So it’s come to this: The Civic Federation recommends the largest tax increase in Illinois history because financial “doomsday” is upon us.
“Illinois’ financial crisis was not created by the great recession,” said Civic Federation President Laurence Msall in announcing his organization’s Fiscal Rehabilitation Plan on Monday, February 22. “It is a self-made crisis fed by a lack of responsibility.”
Msall is correct, which raises this question: Why should anyone believe those who have pushed us to financial doomsday will suddenly begin acting responsibly if we give them a lot more money?
Three of the last six Illinois governors have gone to federal prison, and our latest, Rod Blagojevich, faces criminal charges that could make it four out of seven. Scores of other state, county, and local politicians, bureaucrats, and judges have gone to prison in those years.
Just last week Republican and Democrat state senators made a bipartisan decision to hold a secret meeting to discuss the budget. They did this just days after Gov. Pat Quinn signed a budget “transparency” bill they had passed. In addition to being hypocritical, the secret session was probably illegal.
To say Illinois has been and continues to be run by liars, thieves, and cheats is not hyperbole: It is public record.
Yet the Civic Federation asks us to turn over more of our money to these miscreants and the institutions they infest. The biggest of the recommendations is a 66 percent increase in the state income tax, from 3 to 5 percent.
Since the federation is offering higher taxes as the solution to the state’s budget problems, let’s look at a few states with higher taxes and see how they’re doing.
California: Seven income tax brackets, including 4.25 percent at $16,994 of income for a single filer, 8.25 percent at $37,233, 9.55 percent at $47,055, and 10.55 percent at $1 million. California’s current budget deficit: estimated at more than $20 billion. The state lurches from one financial crisis to another.
Hawaii: Twelve tax brackets, 11 of them higher than Illinois’ current income tax, topping out at a truly spectacular 11 percent on incomes of $200,000 and above. Here’s the first sentence of a December 20, 2009 Associated Press article: “Hawaii public schools are closed most Fridays, rats scurry across bananas in uninspected stores, and there may not be enough money to run the next election.”
New Jersey: Eight income tax brackets, six of them higher than Illinois’, topping out at 10.75 percent. The state comptroller this month announced lawmakers could face an $11 billion deficit when their new fiscal year starts July 1. And that’s after the state raised taxes $2 billion for the current fiscal year.
New York: Seven income tax rates, all higher than Illinois’, topping out at 8.97 percent. Projected state budget deficit for the coming fiscal year: $8.2 billion.
In addition to far higher income taxes, these states have higher taxes in many other areas. And they have chronic budget problems. The more they tax, the more they spend, and then they spend even beyond that.
Spending cuts are obviously the only possible solution, and on that score the Civic Federation gives us some reason to cheer. The report stresses any tax hikes should come only after the state reforms its pension system and assigns lower benefits to new hires. It also recommends cutting spending to 2007 levels.
This being Illinois, we can expect most lawmakers to skip over the spending-cuts part and go right to the yummy tax hikes. Until the voters turn the spigot off, higher taxes will inevitably be soaked up by even more spending.
Steve Stanek ([email protected]) is a research fellow at The Heartland Institute in Chicago.