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* This is probably something that the Democrats neglected to properly consider when they raised taxes…
Annually, the increase will equate to whole paychecks they’ll be handing over to the state.
Two percent of one’s income is, indeed, about equal to a week’s wages. Gov. Pat Quinn and the Democrats better worry that nobody else picks up on this theme. It could be extremely powerful. And quite dangerous. Nevermind that the total state income tax burden prior to this was only about one and a half weeks’ worth of wages. This new one week of pay taken away and given to the brain trust running our ever-so-competent government is something that people can very easily understand.
* But in the meantime, we’ll just have to endure false propaganda like this from the Heartland Institute…
Land of Lincoln? Land of Larceny. […]
The legislation does include a spending “cap,” but it allows spending to grow 18 percent from fiscal 2011 levels over the next four years – and they’ll likely ignore the cap, just as they’ve ignored the state’s balanced budget requirement and a 1995 law requiring proper funding of pensions.
The reason spending appears to be growing from this fiscal year is because we currently can’t pay our bills.
* And the Tribune recklessly printed this Cal Thomas screed, which starts with Illinois as an example and then goes national…
Suppose there was a groundswell of taxpayers who announced they will no longer pay for government and, in fact, will start reducing payments to government if politicians won’t significantly cut spending? That would get their attention.
There aren’t enough prisons to house thousands, perhaps millions, of taxpayers who cry “enough” and demand that Washington live within its means. It’s time to starve the beast. If Dracula doesn’t get blood, he dies. If Washington can’t suck more money out of us and must stop borrowing, it will be forced to cut back, like so many Americans have done in this recession.
So much for toning down the rhetoric.
* Northwest Herald executive editor Chris Krug listed those who voted for Pat Quinn, including…
Idiots, buffoons and the terminally stupid.
Sheesh.
* But James Warren includes a wake-up call for the warring Midwestern states over Illinois’ new tax hike…
But a cautionary note came from [Rich Neimand, a Washington media and political strategist]: Economic health involves more than competitive tax rates and cheap land; it involves thinking far beyond Racine, Prairie du Chien, Carbondale and Elgin.
“Both governors should note that the weather is a lot sunnier in Mexico, the local officials infinitely more generous, the environmental regulations more lax and the gang violence probably no worse than Chicago or Milwaukee,” Mr. Neimand said.
So ridicule Illinoisans picnicking in the Dells, Badgers. But realize that it’s folks around the world who are really eating your lunch, Mr. Walker, and ours.
True dat.
* And Doug Finke dumps cold water over the complainers’ heads…
What were the alternatives to a tax hike? The state could have kept limping along as it is, with bills piling up and getting paid later and later, if ever. That means the vendors and local service organizations that do business with the state would have paid the price for their association with Illinois. Some people might call that unfair.
There is the stubborn belief that cuts alone - just the waste, mind you, not the good stuff - will solve the problem, despite repeated assurances from all sorts of budget experts that those kinds of cuts are a fantasy, that the numbers involved are just too big. You’re talking about wholesale elimination of about half of Illinois government.
Of course, no one likes paying higher taxes. In the end, though, there were no other reasonable alternatives.
* As does former Gov. Jim Thompson…
He does not necessarily buy into the assumption by many that the tax hike, which raises individual income taxes from 3 percent to 5 percent and the corporate rate from 4.8 percent to 7 percent, will not be temporary. The tax is scheduled to drop to 3.75 percent in 2015.
Thompson signed a law that temporarily increased the tax from 2.5 percent to 3 percent. That increase took effect on Jan. 1, 1983, and went back to 2.5 percent on June 30, 1984.
“I went through and the people of Illinois went through in 1982-1983 the second-worst recession in American history,” Thompson said. “(The tax increase) wasn’t renewed, and so it can be done.”
The key to not continuing this year’s tax increase, according to Thompson, will be budget cuts and a better economy.
*** UPDATE *** Not that I usually care what they think, but I forgot to include this editorial from the New York Times…
For years, Illinois, like so many states, pretended that it had not fallen off a budgetary cliff. It was spending too much and taking in too little revenue, but every year it would kick its problems into the next. Unable to pay its bills, it finally accepted reality last week and raised taxes on incomes and businesses — a first step toward getting its house in order.
The action was immediately ridiculed by several governors around the nation who are still pretending that they can cut their way out of the enormous shortfalls they face, without raising taxes. Wisconsin and Indiana predicted a windfall of angry corporations and residents would head their way from Illinois. Even Gov. Chris Christie, the New Jersey Republican, vowed to fly to Illinois to invite businesses there to defect to his state.
That makes great political theater. But businesses and voters in Illinois, and around the country, should take a closer look at the facts and figures, including their own. […]
With federal stimulus aid ending, states are in for their worst year in generations, and they cannot get out of it by either cutting or taxing alone. Illinois is figuring that out, finally. Too many other states are still in denial.
* Related…
* Legislators defend tax increase - State was facing imminent insolvency, Alton Democrats say
* Don’t follow Illinois’ lead: “The idea of competing on state tax rates is … hopelessly out of date,” said Ed Morrison, economic policy adviser for the Purdue Center for Regional Development.
* Illinois moving up the tax charts - But increase is unlikely to turn state into the highest taxed: Even with the tax increase passed last week by Illinois lawmakers and signed by Gov. Pat Quinn, Illinois’ tax burden won’t be among the country’s heaviest. But it is nothing to sneeze at, said Joseph Henchman, director of state projects for the Washington, D.C.-based Tax Foundation.
* Tax hikes will prove to be an onerous burden, local business people say: To make matters worse, Poe doesn’t know how she’ll be able to afford the additional taxes, given that the state owes her business money that hasn’t been paid. She has no idea what happened to some of the expenses for which she asked for reimbursement and has been resubmitting claims to no avail. “Many of the bills are eight months out that need to be paid,” Poe said. “We just got payment recently for something in 2009. I have no idea if they just went into a black hole because we’re not getting payment on them.”
* Companies: Tax hike will hurt recruiting
* Mike Lawrence: More revenue just 1 aspect of fixing state’s finances
* Who won, and who lost, in Springfield?
* Gambling expansion still up for grabs
* R&R courtesy of good government: It was Illinois Sen. Paul Douglas who led the long battle a half-century ago to set aside the precious [Indiana] dunescapes. Business interests put up a stiff fight, but in the end a compromise set aside land for steel mills — and jobs — while preserving much of the rest.
posted by Rich Miller
Tuesday, Jan 18, 11 @ 7:12 am
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The high level of interest and hysterical reaction from some national pundits has been bizarre. Slow news month?
Many of the hyperventilators predicting mass business and citizen exodus from Illinois live and work for companies on the island of Manhattan. Last I checked, that isn’t an international tax haven. Mabye local taxes aren’t the be-all and end-all.
Comment by wordslinger Tuesday, Jan 18, 11 @ 7:39 am
– Federal receivership of the state is more likely to have addressed the structural overspending that brought Illinois to this situation–
How does that work?
Plus, I think the feds have their own budget issues.
Comment by wordslinger Tuesday, Jan 18, 11 @ 8:31 am
That Alton Telegraph story is interesting. Wonder why Beiser and Haine failed to mention that the reason the state was in this mess to begin with was all the “yes” votes they cast for the disastrous budgets their chambers have passed the last several years? Their sob stories about what they were “stuck with” ring rather hollow…
Comment by UnionsWonItForQuinn Tuesday, Jan 18, 11 @ 9:10 am
===that the reason the state was in this mess===
You don’t think the international meltdown had anything to do with it?
Comment by Rich Miller Tuesday, Jan 18, 11 @ 9:12 am
Have I been banished? No snark intended, but I would apprecaite some insight into the behavior that led to the punishment.
Comment by GoldCoastConservative Tuesday, Jan 18, 11 @ 9:15 am
screw Krug. that is the typical sore loser argument–the winner’s supporters are too stupid to know better. so sorry that you and your intellectually superior colleagues were too stupid to convince the stupid people to vote for your guy. better luck next time.
Comment by winco Tuesday, Jan 18, 11 @ 9:54 am
This tax increase in a recession makes me wonder why the argument was made that a tax increase in a recession was (is?) counter-productive. Oh, that’s right, we are now out of a recession. It’s getting to be like a Dogbert cartoon. Bwaa-ha-ha!
Comment by Anonymous Tuesday, Jan 18, 11 @ 10:00 am
We have become a State and Nation of people who do not want to be bothered with anything outside of our individual worlds. I have found that most of the people I deal with on a day to day basis do not understand the position our Country and our State are in, and they don’t want to take the time to learn what they need to know to understand it. As a result things in government progress unnoticed by them until those things begin to intrude upon their little worlds. Then they become interested.
But even then they do not want to take the time to really dig into both sides of the argument and become really informed. They want to get their knowledge the way they get their lunch. They want a drive through briefing that will give them everything they think they need to know. So they go online or tune into people who are more than willing to tell these folks what to think.
Our present society does not want the Walter Cronkites or the Chet Huntleys or David Brinkleys; people who reported the news and made you think for yourself. They want the Glen Becks, Bill Oreillys, Keith Olbermanns, Fox News or the Tribune who tell you what to think with no effort on your part required. Politicians know this, so if they think they can survive the current news cycle by putting the proper spin on things they figure the opposition will go away and they can continue to do what they want.
This is why the GA and past Administrations were able to defer pension payments, and kick the can down the road until the fiscal problem came to a head and had to be addressed. The tax increase was the only way to begin to address the issue. The Republicans and others who even at this very moment are talking against it know it too. Is it the whole answer? No. State Agencies have become extremely top heavy. Blago holdovers have been retained and Quinn “Friends ” have been added. My Agency has doubled it’s number of assistant directors in the last six months. But none of the MSM are picking it up so it continues.
If everyone joined discussion groups like this one where the moderator forces you to think, takes you to task when you don’t, and congenially tells you to do your homework when you discuss unprepared, our State would be in better shape than it is.
We as a society need to inform ourselves of things like the Federal bailout program to understand why it was necessary, we need to know what the Federal healthcare bill does, we need to understand why we need a tax increase and what the money must be used for, we need to understand school funding and how it works. Will people take the time to do this? I wonder.
Comment by Irish Tuesday, Jan 18, 11 @ 10:05 am
Irish, your logic is a bit off. They’ve been kicking the pension can down the road for decades. Nobody knew who Rush Limbaugh was during the Thompson years.
Comment by Rich Miller Tuesday, Jan 18, 11 @ 10:09 am
Cal Thomas:
Just look how well “starve the beast” approach has worked in California.
– MrJM
Comment by MrJM Tuesday, Jan 18, 11 @ 10:21 am
It’s not just the income tax hike. Illinois has been bleeding jobs for some time now and not just because the economy is bad.
The overall regulatory and tax climate coupled with a lack of consistency on the part of all branches of government have led employers to go to where they can do business without the herky-jerky crap they have to deal with in Illinois.
Comment by Robo Tuesday, Jan 18, 11 @ 10:28 am
–The overall regulatory and tax climate coupled with a lack of consistency on the part of all branches of government have led employers to go to where they can do business without the herky-jerky crap they have to deal with in Illinois.–
Can you quantify that? Who, what, when, where? Keep in mind, Illinois has the 5th largest Gross State Product in the union, behind California, Texas, New York and Florida.
It’s also about $130 billion more than the combined wonder states of Indiana and Wisconsin.
Comment by wordslinger Tuesday, Jan 18, 11 @ 10:39 am
Umm, re Neimand’s comments above, the gang violence these days is considerably worse in Mexico than in either Chicago or Milwaukee.
Just sayin’.
Comment by ZC Tuesday, Jan 18, 11 @ 11:38 am
“Two percent of one’s income is, indeed, about equal to a week’s wages. Gov. Pat Quinn and the Democrats better worry that nobody else picks up on this theme.”
The legislators may not see it this way. Since they accomplish about two years’ of legislative work in about two weeks, their taxes can be figured for a few hours worked, vs. two and a half weeks for those who hump for the paycheck all year round. The 80/20 rule (80% of the work gets done in 20% of the time) probably does not apply to the legislature. For them it seems to be more like the 95/5 rule.
Comment by vole Tuesday, Jan 18, 11 @ 12:24 pm
I’ll have to admit I don’t understand the attention to it either. My Iowa relatives were asking me about the 66% increase. I was like, what it’s .02 on the dollar. Sure if I do the math it winds up being a paycheck for a full year. My diet coke habit probably easily transcends that by June! To say nothing of Starbucks, McDonalds et al.
Comment by cermak_rd Tuesday, Jan 18, 11 @ 12:42 pm
Wordslinger,
It’s not were we are, it’s where were heading. There’s no paradise, but businesses crave stability and IL has a deficit of it. Look at the expansion investment decisions IL based corporations have made over the last decade…CAT, Motorola, Deere, Olin.
From Site Selection Magazine March 2010…
3,621 New Sites/Expansions in East North Central Region- 2007,2008,2009 Totals
OH 1,280 (35%)
MI 877 (24%)and they lost population
IL 743 (21%)
These states are roughly 1/2 the size of the top 3…
IN 518 (14%)
WI 203 (6%)
Comment by Robo Tuesday, Jan 18, 11 @ 1:21 pm
- There’s no paradise, but businesses crave stability and IL has a deficit of it. -
A deficit that is being corrected by the recent actions of Pat Quinn and the GA. Not so in Wisconsin…
Comment by Small Town Liberal Tuesday, Jan 18, 11 @ 1:24 pm
You can post a thousand comments, write a hundred newspaper columns and make all the snide remarks about Indiana, Wisconsin, and any other state that you want to. The fact remains that Illinois is still bankrupt, the politicians still corrupt, and people are leaving.
The defense of Illinois and its public policy at any level is similar to watching Baghdad Bob hold a press conference.
Comment by Living in Oklahoma Tuesday, Jan 18, 11 @ 2:46 pm
===The fact remains that Illinois is still bankrupt===
Not after the tax hike.
And since when is Jackson County in Oklahoma?
Comment by Rich Miller Tuesday, Jan 18, 11 @ 2:53 pm
===The defense of Illinois and its public policy at any level is similar to watching Baghdad Bob hold a press conference. ===
I don’t see kneejerk defense here. But I do see plenty of kneejerk offense out there. If you can’t handle the fact that some of your little heroes are shown to be what they are, then you’re in the wrong place.
Comment by Rich Miller Tuesday, Jan 18, 11 @ 2:57 pm
Okie, the census showed the population gained 400,000 in the last 10 years.
Granted, those are not Texas numbers. I’m not quite sure where Illinois would put 4 million more people. I’m not sure it’s good add 4 million people and have an 8.3% unemployment rate.
In one man’s opinion, I think the Chicago metro has reached saturation level. But I’m a Northern Illinois farmboy, and I cringe as I see that prime farmland turned into crackerbox subdivisions as new outer rings are formed.
Downstate has different issues and needs. More growth would be good in many areas.
Anyway, I thought Illinois’ Baghdad Bob was Blago Bill, back in the day.
Comment by wordslinger Tuesday, Jan 18, 11 @ 3:06 pm
Rich, nevermind. this is exactly what I am talking about…you run a great blog, probably the best in the business. But lately I just don’t understand the direction where everyone is coming from with the holier than thou attitude. Dissent is discouraged here lately, so instead of risking banishment, I will no longer comment on this blog. I appreciate your work Rich, sincerely, but I think your right. I don’t belong here.
Comment by Living in Oklahoma Tuesday, Jan 18, 11 @ 3:06 pm
===Dissent is discouraged here lately===
It is not discouraged if you have facts behind you. But, lately, there have been way too many fact-free comments and it bugs the heck outta me.
Also, this state never has been bankrupt. It was a silly thing to write.
Comment by Rich Miller Tuesday, Jan 18, 11 @ 3:09 pm
Okie, I also find it odd that you’re complaining so much when the post begins with a highly charged and very accurate critique of the tax hike.
Comment by Rich Miller Tuesday, Jan 18, 11 @ 3:15 pm
Rich, your right.
Illinois never has been officially bankrupt. However I would guess that many people who work for the state feel that Illinois has been bankrupt for the last 8 years and I think the pension system is still going to be a millstone around our necks. That being said.
I apologize for the drive by comments on my part lately, but understand this tax increase bugs the heck outta me. In conclusion, I will tone down my rhetoric, and keep a low profile.
Comment by Living in Oklahoma Tuesday, Jan 18, 11 @ 3:50 pm
===that the reason the state was in this mess===
===== You don’t think the international meltdown had anything to do with it? ======
Last several years of disastrous budgets?
In addition to Rich’s point about the fall in revenues recently, I’ll add these:
1) The State Journal Register pointed out that the practice of lawmakers shorting the pension system dates back to atleast 1950;
2) Most budget experts agree that part of the reason Illinois finds itself under such dire fiscal pressure now is that ramp-up to fulfill missed pension payments from decades ago — for people who are already retired — eats a bigger and bigger chunk out of our budget each year;
3) Since Illinois’ income tax is now average,one can argue that the recent tax hike was the unavoidable result of decades of cheap taxes. Had we listened to Dawn Clark Netsch and enacted 1.25% tax hike 16 years ago, we could have avoided the costly borrowing of recent years, fully funded education, provided property tax relief, and created a rainy day fund during the 90’s boom years.
Comment by Yellow Dog Democrat Tuesday, Jan 18, 11 @ 4:16 pm
Dog–or, knowing us, we might have p____d all the extra money away. Madigan’s spending cap thing tells me he no longer believes that one-party government can be trusted to always do the right thing.
Comment by steve schnorf Tuesday, Jan 18, 11 @ 8:52 pm