“No Man’s life liberty or property is safe while the legislature is in session”.

- attributed to NY State Judge Gideon Tucker

Monday, January 17, 2011

Illinois Commits Economic Harakiri & Raises Tax Rates

It's sad to see my home state of Illinois going so badly wrong in its fiscal policies.

If I recall correctly, the state's top income tax rate rose by 40%, from 3% to 5%. This was done in a lame-duck session by Democratic legislators in an attempt to tax their way to closing a yawning budget deficit.

Reading remarks from the Republican governors of surrounding states like Indiana's Mitch Daniels and Wisconsin's Scott Walker leaves no doubt that Illinois is bound to lose citizens and probably businesses to those two hungrier, lower-tax states. Even Michigan, which has its own troubles, will probably get into the act once it can stabilize its own fiscal mess.

Other pundits have written, aptly, that we're seeing a wonderful example of our nation's federal system at work. Each state may pursue their own approach to government, and Illinois is foolishly raising taxes while its neighboring, redder states lower theirs and explicitly target Illinois business and personal income tax revenues via outward migration.

Still others have noted that even incoming New York Democratic governor Andrew Cuomo is sounding like Ronald Reagan.

So what's with my old home state? How did Richard Ogilvie's prudent and prosperous Illinois become the bloated, indebted shambles we now see?

Simply put, state and municipal unions run wild with the active assistance of the state's Democratic legislators. New Jersey managed to vote in Chris Christie to try to solve a similar crisis. In Illinois, they're just reaching for the usual measures- higher taxes. No serious pension reform, no serious spending cuts. Just a bunch of lame duck political hacks squeezing an aging population to pay more tribute to the government workers' unions.

Isn't it amazing that none of this is sticking to Wonderboy yet? After all, what little government experience he had before his two-year introductory tour of the US Senate was in the Illinois legislature. And how will his former chief of staff, Rahm Emanuel, handle Chicago, should he be elected, amidst this fiscal mess?

Some years ago, my late father predicted all this. On a summer trip to visit my parents, for my children's benefit, he spoke at length about the coming fiscal storm. There was a huge pension obligation for government workers, he said, while the state's economy had been hollowed out over the past few decades. Much of central Illinois' economic activity, he contended, had become elder citizens spending on local health care services. Hardly the sort of exportable, growth industry that would sustain a base of younger state citizens for the future.

At least there's the hope that, with the expected failure of Illinois' tax hikes to solve its financial problems, even the state's apparently liberal-leaning voters will eventually replace their state-level politicians with ones who will start slashing union-friendly spending.

No comments: