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Tax expert says Illinois needs to shift its bad taxing policies

Published: Tuesday, Dec. 4, 2012 9:42 a.m. CST

(MCT) — DECATUR — One of the state’s leading fiscal policy experts said Monday the Decatur area could benefit from tax reforms.

However, Ralph Martire said many citizens remain unsupportive of tax changes and moving the ball forward. In the meantime, Martire described to members of the Decatur Rotary Club No. 180 numerous budget-related problems in Illinois.

“The state of Illinois is in horrible shape fiscally,” said Martire, executive director of the bipartisan Center for Tax and Budget Accountability.

Rotary member Wegi Stewart invited Martire to speak after listening to him on previous occasions and gaining a better understanding of the situation he was talking about.

“Other people here needed that lesson,” Stewart said. “It’s the educational component.”

Changing bad tax policies could help Illinois get out of the mess, Martire said. Martire would focus on taxing those who make the most money every year and have the greatest impact on the economy.

An additional $4.5 to 6 billion in revenue could be generated, which Martire said represents less than 1 percent of annual economic activity in the state.

“It’s too small to measure,” Martire said. “That’s what is stopping us. Taxes are supposed to respond to the economy based on the ability to pay.”

Illinois plans to pay about $800 million from bills due in the last year, which Martire said would leave it with an $8 billion hole to dig out of after totaling all of its unpaid obligations.

“It was nice for them to pay that, but it doesn’t get the job done,” Martire said.

Most of the state’s budget goes toward paying for education, health care, human services and public safety, Martire said. Human services are usually the first area cut because Martire said it’s the least politically risky.

Spending has not been driving the state’s deficit problems as 20 percent less is being spent than in 2000, Martire said. Instead, bad tax policies are to blame, Martire said.

Illinois is the most reliant state on property taxes, leading to a disparity in the quality of public education, Martire said.

“We have a distorted fiscal system,” Martire said. “Spending cuts alone can’t solve the problem.”

The state’s tax system is not fair, responsible, stable or efficient, Martire said.

State government expenses usually involve labor, so Martire said cuts drive down wages of those in professions such as police and teachers. If those workers have less money to spend, Martire said it hurts the private sector and the economy.

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