No secret that Illinois and Chicago have a financial crisis. They have created it themselves. Public pensions are out of control, and the size, along with the scope of government is out of control.
The political party that’s in power won’t face up to the problem and do what is necessary to solve it.
Instead of blaming big government, the author takes the view that it was the fault of the way Illinois tax policy was designed. That’s the real problem here. Not that there are a bunch of union workers on the public dole, double and triple dipping along the way.
Can you guess his solution? More taxes. That’s right. People are leaving the state, businesses are leaving the state, and this idiot wants to tax them at higher rates.
Of course tax revenue in Illinois hasn’t grown. It’s because the economy is in tatters and the tax base is decreasing every year.
Two excellent solutions proposed during Pension Conference Committee testimony:
1) Change Illinois’ flat tax to a progressive tax. Low income families in Illinois are hammered with a high tax, yet the wealthy love its low rate at 5%. 34 of the 41 states that have a state income tax use a progressive structure, similar to our federal income tax. Doing so would also increase state revenues by billions annually. This idea is slowly gaining traction in Springfield with the democrats; republicans are strongly opposed. Let’s hope the traction continues.
2) Implement a financial tax (speculation tax) that I have written about before. Fortunately, Bill Barclay, from the Chicago Political Economy Group, testified at the third Pension Committee meeting on July 8th. He can be seen testifying here at 1:29:45. I have seen him speak twice before, in Aurora and Bolingbrook. He is brilliant.
If a tiny .01% tax was placed on stock and derivative trades at the Chicago Mercantile Exchange ($CME), a whopping $80 billion in revenue would be gained annually. Barclay says this tax would be hardly noticed, yet would raise billions. Many other countries, including Switzerland and Germany, already have implemented this tax. Representative Mary Flowers has sponsored a speculation tax bill. But legislators don’t seem interested.
The Democrats in Illinois raised state taxes 67%, and now want a progressive tax on top of it. The end game for that tax will be the wealthy will readjust their residency and they won’t pay any taxes. Corporations will continue to leave.
The second idea always comes up in the minds of people searching for revenue. Just a tiny tax that brings in $80 billion a year……
He’s wrong about many countries implementing a tax on commodity trading. Few do. The EU was all for the tax until they saw what the ramifications of it were. They are cooling to the idea as we speak.
As I have said on this blog before, it’s a tax on productive capital. Transaction taxes are taxes on risk taking, risk transfer and production. Once instituted, that tiny tax will be increased in tiny increments-and eventually be an albatross on the industry.
Currently, there is only one candidate with an actual plan to solve the crisis, while at the same time making the economy grow. Bruce Rauner. The rest are we-weeing into the wind.
Besides, it’s not the fault of the exchanges and traders that the state of Illinois is in the mess it’s in. Can we target tax the legislators?
(follow the Illinois pension mess at these sites)