cuts.
* On a related topic, the SJ-R wants a closer look at what could be an overly rosy numbers scenario…
Though we support the tax, we also recognize there’s room for debate. The administration estimates gross savings from enhancing enforcement of Medicaid eligibility rules to be $120 million. The Illinois Hospital Association believes the savings could be triple that — and up to $720 million with a federal match.
And if the state doesn’t realize that extra $480 million from enforcement savings? Another big budget hole is what. Still, the IHA’s numbers are definitely worth a hard look.
* Leader Radogno also reiterated her opposition to shifting the employer pension payment to Downstate and suburban school districts…
“What we have to look at is the total (state) funding for education that goes in to the city of Chicago,” she said. “Chicago is treated differently in a number of areas, in fact, favorably in a number of (funding) areas relative to downstate and suburban schools, and those need to be addressed at the same time there’s any discussion about a shift in responsibility for pension costs.” […]
“The savings from the shift are not significant enough to derail it over this issue. It should be set aside.”
Also a good point about Chicago’s share of education funding, but that’s kinda apples and oranges since the funding is based on a specific formula. Also, the savings from a funding shift would be pretty darned big, particularly over time.
* Meanwhile, I’d never heard of this scam until today…
At least five states (Florida, Georgia, Maine, Utah and West Virginia) have enacted laws that target “tax-zapper” software that essentially allows businesses to keep two sets of books, the Associated Press has reported.
By plugging a flash drive into cash registers, the software lets businesses under report taxable sales. The new state laws make it illegal to possess or install devices that falsify a cash register’s electronic records. Other states considering such measures include Oklahoma, Indiana, New York, Tennessee and Michigan, AP reported.
Richard Ainsworth, a Boston University tax law professor who has studied the issue, estimates that 30 percent of businesses that primarily rely on cash transactions are using tax zappers. In the restaurant industry alone in California, the loss from zappers was estimated at $2.8 billion three years ago and in New York $1.7 billion, Ainsworth says.
* Here’s how it works…
During business hours, cashiers record the true sales and give customers accurate receipts. A log of real sales can also be stored electronically.
But after hours, a memory stick that contains the zapper is inserted to remove a given amount in sales from the day’s receipts, say, $500. For each altered transaction, the zapper will also re-total and recalculate the receipt. That changes the tax due and produces a second set of books.
Boston University tax law professor Richard Ainsworth, an authority on the issue, estimates that 30 percent of the predominantly cash businesses in the states are using tax zappers.
* The reason I heard about this today was that Rep. Jack Franks has introduced a bill to ban the zappers. From a press release…
Legislation barring the use of tax-cheating software was introduced by state Rep. Jack Franks (D-Marengo) to crack down on a practice of falsifying cash register electronic records by skimming receipts, thereby lowering sales taxes owed.
“The vast majority of Illinois businesses play by the rules and are put at a competitive disadvantage by this unlawful practice,” Franks said. “We have an obligation to stop those perpetrating tax fraud and harming honest businesses struggling to thrive in challenging economic times.” […]
“The notion that billions in state revenue could have been lost due to businesses cooking their books is unconscionable,” continued Franks. “Though it is already illegal to cheat on taxes, these devices have created an easy way for businesses to illegally lower their taxable income that is hard to track. We must act to ban the possession or installation of tax-zappers in Illinois.”
The bill is here.