Just phenomenal. The state of Illinois – which spent itself into fiscal oblivion – has decided the way to make up the huge shortfall they’ve run up is to increase taxes for state taxpayers by 66%:
Democrats in the Illinois Legislature on Wednesday approved a 66 percent income-tax increase in a desperate and politically risky effort to end the state’s crippling budget crisis.
The increase now goes to Democratic Gov. Pat Quinn, who supports the plan to temporarily raise the personal tax rate to 5 percent, a two-thirds increase from the current 3 percent rate. Corporate taxes also would climb as part of the effort to close a budget hole that could hit $15 billion this year.
Wonderful. If I lived there, I’d certainly be considering a new state – border states must be happy as they can be over this. And, of course, same with corporations. But as grim as that is, here’s the laugh line:
It will be coupled with strict 2 percent limits on spending growth. If officials violate those limits, the tax increase will automatically be canceled. The plan’s supporters warned that rising pension and health care costs probably will eat up all the spending allowed by the caps, forcing cuts in other areas of government.
Question: why, in an era of little to no inflation is there any spending growth when you have a budget shortfall like that in IL? The state shouldn’t be increasing spending by even a single penny, for heaven sake.
In fact, it would make much more sense to keep it flat or, better yet, have it actual cuts (not “cut” in the sense politicians usually use the word) in spending by 2%? Pensions? Cut ‘em. Health care costs? Cut ‘em? Government employees? Let ‘em go or furlough them. You politicians got the state in the mess it’s in, now live with the consequences and face the music.
The state got itself in this mess by over promising and over committing. Now the state should work itself out of the mess without again tapping taxpayers. Instead, it chooses to take more money from its citizens to pay for its profligacy. It penalizes them for something the state’s politicians willingly, irresponsibly and thoughtlessly did.
And I’m sure the jobs picture is wonderful in IL. It must be if the state can afford to throw some higher taxation at corporations there.
Because, you see, saying “no” to government employee unions and the like is much harder than slapping higher taxes on the masses and business.
However, all things considered, most should know that if you want to live in a blue state, these sorts of things are what you’re most likely going to have to suffer.
The increase means an Illinois resident who now owes $1,000 in state income taxes will pay $1,666 at the new rate. After four years, the rate drops to 4 percent and that same taxpayer will then owe $1,333.
Any bets that before the 4 years are up the new rate becomes permanent?
"Based on this particular legislation the only businesses that will benefit are the moving companies that will be helping many of my members move out of this particular state," said Gregory Baise, head of the Illinois Manufacturers’ Association.
"This is the nuclear bomb of jobs bills," said Sen. Dan Duffy, R-Lake Barrington.
Timing is everything, isn’t it? So much for hiring that new employee on the margin. He or she now has been replaced – before they were ever hired – with new taxes.
The usual Democrat answer?
Democrats countered that even with the increase, Illinois’ tax rate will be lower than in many neighboring states — Iowa’s top rate is 8.98 percent, Wisconsin’s is 7.75 percent. They also maintain that without more money, state government may not be able to pay employees by the end of the year. Major government services might have to be halted, they warn, and groups waiting for state payments will go under.
That’s right – scare tactics and the usual “our taxes still aren’t as high as others”. Well here’s a clue IL Dems – nothing says they have to move to “neighboring states” does it?