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*** UPDATED x1 *** Unclear on the concepts

Monday, Nov 3, 2014 - Posted by Rich Miller

* This Chicago Sun-Times editorial made me chuckle today…

Should the state Constitution be amended to tax the incomes of millionaires an extra 3 percent, money that would go to schools? We urge a strong Yes vote on the concept embedded in this question, even if you disagree with the particulars. Illinois should move to a progressive or graduated income tax system, one that imposes higher rates on higher earners and is based on the ability to pay.

This is the same newspaper which endorsed Bruce Rauner, who is flatly against a progressive tax, including a millionaire’s surcharge.

* Meanwhile, from a Tribune editorial…

That bogus budget has Illinois spending nearly $36 billion this fiscal year, with $8 billion of that coming from the income tax increase. The Jan. 1 partial rollback will shave second-half revenues by about $2 billion. What to do?

Recall that the taxers of 2011 have continued to raise spending. The threat of an aggressive cost-cutter being elected governor explains why so many vested interests fear one outcome in the race: As we’ve noted, different candidates have different ideas about what Springfield “needs” or “must have” or “can’t possibly cut.”

With Illinois in an emergency, its credit rating dismal and its economy moribund, we’d take hard looks at capital spending (read: politicians’ pork projects) from general funds, the eligibility of Medicaid recipients, the salary structure of state government and all the multimillion-dollar line items that Springfield’s apologists dismiss as too insignificant to deliver big savings. When you only have to cut $2 billion, every million helps. (Mr. Madigan, about that $35 million for a school in your district ….)

Illinois collects $18 billion a year in income taxes and $8 billion in sales taxes. That gouges working-class and middle-class families more on how much they work than on what they consume. We would expand Rauner’s proposed broadening of the sales tax to include virtually all consumer services, which account for two-thirds of Americans’ consumption. Done right, broadening the sales tax base while letting Quinn’s income tax surcharge die could let the sales tax rate drop.

* Look, cutting $2 billion worth of programs in the second half of a budget year is like cutting $4 billion for the full year. That’s painful, no matter how you look at it. And the longer you wait to do it (the budget address isn’t until late February) the harder it becomes.

Sure, you can do some things, like no new capital projects (but you still gotta pay off the bonds from the rest of the projects), you can move money around with interfund transfers, slice here and dice there, put off paying bills, etc. and limp through the rest of the fiscal year. You could ask AFSCME to reopen the contract, but good luck with that, so there will be no real savings until the following fiscal year or unless the GA goes along with any schemes to bust the union.

And the following fiscal year is where the real pain comes - particularly if too many cans are kicked down the budgetary highway - and that’s why Rauner is now saying he’ll gradually step down the tax hike instead of eliminating it immediately.

* And, yes, spending has gone up in the past four years mainly because the state is finally making its pension payments and the GA and the governor refused to cut education funding. And despite some big cuts to Medicaid, growth is still high.

Also, implementing a brand new service tax right away just can’t happen. Most of these businesses have never, ever paid sales taxes. Getting that program up and running just can’t be done overnight. You can hike income taxes and implement it right away (even do it retroactively) because the system is already in place. But it’ll take time for barbers, laundromats, lawyers and everyone else to get up to speed on a totally new tax (not to mention the time it’ll take to pass a tax like that).

And a service tax will only replace about a quarter or so of that $8 billion in revenues lost when the income tax hike goes away.

* The Tribune is also conveniently forgetting that Rauner wants to massively increase education and higher education funding and has promised spending increases for IDNR, DCFS, IDOC and lots of other stuff, including a huge new capital plan. That will necessitate even more cuts elsewhere or more revenues.

Getting back to the Sun-Times editorial for a moment…

Raise minimum wage to $10 an hour by Jan. 1

As noted in our recent endorsement of a $13 minimum wage for Chicago, it’s past time to raise the minimum wage. Both Chicago and the state need a higher wage, if only to make up for an stagnant low wage that hasn’t kept pace with inflation. We urge a Yes vote to send a strong message to state legislators to get cracking.

That’s diametrically opposed to an editorial the Sun-Times published just last year...

Right now, Illinois’ minimum wage of $8.25 already is $1 higher than Kentucky, Indiana, Iowa and Wisconsin and 90 cents higher than Missouri. In fact, Illinois’ minimum is the fourth-highest in the nation. Raising it any further would put the state at too much of a disadvantage in the competition for jobs.[…]

Any hike in the hourly minimum wage should be done nationally

35 Comments

- Anonymous - Monday, Nov 3, 14 @ 12:41 pm:
===Rauner wants to massively increase education and higher education funding and has promised spending increases for IDNR, DCFS, IDOC and lots of other stuff, including a huge new capital plan===

Wow. It’s like you’re the only one listening to what Rauner is actually saying about taxes and spending and taking him at his word. Maybe the Tribune knows he’s just full of baloney, but if you believe what he says…there ain’t enough money to pay for all of his promises.

- 47th Ward - Monday, Nov 3, 14 @ 12:41 pm:
That was me at 12:41pm.

- Concerned Citizen!!!!! - Monday, Nov 3, 14 @ 12:42 pm:
I am deeply concerned about the future of Illinois. I know that the re-election of Quinn will continue to hurt us. The election of Rauner is an unknown but one that we need to take a chance on. I don’t believe the Quinn is moving Illinois forward and I am willing to give someone else a try.

Read what George Will said this weekend in his column;

http://www.washingtonpost.com/opinions/george-f-will-illinois-voters-have-a-stark-choice-for-governor/2014/05/14/e46ba0f0-dad6-11e3-bda1-9b46b2066796_story.html

Its time for a change…..

- Joe Bidenopolous - Monday, Nov 3, 14 @ 12:47 pm:
Magic beans - it’s the solution to all.

Feed them to MJM and Cullerton so they help pass the Rauner tax increase.

And then grow them so he can climb up and steal the giant’s gold.

That’s gotta be it.

- The Way I See It - Monday, Nov 3, 14 @ 12:47 pm:
On the S-T editorial, did anyone clear it with Ferro?

- Concerned Citizen!!!!! - Monday, Nov 3, 14 @ 12:49 pm:
@Anonymous……

What you say is most likely true, but we also know that there is no money for all of Quinn’s spending. The taxes are being raised on Wednesday no matter no matter if Quinn wins or loses, and if Quinn wins they will go up again in 2015 to pay for all of his pork projects he just dished out to get the votes. We need to stop the spending somehow and get the businesses to come back…..Quinn is not doing that.

- Demoralized - Monday, Nov 3, 14 @ 12:52 pm:
==When you only have to cut $2 billion==

Yeah. “Only” $2 billion. No problem Tribune. Piece of cake. Dopes.

- PublicServant - Monday, Nov 3, 14 @ 12:54 pm:
I’m sure shorting the pensions will be a new “revenue” source under the as-yet-disclosed Rauner balanced budget.

- MikeMacD - Monday, Nov 3, 14 @ 1:00 pm:
35 million from 2 billion leaves 1 billion 965 million.

The rest is for the little minds to figure out.

I suppose.

- my two cents - Monday, Nov 3, 14 @ 1:04 pm:
Rauner’s role models are Rick Scott, Scott Walker and Rick Snyder. It’s no mystery how he would try to govern if elected.

- my two cents - Monday, Nov 3, 14 @ 1:07 pm:
The Sun Times editorial staff is suffering from Rauner-itis and is trying to be all things to all people in an effort to recover from the McKinney debacle.

- Bourbonrich - Monday, Nov 3, 14 @ 1:09 pm:
I’m willing to give someone else a try as Governor if the GOP would ever nominate someone who has a grasp of the issues. Rauner is not it. I don’t like Quinn but Rauner is scarier than any Gubenatorial candidate in my lifetime.

- Yellow Dog Democrat - Monday, Nov 3, 14 @ 1:22 pm:
=== On the S-T editorial, did anyone clear it with Ferro? ===

As noted, the S-T says that there are also going to be endorsing in municipal races so, if they are gonna be endorsing someone for mayor who now supports the minimum wage, it would be better if they pivoted now. Instead of giving, ya know, six hours notice.

- 47th Ward - Monday, Nov 3, 14 @ 1:23 pm:
Maybe the S-T newsroom is playing a game to see if Ferro actually reads his own paper? My guess is that, unless one of his mentors passes away or his pal Bruce calls to complain, Ferro doesn’t much care what his reporters put in his newspaper.

He’s probably reading the Tribune anyway.

- Angry Chicagoan - Monday, Nov 3, 14 @ 1:23 pm:
So the new editorial board policy of the Sun-Times is, we endorse center-left policies and candidates except when one of the higher-ups determines we owe someone else a favor. Hmmmm. They’re going to have their work cut out on the branding for that.

- porkbellies - Monday, Nov 3, 14 @ 1:28 pm:
@Concerned Citizen… I know this isn’t a popular thing to say, but the truth is spending under Quinn has been darn responsible. I believe I read in the Trib that Illinois spends the fourth least amount per capita on state bureaucratic employees (normally that is the “fat” that people claim needs to be trimmed) and a very substantial portion of what we’re spending is on the pension fund deficit (http://www.usgovernmentspending.com/Illinois_state_spending.html).

If someone is spending a ton of their income on paying down credit card bills accrued by someone else… it’s hard to cry about it being irresponsible.

Is there a program here or there that could be trimmed or had monies misallocated? Yes. I will not claim that the state is run perfectly. But when you take a big picture look at it… we’ve been spending responsibly under Quinn. Just my opinion.

- Anonymous - Monday, Nov 3, 14 @ 1:30 pm:
This is local our local state rep who takes credit in her mailers for helping the state pay down bills but voted against the state income tax extension.

- Economic Justice - Monday, Nov 3, 14 @ 1:30 pm:
Hey Tribbies. Very interesting thoughts. Here’s an idea… For tomorrow morning, pretty please run this (shortened) line of yours in big bold print on page one above the fold:

“Expand Rauner’s sales tax to include all consumer services.”

I truly believe that would help your candidate’s chances greatly. Thank you.

- Del Clinkton - Monday, Nov 3, 14 @ 1:30 pm:
Just read George’s column. George forgot to mention Bruce’s tax increases. Gotta pay for all the prisons somehow.

- Anonymous - Monday, Nov 3, 14 @ 1:33 pm:
Meant to say “like” our local state rep…

- DuPage - Monday, Nov 3, 14 @ 1:36 pm:
I heard that Rauner supports expanding the income tax making pensions and social security taxable. Also making services taxable, creating extra paperwork and recordkeeping for small business.
I don’t see that as any better then Quinn’s extending the income tax. Anything that creates more hoops for small business is not usually a Republican idea. I was a middle of the road Republican for several decades. Between Rauner, Oberweis, and Jeanne Ives, the tent seems to have moved so far over I am no longer inside of it.

- tominchicago - Monday, Nov 3, 14 @ 1:41 pm:
Concerned Citizen. George Will also thinks that women get raped to achieve “special status” so forgive me if I ignore his thoughts on Illinois politics.

- Kasich Walker, Jr. - Monday, Nov 3, 14 @ 1:50 pm:
So the Trib editorial writers want budget cutters to look at “….all the multimillion-dollar line items that Springfield’s apologists dismiss as too insignificant to deliver big savings. ”

I hope they also support the boost in revenue that legal cannabis for all Illinois adults would surely generate.

Through August 2014 Colorado reported $45 million in tax revenue from recreational sales of cannabis year-to-date, or approx $5.625 million per month.

IL has a population over 1.4 times greater than Colorado. My back of envelope arithmetic shows that would generate $94 million a year in revenue for IL if recreational cannabis was legal here and taxed similarly to Colorado. I’d guess more.

- Yellow Dog Democrat - Monday, Nov 3, 14 @ 1:59 pm:
Rich -

I thought it was pretty funny the Tribune editorial board name-dropped the Civic Federation, since the Civic Fed actually has a proposal for tax reform. That is nothing like the Tribune editorial board.

Civic Fed calls for:

1. Extending Quinn 5% rate for 1 year, to Jan 1, 2016;
2. Rolling back the income tax rate to FOUR PERCENT over three years, which takes us to 2019.
3. Replacing the lost income tax revenue by extending the income tax to retirement income.

In fact, it really hard to figure out how the two plans resemble each other at all.

- walker - Monday, Nov 3, 14 @ 1:59 pm:
The numbers don’t lie.

Rauner would have to come up with a completely new set of spending and tax “plans” unlike anything he has tried to sell so far, and surprise us all. If not, he will either put the state into substantial further debt, or default on the pension obligations.

Any fair review of Quinn’s spending, even by Rauner were he not running, would find that it is not “out of control,” and is “responsible” given the challenges. Of course it is not perfect, as porkbellies pointed out above.

I just talked to a supervisor in one large state agency, (a smart, conservative Republican if that matters), who told me they have cut paid staff over 45% during Quinn’s tenure. They now are hanging on to see if they can complete their mission for the public at all. That is not rare. Spending on outside groups and contractors have also been very substantially cut during Quinn’s tenure, and literally hundreds of programs have been cancelled. If any politician tells you otherwise, they are misinforming you. The bulk of the increased outlays have indeed been to cut past due accounts payable, slightly grow state support for education, and make ramped up pension payments.

We have major challenges, and the best way to deal with them is to start with reality.

- From the 'Dale to HP - Monday, Nov 3, 14 @ 2:08 pm:
Another Trib editorial where they base next to nothing on facts or numbers, that offers no solutions to the problems they’ve identified, obsesses over the small stuff but ignores the big stuff, and is unclear what the point to it is other than they want to lower income taxes, only they tack on an additional 600 words. Very poor editorial: winded, illogical, intellectually dishonest, and non-factual. Rinse and repeat.

- AC - Monday, Nov 3, 14 @ 2:13 pm:
I think the Sun Times shouldn’t move their editorial section to the Early and Often section. Regarding consistency, they seem completely aligned with Bruce Rauner, but it would be better if they had a downstate edition. Geolocation could help make them all things to all people.

- tominchicago - Monday, Nov 3, 14 @ 2:23 pm:
From the ‘Dale to HP that is also an apt description of every Kass column.

- Liberty - Monday, Nov 3, 14 @ 2:32 pm:
Republicans have touted a flat tax for a long time. How is that working for Illinois?

- archimedes - Monday, Nov 3, 14 @ 2:33 pm:
As long as we can balance the budget by lowering revenue and increasing expenses, Rauner will succeed. Silly Quinn, thinking we needed to keep our current revenue to balance the budget - he sure is taking us in the wrong direction.

- SAP - Monday, Nov 3, 14 @ 2:43 pm:
“threat of an aggressive cost-cutter being elected governor” Which candidate is threatening to cut costs?

- Ghost - Monday, Nov 3, 14 @ 2:52 pm:
So pandering to try and regain reputation

- KurtInSpringfield - Monday, Nov 3, 14 @ 4:07 pm:
– Illinois collects $18 billion a year in income taxes and $8 billion in sales taxes. –

I work at Revenue. These numbers are low. I am not at work right now, but anyone can go to the website and see the annual reports, http://www.revenue.state.il.us/AboutIdor/TaxStats/

There was a total of $23,480,243,434 in income taxes and $10,073,281,963 in sales taxes collected. However, that is not the whole story. Revenue collects income from several other taxes. The total revenue collected for 2013 was $37,713,660,975. The Sun-Times failed to get their facts correct on something so easily verified.

- KurtInSpringfield - Monday, Nov 3, 14 @ 4:09 pm:
Sorry, that quote wasn’t the Sun-Times. It was from the Tribune Editorial.

- Wordslinger - Monday, Nov 3, 14 @ 5:14 pm:
Wrapports has officially cashed out their suburban papers, selling to the Trib.

Take a look at that Sun-Times ad hole, and subscription base, and put your thoughtsicles to the revenue stream they produce.

They have no real estate. They have no printing plant producing other revenue.

Do the federales still allow Joint Operating Agreements? If not, I put the over/under on the Sun-Times as a year and a hook.

Cats don’t get 10 lives.

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