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  • It’s Not Reform

    Posted by Carl from Chicago on March 17th, 2009 (All posts by )

    Illinois, like most states, is in the throes of a financial crisis. Our new governor, Pat Quinn, now is leading the financial and budget process.

    One of the few financial areas in which Illinois has a sensible tax policy is with regards to the state income tax. The state income tax is a flat 3%, tied to the Federal form (many other states are very complex, with graduated rates, and they diverge significantly from the Federal returns on key points of logic). Note that the state tax rate is supposed to be 2.5% but a 0.5% “surcharge” was added ostensibly to pay for transit and this was never rescinded. By contrast, Illinois has some of the highest sales tax rates in the nation, with Cook County and Chicago at over 10%, and we have high property taxes, as well.

    Pat Quinn has now proposed a 50% tax hike, from 3% to 4.5%. In this requested tax hike, he is extremely deceptive and calls it tax “reform”, as noted in this headline from the Chicago Tribune. Mr. Quinn’s idea of reform, however, is reform as only a hard-core re-distributionist Democrat could see it – the structure of the tax is now being graduated so earners under a certain amount around $60,000 would pay about the same and high earning individuals and families would pay much more.

    Mr. Quinn – here are some ideas for ACTUAL reform, as to how it is defined in the real world, not the act of giving some people the same tax rates and charging others a disproportionate amount:

    – Reduce salaries for state employees by 20% – this rate is probably in line with the net reduction in the private sector, when you take into account rising insurance burdens, lack of 401(k) and retirement matching, freezing of salaries, elimination of perks, and elimination of merit bonuses
    – Eliminate layers of local government – Illinois has a very large number of government entities, each requiring boards, executives, and tax revenues for support. Streamline and eliminate layers of government and eliminate the revenue requirements for those jobs
    – Crack down on false disability claims – government entities are more likely to have employees filing for disability – review the records and purge those that are faking from the roles
    – Implement pay for performance, eliminate low performers – require state entities to rank all employees and eliminate the bottom 10% poor performers every year. Unlike a private enterprise, you won’t have to worry about having to “force rank” good performers in the next 5 years or so
    – Move services to the web – there are myriad government positions standing behind desks or slowly answering phones to provide “service”. Move these duties to the web and eliminate the positions where possible, which also will provide better services to citizens
    – Review external contracts – review external contracts and also the entities that hold those contracts, looking for conflicts of interest and the like. Pay particular attention to female or minority owned firms that may be fronts for political cronies
    – Reconsider licensing and requirements – Illinois has licenses for everything, and a complicated bureaucracy for each one. Eliminate much of the licensing and concentrate resources on areas that are significant for the state as a whole
    – Bargain hard with unions – Unions rule Illinois, and extract work rules that are punitive, raises out of line with the private sector, and pension and medical benefits that are bankrupting the state. Bargain hard to reduce these costs, even taking a strike if needed – most services are so inessential no one will even notice
    – Eliminate internal inspectors – this sounds counter-intuitive but no important oversight is performed by these bodies – it was the Federal authorities that took down Blago, Ryan, Rostenkowski, and all the rest. They likely just feed information to the miscreants and provide an “illusion” of control. Until the day comes when these agencies actually rival the Federal authorities for “busts” and the like, just get rid of them and let’s declare reality, which is that the inmates run the asylum

    These items aren’t even really partisan – they are just basic good government items. They all apply just as well to Republican or Democratic administrations, both of whom drove the state into its current fiscal spiral.

    The newspapers should also hold the governor accountable for the false and misleading rhetoric. There is nothing in a 50% tax increase that meets the definition of “reform”.

    Cross posted at LITGM

     

    5 Responses to “It’s Not Reform”

    1. Dan from Madison Says:

      Unfortunately most of your ideas require something called “work” and something else called “guts” to perform. Neither of which are abundant in any state government, much less the government in a chaotic state like Illinois.

      FWIW, our governor here in Wisconsin has also been advertising a tax rate on the “wealthy”, and it is large.

      I have noticed that the rhetoric from Washington has toned down immensely on moving the highest tax bracket from 35% to 39% and they have even said that they will delay it for a few years. I guess a silver lining in the grey cloud that is our economy.

    2. Carl from Chicago Says:

      I wouldn’t read much in the 35% to 39% issue, unfortunately. They are going to get those dollars a different way, by impacting the way that deductions are claimed. Deductions are going to be capped at a 28% rate, so that if you take a charitable deduction it benefits you less if you are in the top bracket. The charities are howling about this now. Grist for another blog post I have in the pipe…

    3. Shannon Love Says:

      I find it revealing of the true motivations of the leftist that they claim to work from a Keynesian model but that they violate one of the key concepts of Keynesian economics i.e. don’t raise taxes in a recession. In Keyne’s original formulation, the government would cut taxes in a recession and operate off of borrowed money. The when the economy started to overheat after the recovery, the government would raise taxes and cool the economy off. With hindsight, Keyne’s model was to simplistic but at least it has a self-consistent model of economic cause and effect.

      The current crop of leftist, however, clearly have no motive other than increasing state power and all the benefit that they derive from that. When times are good, they want to raise taxes. When times are bad they want to raise taxes. The only consistency they show is that the desire to seize the fruits of the labor of others.

      Keyne would have had a stroke at the idea of raising taxes in a recession. He castigated Hoover for doing exactly that.

    4. Hucklebuck Says:

      What can you expect from a public official who thinks taxing according to “ability to pay” is a principle of democracy rather than Marxist dogma?

    5. Hucklebuck Says:

      Bring back Blago. I’d rather be robbed by an unrepentant thief than a socialist do-gooder.