Taxes

WSJ Opinion Article on Illinois Taxes

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The WSJ recently wrote an opinion piece on the Illinois tax increases which I wrote about here called “The Taxing Illini”. From the article:

This is a state that does almost everything wrong economically. It is not a right-to-work state and is thus heavily unionized, repelling new business investment. It has the fifth highest minimum wage among the states, the fifth most trial-lawyer friendly legal code, the sixth highest workers’ compensation costs, and the 11th highest property taxes. It has one of the highest inheritance taxes, at 16%, so retirees flee to states with no death tax, such as Florida and Arizona. A rare Illinois advantage has been its relatively low income-tax rate, but that will shrink or vanish under Mr. Quinn’s increase.

The sad part about this article is that they failed to mention that Illinois has pretty much the highest sales tax rate of any state in the country, and in Cook County the rate is higher than 10% with relatively few exemptions. I guess they just ran out of bad things to say about the state, or figured that the “slaughter rule” was in effect, kind of like in that recent WBC game featuring the USA team.

Cross posted at LITGM

It’s Not Reform

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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state tax rate is supposed to be 2.5% but a 0.5% “surcharge” was added ostensibly to pay for transit and this was never rescinded.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:

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Legalizing Sports Betting

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For a long time I have wondered here and elsewhere why there is no state sanctioned sports betting. It isn’t like gamblers aren’t betting on sports in areas where there is no legal way to do so.

From what I have heard, you can simply walk into pretty much any bar and get “parlay cards“, or bet on games online.

Since these activities are already going on, why have states been so anguished about setting up organized betting for them? We all pretty much have lotteries where we can bet on RANDOM numbers, so why not on sports games? Vegas has dialed in the sports betting ratios and how to run a sports book long ago; there aren’t any real secrets in that realm. Set the spread so you get half the bets on one side, half on the other and collect the “juice” or “vig“. Simple as that.

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Federal Tax Credits For Energy Efficient HVAC Equipment

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President Obama signed the “stimulus” package into law on February 17.   I prefer the term “porkulus”.

Embedded in that garbage legislation are a mind boggling array of things that really have not much of anything to do with reviving our economy.   Pretty much everybody knows that.

There is a small piece of the “porkulus” that may help you if you are needing to update the mechanical systems of your domicile.

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California Confiscates Tax Refunds

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I would wager that those who withheld more than they owed on their State of California taxes didn’t think that they would be making a zero interest loan to the state.   I would be absolutely furious.   I am thinking that many will never see their refund, as California  appears to be  on the precipice.  

California has had no money in its general fund for the past 17 months, and has been paying its bills by borrowing from Wall Street and special internal funds.

If the state’s legislators and governor do not reach a budget agreement that brings immediate funds into the state’s coffers, the state’s borrowed funds will be entirely exhausted at the end of February, according to the controller’s office.

I would also wager that workers will be making a lot of changes to their withholding so as not to be owed any refund at the end of next year.   Fool me once, shame on you, fool me twice…

Then again, the feds could come to the rescue and print some money for Cali.   Good luck with your bond rating, California municipalities and (insert project here) districts.

Some muni bonds are actually paying very good rates right now.   As I was sitting across the table from a financial advisor we discussed the rates that some municipalities and state agencies in California were paying and then we both laughed out loud and moved on to looking at munis from more stable cities and states.   I am thinking that this conversation has been played out millions of times at brokerage desks across the nation.