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Where’s the ‘strong economy’ from tax hikes?

Published: Tuesday, Jan. 17, 2012 6:59 a.m. CST

The following editorial appeared in the (Bloomington) Pantagraph on Jan. 15:


(MCT) — Remember when Illinois instituted the Lottery and it was sold as a solution to improve school funding — a way to make state-sponsored gambling more palatable to its opponents by arguing that the ends justified the means?

Maybe no one “promised” the Lottery would be the answer to education funding problems, but that’s how it was perceived by many. Instead, it is more like a voluntary tax — a “tax” often paid by those least able to afford it.

But there was nothing “voluntary” about the tax package approved by a lame-duck Legislature and signed a year ago by Gov. Pat Quinn. Like the Lottery, the 2011 tax increase was sold as an answer to the state’s problems — maybe not “the” answer, but as least “an” answer.

On Jan. 11, 2011, lawmakers voted to increase the individual income tax from 3 percent to 5 percent and the corporate income tax from 4.8 percent to 7 percent. No Republicans supported it.

The next day, Quinn told reporters, “We have some temporary tax increases that are designed to pay our bills, get Illinois back on fiscal sound footing and make sure that our state has a strong economy.”

Instead, the state is still behind in its bills, its credit rating was just downgraded by Moody’s Investors Service to “2A” (the lowest of any state) and the economy is anything but strong.

Instead of using the $7 billion or so brought in by the tax increases to “pay our bills,” the money, essentially, is being used to pay into the state’s underfunded, unsustainable public pension program.  Some pension reforms have been enacted and a task force is being put together to look at further cost-saving measures. But a lot of time has been lost, and the reforms, while a positive, don’t go nearly far enough to have the needed effect.

By approving the tax increases before making necessary spending cuts and policy changes, the state gave itself a safety valve — though not a very effective one — that removed some of the pressure to make immediate cuts. But the problems didn’t go away — and won’t go away — and Illinois’ economy was not transformed and placed on “sound footing.”

As Republican leaders called on Thursday for repeal of the individual and corporate tax hikes, a Quinn spokeswoman was quick to claim there would have been dramatic service cuts and layoffs of teachers, police and firefighters without the tax increases.

The governor and other Democrats are not so quick to acknowledge how much better the economy might be if the state had focused more on spending cuts (yes, some were made) and if businesses and individuals had money in their own pockets to invest and spend, rather than sending it to the state.

Instead of a strong state, we have the same dysfunctional, indebted, late-paying state we had a year ago — only now it has a worse bond rating.

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