Here's the challenge: Illinois is so in the red that the machine's lawmakers have created drastic legislation to maintain the status spending quo (rather than the alternative: making hard choices to cut back the size of state government). Finances are apparently so desperate that "the state would use the income tax hike to borrow $12.2 billion. Of that, $8.5 billion would pay overdue bills and $3.7 billion would cover a government worker pension payment lawmakers skipped when putting together the current budget."
What's clear here is that free spending, massive state worker pension liabilities and criminal governors already in jail or facing trial have all contributed to the problem that led to this proposal. But regardless of the cause, the proposed remedy could backfire.
The Trib suggests, "Under the proposal, the state's 3 percent personal income-tax rate would rise to 5.25 percent for four years, then fall to 3.75 percent. All told, that's a 75 percent increase." Moreover, the hike is going to garner $6.2 billion from the personal income tax increase, and "a corresponding corporate income tax increase could raise an additional $1 billion."
You've got to love the complete lack of logic of the career politicians in Springfield. Are corporations, which will now face nearly double the state tax burden, likely to create new jobs in Illinois or hunker down/move elsewhere? We ask this rhetorically of course. What a great way to stimulate the local crumbling jobs market -- by taxing the hand that feeds the machine directly and indirectly...(sarcasm apparent).
Socking it to businesses aside, the rest of the tax plan is equally off kilter. Consider that Quinn has proposed adding a $1 tax to each pack of cigarettes sold in the state. But you'll be able to feel good when you smoke and pay more for the privilege, because the expected $377 million from this scheme will go "into what was described as a 'lock box' to increase education funding." Seems like a bit of an odd message to us -- light one up for the kids and fund the hiring of even more teachers whose pensions we'll need to budget for. Eventually.
If Governor Quinn really wants to "build [a] framework that will allow the state to pay its bills, stabilize the budget and strengthen the Illinois economy," how about (gasp) cutting pensions, ridding ourselves of ridiculous union agreements (including our Governor's agreement to not lay off workers) and reducing the overall size of the bloated state workforce by 25% as a start?
Socking it to small Illinois businesses, like ours, which will certainly factor higher taxes into proposed growth plans, will cause further economic hardship and delayed hiring, even before the so-called recovery ramps into gear. And some companies may just pack up and move. Whatever happens, this proposed plan seems to forge a path leading the exact opposite direction of Quinn's "intentions." No doubt, the State's finances are in a shambles. But Illinois should examine every possible way to reduce its own costs before asking for a penny from others to fund its out of control spending.
- Sheena Moore and Jason Busch