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Sunday, December 17, 2006

Just Raise Taxes

Illinois' legislative bodies, and the Civic Committee of the Commerical Club of Chicago, along with writer Ralph Martire (in the Chicago Sun Times) of the Center for Tax and Budget Accountability have all decided that there aren't enough spending cuts available in Illinois to fix our budget mess, that taxes have to go up to do it.

I don't necessarily disagree with that assumption, as (except for Cook County) Illinois has a fairly low income tax (3%) low business tax, and a reasonable sales tax. Property taxes aren't really accounted for by any of them, those taxes are astronomical.

The problem with their assumption is that because spending cuts alone can't fix the budget; especially when we keep adding social services to buy votes; all of the above have decided to abandon any hope of cutting back anywhere, and just decided that jacking taxes up to Wisconsin like levels is the solution.

Article IX of the Illinois Constitution makes the tax issue very complicated, which is good for tax attorneys, and bad for the rest of us. That article allows for only a single income tax rate in the state, and caps business tax rates at an 8 to 5 ratio compared to personal income taxes.

Martire, in his Sun Times editorial argues for raising the rate along the lines of HB 750's proposals, but then giving a number of credits and deductions so the lower 60% of tax payers should see no increase. And end around on the Constitituional requirement of a single tax rate.

Likewise, he and the HB 750 folks advocate new taxes on many services not currently covered by sales tax, as another revenue generator. Unfortunately, they fail to take into account the fact that those the protected with the above give-aways on the income tax would be affected just as harshly by the new services taxes.

The Civic Committee also came to similar conclusions, however their plan also called for reigned in spending at the state and local levels to reduce the amount of the increases, something HB 750 and Martires group have given up on.

The main focus in the Civic Committee report is trimming of the overly generous (compared to the real world) government retirement and benefits packages. Something sure to raise the ire of the public service unions. Never mind that Illinois has a public retirement package that would make UAW members jealous, the unions will fight tooth and nail to prevent any cuts in a program with a $40 billion dollar funding shortfall.

All of the above groups fail in their reports and reasoning to take into account the huge overhead of Illinois' layers of beaurocracy. As I mentioned in "Fixing Illinois" the reduction of the number of school districts by consolidation, and removal of the inefficient and antiquated Township governance would reduce a large amount of money currently being spent on overhead instead of actually providing services.

Don't look for consolidation to happen, though, the current government structure is something of a farm system for the larger political office. That's where big time pols look for good foot soldiers to move up through the ranks, and of course collect cash for them. On the school district side, the unions are solidly against any consolidation, because it would in most cases cause reorganization that would shake up the structure they've become accustomed to.

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Blogger shoprat said...

Looks like the pols see a tax-hike as a cure-all. We know all to well how that works.

5:20 PM  
Blogger Crazy Politico said...

We know it never works, instead, pols see more $$ and decide that new programs are the answer instead of fixing the one's they already have.

8:42 PM  

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