Posted on 06/27/2017 6:51:18 AM PDT by Kaslin
The media has hyperobsessed over the Kansas tax hike this year and sold it as a repudiation of supply-side economics. But the real story in the states has been the catastrophic effects of tax-and-spend fiscal policy in Illinois.
Last week, Illinois House Speaker Mike Madigan endorsed a $5 billion annual income tax hike. This would be the largest tax increase of any state in years. Republican Gov. Bruce Rauner has blocked new taxes for three years but is now under intense pressure from the Springfield political machine to agree to the revenue heist.
Anyone who thinks this soak-the-rich scheme will solve Illinois' long-term budget crisis should have their head examined. Illinois already ranks in the top three among the 50 states in state-local tax burden, so if raising taxes were any kind of solution here, the Land of Lincoln would be a Garden of Eden.
Instead, the state has been a financial basket case for years.
This is a state that is now $14.5 billion in arrears whose bonds have been downgraded to near-junk bond status, and that is losing its most valuable resource: its businesses and citizens. Small business contractors have to wait six months or more to get paid.
Back in 2013, then-Gov. Pat Quinn, a Democrat, followed the advice of economists like Paul Krugman of The New York Times and raised taxes on the very wealthiest residents of the state. He argued that the superrich in Illinois could easily afford to pay a bigger share of the tax load and no one would leave.
The more Quinn raised taxes, the deeper the budget hole got. Whole resort towns in Florida and Arizona have become high-income refugee camps of former affluent residents of Chicagoland.
In 2014 the voters dumped Quinn and his tax-and-spend economics and opted for businessman Bruce Rauner, a Republican. Rauner tried to fight the empire in Springfield but was stymied every step of the way. Democrats laughed away his call for a constitutional spending cap, reforms to a pension system that is $200 billion in the red, a property tax cap and so on. Their mantra sounded a lot like the giant plant in the film "Little Shop of Horrors" -- "feed me."
If there is any state that desperately needs term limits, it is this one.
The tax increase is a punt in dealing with the massive unfunded liabilities in its government pension system. According to the Commission on Government Forecasting and Accountability, Illinois' pension payments are the major contributor to spending growth. Following the recent credit downgrade, Moody's Investors Service cited the state's overwhelming pension debt level as a contributor to the poor credit rating and negative outlook. In November, the state reported having $130 billion in unfunded pension liabilities, but Moody's calculates that level of pension debt as twice as high, or $251 billion. A recent Hoover Institution analysis estimates Illinois' pension funding ratio to be 29 percent, the lowest level in the United States.
According to Donna Arduin, a former budget advisor to Gov. Rauner, if the pensions aren't curtailed, as much as 1 in 4 tax dollars in the state will soon not go to schools, roads, health care, or police and fire but to pension payments to retired employees -- many of whom no longer live in the state.
With a financial outlook like this, is it any wonder that some half-million more Americans left Illinois than moved there over the last decade? Only two states -- California and New York, two other liberal pantheons -- have lost more residents to other states than Illinois.
The recent actions in Springfield bring to mind the words of former Indiana Gov. Mitch Daniels who once joked that being a neighbor to Illinois is "like living next door to the Simpsons."
So what is the lesson for the rest of America? Soak-the-rich economics almost never works. As tax receipts keep sinking in Illinois, the safety net is tattered; the roads are in disrepair; crime is out of control in Chicago; and the state is home to some of the worst schools in the nation.
When you try to soak the rich, they leave; the state goes bankrupt; and it's the middle class that gets all wet. How's that for tax fairness?
Why is the national media ignoring this story?
With a hundreds of billions of dollars shortfall in pensions and other items as reported on Fox, Illinois is far worse off than Puerto Rico, Greece, others, and maybe even Venezuela.
And the state keeps passing Anti-God legislation . . .go figure!
I read today that Madigan and his cohorts have a budget that they will release today. Of course it calls for a tax increase and of course they have run out the clock to Gov. Rauner will be forced to choose between it and a bigger state shutdown. He’s already said that “revenue increases” are needed to it’s really a game at this point.
Illinois is doomed thanks to the idiots putting paying pensions in the state constitution. It leaves them no way out.
I agree. I get so tired of hearing idiots like Obama stating that "the rich don't pay their fair share". True, they don't...they pay far too much. The top 10% of income earners in the US (2015) paid about 71% of total Federal income tax collections. Further, the hypocritical politicians who are chanting this montra are the idiots who wrote the tax code! They put those loop holes in the Code so the rich would give them political contributions.
Like it or not, it is the rich who drive this economic engine and provide the capital that creates jobs. How many of you were hired by a poor person?
The solution? Throw the IRS Code in the crapper and pass a flat 15% tax on income. No deductions, no income exemptions. I don't care if you only make $1000/year, $150 goes to the federal gov't. If you live totally off the largess of the gov't, no problem, but you can't vote in Federal elections. Same for state and local taxes and voting. After all, nothing in the game, why should you have a voice?
The rich are not the bad guy here. It's the politicians and us stupid people who continually re-elect them. (And, no, I'm not rich.)
Jerry Brown's answer? Raise taxes even higher.
Yeah, that'll work:
April, 2017:
Gov. Brown signs bill raising gas tax and vehicle fees by $5.2 billion
The money is supposed to pay for "bridges and roads" but it has never worked out that way in the past, the money will go to pay for California's enormous welfare population and unfunded pension liabilities.
Banana republics have at least one redeeming social grace - they produce bananas for the purpose of some outside income from exports.
Far as I know, Illinois produces no bananas at all. But they do produce a great deal of confusion and chaos.
Only 20% of those billions raised will go to roads. . . .
They temporarily raised taxes under Pat Quinn and most Illinoisans were ok with it as long as they used the money to start digging us out of this hole. Guess what, Quin and Madigan didn’t pay off a dime of debt and just pi$$ed the extra money down their special interest rabbit holes. Now Rauner has pledged not to raise taxes and Madigan has in essence shut down the state until the next election. I so hope Rauner is reelected just to pi$$ Madigan off. One can hope.
Every state, city, town and village does exactly the same thing. Making promises and not keeping them
Good morning ping.
5.56mm
No federal bailouts!
Sink or swim California/Brown!
Bankruptcy is a good thing. Let’s hope Illinois and many other governments experience it - soon.
In fact, its the ONLY thing that will slow down the social-engineering, highly political leftist nanny-state.
Illinois the California east.
You KNOW these spendthrift states will eventually get a bailout, just as the banks did in ‘08. They just need a crisis to hit a particular tipping point.
“Too Big to Fail” is sadly all too real.
Leni
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