Illinois Tax Hikes, Two Years Later: A Failure
Illinois Governor Pat Quinn, upon signing income tax hikes into law on January 12, 2011:
We had to take decisive action. … Our fiscal house was burning.
Almost two years later, the Land of Lincoln is still aflame. The state began its 2013 fiscal year this past July with an estimated $8 billion of unpaid bills and a total of some 160,000 bills awaiting payment.
What about additional tax receipts garnered by the state’s dramatic income-tax hikes? Unseen and unfelt, according to the Republican state comptroller, who has acknowledged that the gains were undercut by financing pension contributions, Medicaid expansion, and the expiration of President Obama’s 2009 stimulus.
Here’s a rundown of the governor’s 2011 tax hikes: a 67% increase for individuals (from 3% to 5%) and a 46% hike on corporations (from 4.8% to 7%, plus an extra 2.5% for an esoteric tax called the personal property replacement tax). The result for corporations is a 9.5% state rate, among the highest in the country. Among business leaders, Illinois now consistently occupies the cellar in surveys rating the best states for business.
For some perspective on how the hikes affect typical Illinoisans – according to free market think tank Illinois Policy Institute — a family of four with two working parents earning a combined $80,000 will pay an additional $1,527 in state income taxes thanks to Quinn’s hike. This is on top of the $2,160 they were already paying.
The taxes are only fanning the flames. Illinois’s total debt — which includes unfunded pension commitments, outstanding bonds, and budget gaps — is a staggering $271.1 billion, fourth largest in the country according to non-partisan research group State Budget Solutions. The systemic albatross for Illinois is its unfunded pension liability, which accounts for over 70% of this $271.1 billion figure.
Governor Quinn has even suggested the prospect of a federal guarantee of its pension debt. Fat chance of that — Congress has no appetite for rescuing profligate states. In fact, Republicans in Washington (including Illinois Senator Mark Kirk) have preemptively proposed a resolution opposing bailing out state pension deficits.
The pension crisis is hardly an abstract future challenge; its consequences are immediate and far-reaching. In August, Standard & Poor’s lowered the state’s credit rating because of “weak pension funding levels and lack of action on reform measures.” Only California’s rating is worse among U.S. states. (Moody’s took a similar step earlier this year.) The downgrades will likely force the state to pay a higher rate when borrowing money, which could prove catastrophic when the Federal Reserve raises interest rates. For a state addicted to borrowing, it is an increasingly onerous burden.
I have watched this state go to crap in the last 20+ years I have been here. You can’t trust the GOP either. The Unions have too much juice here. THe state (pensions) are going to have to crash to get any meaningful change. Quinn is in over his head, he has never run anything that I know of-just an activist forever on the state dole in some way.
351 traffic fatalities last year, and 532 murders in Chicago alone. Now that’s a f*cked up state of affairs.
The Valerie Plame case: The man who was appointed to appoint Patrick Fitzgerald “Special Counsel”
http://illinoispaytoplay.com/2013/01/04/the-valerie-plame-case-the-man-who-was-appointed-to-appoint-patrick-fitzgerald-special-counsel/
Heavy taxes and gun bans/confiscation… Illinois– the Commie State!
Well, anonymous, you have struck a chord. Its the communists, stupid. Frank Marshall Davis hailed from Chicago and printed a communist rag sheet before he left for warmer climes to pollute the Aloha State with collectivism. And Barack Obama’s mentor was the very same Frank Marshall Davis.
Actually, Patty, it’s pension liabilities from teachers’ unions and state employee unions. That’s where most of our 67% tax increase went. It did not go towards its intended purpose, which was to rescue the state’s abysmal cash flow problems. It was used to buy continued union support.
But, Hark! Hope is on the horizon! We now have a Democrat Governor and veto-proof Democrat majorities in both the Illinois House and Senate. There is just a hint of a whisper of a 100% chance that they might just maybe raise taxes yet again and save us all. Like before summer, unless I miss my guess. Right after they give their full legislative attention to more important matters, such as gay marriage and yet another pile of laws banning guns.
Worse, I live in Cook County, also run entirely by Democrats. Guess what’s going to happen to my personal property taxes after the last round of teacher union raises? Guess what our mayor, the city council and the Cook County Board are going to do about controlling the wanton murders in our inner city caused by illegal handguns? Why, according to the Democrat National Committee national guidelines, ban LEGAL handguns. That ought to fix it just fine, if we rush it through before anybody gets made enough to stop it.
I don’t want to live in this state any more.
“I don’t want to live in this state any more.” So why do you?
My wife, adult Daughter and myself just moved from Schaumburg Il to Tennessee. The view from my bedroom and kitchen patio windows are the beautiful great smoky mountains. I hated living in corrupt Il. How many illinois governors have we sent to prison since 1960? By the way, Tennessee has no state income tax and is a concealed carry state.
I felt the same hopelessness about my native state, California. So, I reluctantly gave up, no longer able to vote there in opposition to the looters, and moved to Nevada. No state income tax. Property taxes with a legal limit on increases. A “shall issue” state which means that it will not be hard for me to get a permit to carry a concealed weapon. People tend to be very polite to each other when no one knows for sure who is packing.
John Madigan has been speaker of the Illinois House of Representatives for at least the last 30yrs. No legislation is adopted without his imprimatur. He is a democrat, he is a lawyer who’s law firm has gotten hundreds of millions of dollars of business as a result of his position. He is beholden to the public employees unions with whom he and his fellow democrats “negotiate” contracts. Those unions in return take dues that are mandated to be taken out of union members dues automatically (not voluntary) and contribute to Madigan’s and the democrat party campaign coffers. The vicious cycle goes on and on. It is the same in most of the large metro cities controlled by democrats for the past 100 yrs or so. Illinois & Chicago are the prime examples of dysfunctional government.
We will all be Detroit soon, since our dear leader has learned his governing lessons here in the land of Lincoln & the city that the Dailey machine has run for 50yrs.
Small correction, it’s MIKE Madigan who’s Speaker of the Illinois House. He has always had power equal to the governors or any past mayor of Chicago. So much power, that a few years ago he got his own daughter, a fledgling lawyer, slated by the Democrat party to run for IL Attorney General. Not even remotely qualified, but with her daddy’s political muscle, she easily won election.
IL has been lost for years in terms of any sensible government. I’m moving this year (finally)!
I wish I shared your confidence that DC has no appetite to bail out the states one by one as they fail. Remember “Ford to City: Drop Dead?” that kind of courage is long gone. Get ready for: “O to CA: So How Much Do You Want?”
A federal bailout is inevitable and preferable. The local politicos cannot solve this. They are owned by the unions. We have no choice but to let them keep doing what they are paid to do.
However, the feds need to lend money as needed to keep the PEU pension funds solvent. Then, since the feds have unlimited ability to tax income in any way they want, they should set up an excise tax on benefits derived from these bailed out PEU pension systems to fund the bailout provided. Clean, fair and honest.
Spoken like a true gimmy guy!
From the industrious to The People’s Republic of California, You broke it, You FIX it!!! You might at least try.
I guess you did not understand my idea, Robert. The PEs need to pay the piper for the monster they created.
Please be assured I fully understand the following, “the feds need to lend money,” that’s called a bailout! In the Progressive land loans become gifts. You want the industrious underwrite the fixing of your State. I still remember GM!
“they should set up an excise tax on benefits derived from these bailed out PEU pension systems to fund the bailout provided.”
So you’re saying you’ve invented the perpetual money machine? How interesting. Too bad it won’t work.
And FWIW you’ve given us no reason at all for the taxpayers governed by responsible state leadership to bail out the dumb-asses in states like California and Illinois. You guys remind me of horn-dog men and women that can’t control their sexual urges well enough to prevent pregnancies. We the People are funding their ‘mistakes’. I’ll help take care of defenseless children but I balk at paying for the irresponsible urges of your state’s government and the greedy unions they’ve spawned and now find they cannot control.
I love something Reagan said years ago – (I’m paraphrasing here!) “we have too many people in the wagon and too few pulling the wagon. Either get out of the wagon and help pull it or at least get out and walk alongside”.
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Sheesh. I HATE hanging tags.
Wait, wait, wait … why should the taxpayers of fiscally responsible states be held liable for the messes created in states that weren’t responsible? Those politicians made promises they couldn’t keep. Those states need to fix the problem. It is not my problem, and I shouldn’t be forced to pay for it.
I WILL NOT be taxed to pay for government workers in Illinois, New York or California when they all go bust. I have had nothing to do with any of the three nor have I enjoyed any of their services.
NO fed bailout. Hundreds of billions of dollars have not fixed Illinois/Chicago’s real issues. Hundreds of billions more will not fix it either. Might as well burn the money.
I’m so glad I left Chicago for Florida 15 years ago. No state income tax, I can conceal carry to protect myself and my family, and there is no one trying to stick their hands in my pockets every 15 seconds like there is in Chicago.
I have built a successful business here, creating hundreds of upper-middle class jobs with good benies. Your loss.
Keep voting for liberals. Drown in the cesspool you have voted for. The rest of the nation owes you nothing.
And yet Obama did the same thing to the average taxpayer through Obamacare and the Fiscal Cliff bill that was just passed. Under Obamacare, there are roughly 21 new taxes that hit ALL Americans, NOT just “the rich,” whoever the government considers that to be today. And, let’s not forget that the Supreme Court considers the old “mandate” under Obamacare to be a TAX, NOT a mandate, which has also increased the tax burden on many Americans, especially young people who don’t have insurance and are now forced to buy it, regardless of whether they need it or not. The Federal Government now is just Illinois but on a larger scale. This will simply kill our economy, keep unemployment high, keep economic growth low, and make our taxes go sky high. And people wonder why unemployment is still so high and the economy still stinks? Just look at Illinois and Washington for your answer to that.
When liberals leave the state messes they’ve made, by migrating to states that are not in chaos, i.e, fiscally sound states, they simply make messes of their new states. The only solution to avoid that, which I can imagine, would be to make it impossible for any to immigrate to other states for 10 years, after they have voted in any state’s election. Would be a good idea, on the federal level as well, to insist that all Congressmen and Supreme Court Justices must have resided in the state they are in at the time of the election for a minumum of ten years. Instead of that, I’ve noticed a few don’t even list in state in the US as their home address, and as I recall, Hillary Clinton merely had to buy a residence in NY to quality to run for Senator. Since the Clintons failed to own a residence anywhere in the US, neither of them should have been qualified to run for postal clerk. Finally, why should anyone who has a felony record of any description, or who has ever lost a professional license for any, be qualified to run for any government position?
This is only the beginning of the end. Our country will fail because of this unbridled spending and debt. Anarchy will soon rule the streets and everyone will want their guns.
Illinois will never reform. Chicago is not democratic–it is a Democratic Party Tyranny and run by the unions, the Mob and Black Liberals. And Chicago controls the state.
Perhaps the rest of IL could figure out a way to expel Chicago from the state.
The downside to that, of course, is that Chicago would then be its own state, meaning two corrupt Democrat Senators and however many corrupt Democrat Representatives.
I hope they increase taxes more.
First, red states will benefit from the influx of productive people fleeing the Farm.
Second, the people who stay deserve to be punished. They asked for it.
Third, after a while, maybe the lessons will sink in. Not likely, but possible
Fourth, the collapse of the Marxist in Chief’s state will be amusing to watch.
Not much works well in Illinois other than their corrupy political machine. Some of the toughest gun legislation in the country and their murder rate is a blot on the face of humanity. Just heard a report yesterday that gun sales in California are “going through the roof” and have been for some time. They also said that violent crime is down a bit. Not my words, words of the reporters. I guess when the “bad guys” don’t know who is armed, maybe they have been moving to Illinois?
Weird, the Left nearly sprains its arm with all the patting-themselves-on-the-back on how “smart” and “science based” they are.
But they just can’t seem to grasp economics.
A perfect example of “progressive” modern politics. Rake it, screw taxpayers, spend where it will do the politicians the most good, then whine about deficits and start the scam all over. The left actually wants more of this !!!
Those counties of Illinois outside of Cook County should separate themselves from the existing State of Illinois and form a new state; the state of Southern Illinois.
Frankly, it is the corrupt, mafia, gangster pols and their union thug pals that have bankrupted Illinois.
A new Southern Illinois can govern themselves without having to kowtow to the criminal pols and union thugs of Chicago and Cook County.
While on this thread, Upstate NY should also separate from the greater NYC area. The folks in upstate NY have nothing, ZERO, in common with the downstate folks.
Ditto for Pennsylvania separating from the greater Philly region, N.Cal from S.Cal; and Eastern Washington and Oregon from the coastal areas.
And if this does not work , then it is time for entire states to secede from the union and once again be able to live in a truly free constitutional republic.
the chicago way
Good news: the Illinois state legislature has been working overtime, desperately trying to put together legislation to solve the state’ most pressing needs. They even had a special weekend session in the Illinois House of Representatives!
What were the issues that were so pressing that the legislature was forced to work through the weekend?
Gay marriage, gun control (banning guns!), marijuana legalization and drivers licenses for
illegal aliensundocumented workers!No worries! The cavalry is on its way!
This is tax related!
In Apple’s War on Taxes, Surrender Costs $28 Billion BY RYAN TATE 01.07.13
http://www.wired.com/business/2013/01/apples-28-billion-dollar-tax-war/
Walter E Williams – Is America Primarily About Self Interest?
http://www.youtube.com/watch?v=S8qQxKEiCLM