The following letter to the editor appeared in the Northwest Herald.
Fight or pack up
To the Editor:
Gov. Rod Blagojevich is pushing the largest expansion of state government in Illinois history.
And he’s doing it in classic Blagojevich style, with vague bold strokes. He has no detailed plan for this massive proposal, just a partisan speech, a news release, and a new straw man, the Illinois businessman.
The gloves are off now, it’s his second term. His budget address sounds like a declaration of war against Illinois businesses. Blagojevich wants free health care, piles of money for overdue bills, and another $10 billion for education. And instead of real working people (i.e. union labor), he’s going to make you pay for it.
But Blagojevich isn’t raising taxes, he’s just expanding them – expanding them to everything you do with a gross receipts tax. The average voter won’t understand economic ramifications of the all-inclusive taxes and the multiplier effect, but should understand that Illinois is the eighth-worst state to do business in, and it’s about to get much worse. The most aggravating part of all this is putting more good money down that bottomless pit in Springfield.
This is a fight-or-flight situation. Stop Blagojevich or start researching new state residency requirements.
Drew Veeneman
Elgin
Gross receipts taxes are extremely destructive for a state's economy for more information we refer you to the The really gross ‘Gross Receipts really Tax’ article by the Illinois Policy Institute.
Showing posts with label Income Taxes Cost Jobs. Show all posts
Showing posts with label Income Taxes Cost Jobs. Show all posts
Sunday, March 18, 2007
Friday, March 02, 2007
New tax targets firms
The piece below states that the tax plan puts a burden on businesses. The fact is it puts a burden on everyone except for those that will benefit from the income redistribution and that would be the education industry and those involved with socialized medicine. When you tax businesses it risks jobs and the increased tax burden is shifted on the buyers of the businesses products. This is a lose, lose, win situation. The only ones who are winning are those that benefit from income redistribution or the tax increases.
The following piece appeared in the Daily Herald.
New tax targets firms
Plan puts more tax burden on businesses
By John Patterson
Daily Herald State Government Editor
Posted Friday, March 02, 2007
SPRINGFIELD — Gov. Rod Blagojevich is expected to roll out a dramatic change next week in how businesses pay taxes in Illinois, a move that could raise billions for health care and education spending but which already has business interests howling.
Specifics are unlikely before the governor’s March 7 budget speech, but the general idea involves doing away with the corporate income tax and instead imposing a tax on virtually every transaction businesses make.
The concept is to put a relatively low tax rate on all the money that comes in the door rather than a higher tax only on company profits.
Illinois isn’t alone in considering this. Ohio and Texas enacted similar tax policies in recent years.
The bottom line result in Illinois could be upward of $7 billion in new tax revenue flowing into state coffers, money Blagojevich sorely needs to shore up previous populist programs, such as his children’s insurance plan, and launch new ones, all while keeping his campaign mantra of not raising the state’s sales or income taxes.
Supporters of the idea describe it as restoring fairness to the state’s tax structure, saying more than half the Illinois corporations do not pay the state’s corporate income tax.
Doug Kane, a former Illinois lawmaker and president of a Wisconsin-based economic consulting firm, said the state’s existing tax structure no longer represents its economy and, as a result, a greater burden increasingly falls on individuals. Switching to this new tax structure would reverse that trend and at the same time ensure every business pays, if for no other reason than the loophole-filled corporate income tax system would be abolished.
“The advantages of a gross receipts tax are: one, the simplicity; two, the very broad base which allows a very low rate,” said Kane, who’s been retained at $125 an hour by the Blagojevich administration to help make the case for such a tax change.
He notes Republicans and business groups have led the push for similar tax policies in Ohio and Texas.
But Illinois business groups aren’t convinced, with makers of everything from bottle caps to bulldozers fearing they’ll get soaked.
Hardest hit, critics say, are major manufacturers relying on myriad supply chains and companies with low profit margins whose daily business consists of numerous small transactions.
“Good year or bad year, you’re going to get hit on your sales and not on your profitability,” said John L. Mikesell, a government finance professor at Indiana University.
“Almost anybody who’s done graduate-level work in economics is going to be against that turkey. The only exception is politicians,” Mikesell said. “There’s literally nothing good that can be said about it.”
As for other states, Mikesell notes Ohio businesses backed this kind of tax as a replacement for a system they despised even more. Nor are all states rushing to impose these taxes. Indiana has done away with its gross receipts tax.
Back in Illinois, the pending proposal almost certainly will create an all-out lobbying war at the Capitol, as virtually every business entity is already lining up to fight the plan. On the other side are myriad education, health care and other interest groups who covet state funding for their programs and have no shortage of ideas for how to spend more tax dollars.
In between are lawmakers who, on one hand, don’t want to appear overly anti-business but on the other hand will have the Blagojevich administration tempting them with the opportunity to come up with billions for spending without having to go home and defend a tax hike to the general public.
Business groups, however, are already emphasizing that such a tax will result in higher prices and the fingers should point to Blagojevich.
“The governor’s going to impose the largest tax on the people of Illinois, period,” said Greg Baise, president and chief executive of the Illinois Manufacturers’ Association. “They’re going to pay for it.”
But supporters dispute the guarantee of higher prices and say such criticism ignores the bigger problem of how to fix the state’s overall tax structure.
“It’s way too easy to trash a tax individually,” Kane said. “No tax is good.”
The question Kane has for critics is, if not this tax, then which one?
The following piece appeared in the Daily Herald.
New tax targets firms
Plan puts more tax burden on businesses
By John Patterson
Daily Herald State Government Editor
Posted Friday, March 02, 2007
SPRINGFIELD — Gov. Rod Blagojevich is expected to roll out a dramatic change next week in how businesses pay taxes in Illinois, a move that could raise billions for health care and education spending but which already has business interests howling.
Specifics are unlikely before the governor’s March 7 budget speech, but the general idea involves doing away with the corporate income tax and instead imposing a tax on virtually every transaction businesses make.
The concept is to put a relatively low tax rate on all the money that comes in the door rather than a higher tax only on company profits.
Illinois isn’t alone in considering this. Ohio and Texas enacted similar tax policies in recent years.
The bottom line result in Illinois could be upward of $7 billion in new tax revenue flowing into state coffers, money Blagojevich sorely needs to shore up previous populist programs, such as his children’s insurance plan, and launch new ones, all while keeping his campaign mantra of not raising the state’s sales or income taxes.
Supporters of the idea describe it as restoring fairness to the state’s tax structure, saying more than half the Illinois corporations do not pay the state’s corporate income tax.
Doug Kane, a former Illinois lawmaker and president of a Wisconsin-based economic consulting firm, said the state’s existing tax structure no longer represents its economy and, as a result, a greater burden increasingly falls on individuals. Switching to this new tax structure would reverse that trend and at the same time ensure every business pays, if for no other reason than the loophole-filled corporate income tax system would be abolished.
“The advantages of a gross receipts tax are: one, the simplicity; two, the very broad base which allows a very low rate,” said Kane, who’s been retained at $125 an hour by the Blagojevich administration to help make the case for such a tax change.
He notes Republicans and business groups have led the push for similar tax policies in Ohio and Texas.
But Illinois business groups aren’t convinced, with makers of everything from bottle caps to bulldozers fearing they’ll get soaked.
Hardest hit, critics say, are major manufacturers relying on myriad supply chains and companies with low profit margins whose daily business consists of numerous small transactions.
“Good year or bad year, you’re going to get hit on your sales and not on your profitability,” said John L. Mikesell, a government finance professor at Indiana University.
“Almost anybody who’s done graduate-level work in economics is going to be against that turkey. The only exception is politicians,” Mikesell said. “There’s literally nothing good that can be said about it.”
As for other states, Mikesell notes Ohio businesses backed this kind of tax as a replacement for a system they despised even more. Nor are all states rushing to impose these taxes. Indiana has done away with its gross receipts tax.
Back in Illinois, the pending proposal almost certainly will create an all-out lobbying war at the Capitol, as virtually every business entity is already lining up to fight the plan. On the other side are myriad education, health care and other interest groups who covet state funding for their programs and have no shortage of ideas for how to spend more tax dollars.
In between are lawmakers who, on one hand, don’t want to appear overly anti-business but on the other hand will have the Blagojevich administration tempting them with the opportunity to come up with billions for spending without having to go home and defend a tax hike to the general public.
Business groups, however, are already emphasizing that such a tax will result in higher prices and the fingers should point to Blagojevich.
“The governor’s going to impose the largest tax on the people of Illinois, period,” said Greg Baise, president and chief executive of the Illinois Manufacturers’ Association. “They’re going to pay for it.”
But supporters dispute the guarantee of higher prices and say such criticism ignores the bigger problem of how to fix the state’s overall tax structure.
“It’s way too easy to trash a tax individually,” Kane said. “No tax is good.”
The question Kane has for critics is, if not this tax, then which one?
Wednesday, February 28, 2007
Will plan spell r-e-l-i-e-f?
HB - 750 will undoubtedly pass in the fall veto session. But this will not help McHenry County Schools. Once the income taxes leave the County they will not come back. Schools will continue to overspend and referenda will not cease. Please take the time to contact your legislators and tell them to vote no on any income tax increases, tax swaps or new taxes to businesses. There are two ways to balance a budget. One way is to increase revenues the other is to decrease spending. It is time to decrease spending in the schools. Taxpayers should not be the ones to always take a pay-cut.
The following piece appeared in the Northwest Herald.
Will plan spell r-e-l-i-e-f?
By ALEXA AGUILAR - aaguilar@nwnewsgroup.com
Comments (63)
Local school district leaders aren’t pinning their hopes on HB 750 – the latest education funding reform proposal reintroduced this month.
And they don’t think that it is the solution to Illinois’ school funding woes.
Officials aren’t even bothering to crunch the numbers to see how they will fare under the bill. Many of the county’s education veterans have seen so many proposals come and go over the years, they are wondering why this one will be any different.
“I’ve been in education 31 years,” said Ronald Miller, superintendent of Crystal Lake District 47.
“It comes up all the time, ... and then it stalls.”
House Bill 750 is designed to equalize the state’s funding system, which critics say is too reliant on local property-tax dollars.
The bill would increase the state income tax and tax consumer services, such as haircuts and lawn care, to provide a revenue stream to boost state aid to schools. It guarantees property tax relief, in the form of a refund from the state, to taxpayers.
The organization that wrote the legislation, the Center for Tax and Budget Accountability, says no school district in Illinois would lose money under the proposal.
Local legislators are skeptical. Even if local school districts don’t lose money, the taxpayers of McHenry County likely will be helping foot the bill of making the system more equitable, they said.
“McHenry County would lose money,” said state Sen. Pamela Althoff, R-Crystal Lake. She and state Rep. Jack Franks, D-Woodstock, say they oppose the legislation.
Local school district leaders say they aren’t sure how they would be affected.
Allan Smigiel, director of finance for McHenry District 15, said he didn’t know the specific impact on his district. He said similar proposals to HB 750 already had been proposed without any action.
But until the Legislature addresses the state’s structural deficit, he said, it shouldn’t be taking on the school’s education system.
Education leaders throughout the state agree that the quality of a child’s education shouldn’t depend on where the child lives. But part of the challenge is that each district and legislator wants to protect their local districts. In McHenry County, local dollars provide up to 90 percent of school funding. In other areas of the state, the percentages are far less.
Miller said there was a natural skepticism from McHenry County taxpayers about any reform that meant sending money to Springfield for the state to dole it out.
“No ifs, ands and buts,” Miller said. “Anytime money goes to Springfield, we worry about it.”
As much as property-tax dollars are a burden, taxpayers prefer to have that local control, said Mike Tanner, assistant superintendent of finance for Prairie Grove District 46.
The following piece appeared in the Northwest Herald.
Will plan spell r-e-l-i-e-f?
By ALEXA AGUILAR - aaguilar@nwnewsgroup.com
Comments (63)
Local school district leaders aren’t pinning their hopes on HB 750 – the latest education funding reform proposal reintroduced this month.
And they don’t think that it is the solution to Illinois’ school funding woes.
Officials aren’t even bothering to crunch the numbers to see how they will fare under the bill. Many of the county’s education veterans have seen so many proposals come and go over the years, they are wondering why this one will be any different.
“I’ve been in education 31 years,” said Ronald Miller, superintendent of Crystal Lake District 47.
“It comes up all the time, ... and then it stalls.”
House Bill 750 is designed to equalize the state’s funding system, which critics say is too reliant on local property-tax dollars.
The bill would increase the state income tax and tax consumer services, such as haircuts and lawn care, to provide a revenue stream to boost state aid to schools. It guarantees property tax relief, in the form of a refund from the state, to taxpayers.
The organization that wrote the legislation, the Center for Tax and Budget Accountability, says no school district in Illinois would lose money under the proposal.
Local legislators are skeptical. Even if local school districts don’t lose money, the taxpayers of McHenry County likely will be helping foot the bill of making the system more equitable, they said.
“McHenry County would lose money,” said state Sen. Pamela Althoff, R-Crystal Lake. She and state Rep. Jack Franks, D-Woodstock, say they oppose the legislation.
Local school district leaders say they aren’t sure how they would be affected.
Allan Smigiel, director of finance for McHenry District 15, said he didn’t know the specific impact on his district. He said similar proposals to HB 750 already had been proposed without any action.
But until the Legislature addresses the state’s structural deficit, he said, it shouldn’t be taking on the school’s education system.
Education leaders throughout the state agree that the quality of a child’s education shouldn’t depend on where the child lives. But part of the challenge is that each district and legislator wants to protect their local districts. In McHenry County, local dollars provide up to 90 percent of school funding. In other areas of the state, the percentages are far less.
Miller said there was a natural skepticism from McHenry County taxpayers about any reform that meant sending money to Springfield for the state to dole it out.
“No ifs, ands and buts,” Miller said. “Anytime money goes to Springfield, we worry about it.”
As much as property-tax dollars are a burden, taxpayers prefer to have that local control, said Mike Tanner, assistant superintendent of finance for Prairie Grove District 46.
Tuesday, January 30, 2007
Wall Street Journal -- on Abolishing State Income Taxes
The Wall Street Journal article below was sent to us by our friend Marilyn Rickert of Fair Tax Now.
She reported the following background information on the report.
The research on which the Wall Street Journal article was based was funded by Americans For Fair Taxation (FairTax). The goal was to compare the states that had income taxes and those with no income taxes to see which ones did better. As Flat Tax supporters, the team of Arduin, Laffer, & Moore was chosen to carry out this research because we felt their bias would be against the FairTax and in favor of an income tax -- yet as honest researchers they would accurately report their findings no matter the result.
Our research in IL shows that using the FairTax base, we can eliminate the state income tax and property tax at about the same sales tax rate as we have now while raising the same amount of money as our current tax system. Remember under the FairTax bill, everyone is protected up to the poverty level. Also how much you pay in taxes is always your choice.
To view the A Macroeconomic Analysis of the FairTax Proposal click here.
Incentives drive all economic behavior. Taxes are a negative incentive. From an economic efficiency perspective, the appropriate goal for tax policy is to establish a tax system that minimizes the tax disincentives on economic activities, given the revenue needs of the government.
The article below appeared in the Wall Street Journal.
Rich States, Poor States
January 25, 2007
Wall Street Journal, Page A18
If you're searching for the next big thing in American politics, it's wise to keep an eye on the states. Here's one possibility: the abolition of state income taxes.
In Georgia, Missouri and South Carolina, Governors and state legislatures are drafting serious proposals to repeal their income taxes to promote economic development. St. Louis, one of America's most distressed cities, may overturn its wage/income tax as a way to spur urban revival. And in Michigan, the legislature is in the last stages of phasing out its hated business income tax -- the most onerous in the land. "States are now in a ferocious competition to attract jobs and businesses," says economist Arthur Laffer, who is advising several Governors and legislators on the issue, "and one of the best ways to win this race is to abolish the state income tax."
The timing for fixing state tax codes could hardly be more ideal because states are swimming in budget surpluses thanks to the booming national economy. This should be a big year for state tax cuts. Governors in Arkansas, Florida and West Virginia have already announced major tax relief plans for 2007. Even New York City has a $1 billion surplus and Mayor Michael Bloomberg is promising a property tax cut.
But the biggest target is the income tax. Newly re-elected South Carolina Governor Mark Sanford is talking of reviving his plan to phase out the income tax over 18 years. Mr. Sanford ran into opposition from the legislature in his first term, but he tells us that "I still consider this one of my top priorities and if the legislature wants to do it, I would be ecstatic."
Georgia may beat Mr. Sanford to the punch. House Republicans in Atlanta have announced that one of their top priorities is to use the half-billion-dollar budget surplus as a downpayment to "dismantle the current tax code." House Republican Majority Leader Jerry Keen tells us the debate in Atlanta is between a flat-rate income tax and a plan that would "do away with the personal income tax but broaden the sales tax by eliminating 107 exemptions. We're committed to a pro-growth tax plan that announces to the country that Georgia is open for business."
In Missouri the legislature is reviewing a plan by the state think tank, the Show Me Institute, that would increase the rate of the sales tax to 7.5% and limit spending growth to population plus inflation, in return for eliminating the state's income tax over 10 years. House Speaker Carl Bearden says "I would like to see a phasing out of our current tax structure in Missouri. . . . Eliminating the income tax can have a huge positive impact on a state's economy."
The idea of financing state services without an income tax is hardly radical. Nine states today -- Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming -- manage well without one. With a few exceptions, the non-income tax states are America's most prosperous. Meanwhile, the high income tax states, which tend to be congregated in the Northeast, keep surrendering jobs, people, and voters to the South and West.
State lawmakers also seem to have learned from two of the most recent states to adopt an income tax: New Jersey and Connecticut. As recently as 1965 New Jersey had neither an income nor sales tax, but managed to balance its budget every year. Now it has both taxes -- its income tax is the 5th highest in the nation -- but the state is facing what Stateline.org calls a "staggering budget deficit." Allied Van Lines reports that the Garden State is now one of the leading places for people to flee.
The latest state to adopt an income tax was Connecticut in 1991, but a new report by the Yankee Institute reveals that the tax has been a calamity. The state has ranked last in employment growth since 1991, losing 240,000 of its native born citizens between 1991-2002. No other state has since enacted an income tax, and lawmakers in Georgia, Missouri and South Carolina say Connecticut is now the model for how not to run a state economy.
Whether these states will be able to eliminate their income taxes in the next few years is an open question. But what's undeniable is that the debate in state capitals has swung decisively in the direction of chopping income tax rates, not raising them.
Quote of the day.
"A taxpayer is someone who works for the federal government but who doesn't have to take a civil service examination."
Ronald Reagan
She reported the following background information on the report.
The research on which the Wall Street Journal article was based was funded by Americans For Fair Taxation (FairTax). The goal was to compare the states that had income taxes and those with no income taxes to see which ones did better. As Flat Tax supporters, the team of Arduin, Laffer, & Moore was chosen to carry out this research because we felt their bias would be against the FairTax and in favor of an income tax -- yet as honest researchers they would accurately report their findings no matter the result.
Our research in IL shows that using the FairTax base, we can eliminate the state income tax and property tax at about the same sales tax rate as we have now while raising the same amount of money as our current tax system. Remember under the FairTax bill, everyone is protected up to the poverty level. Also how much you pay in taxes is always your choice.
To view the A Macroeconomic Analysis of the FairTax Proposal click here.
Incentives drive all economic behavior. Taxes are a negative incentive. From an economic efficiency perspective, the appropriate goal for tax policy is to establish a tax system that minimizes the tax disincentives on economic activities, given the revenue needs of the government.
The article below appeared in the Wall Street Journal.
Rich States, Poor States
January 25, 2007
Wall Street Journal, Page A18
If you're searching for the next big thing in American politics, it's wise to keep an eye on the states. Here's one possibility: the abolition of state income taxes.
In Georgia, Missouri and South Carolina, Governors and state legislatures are drafting serious proposals to repeal their income taxes to promote economic development. St. Louis, one of America's most distressed cities, may overturn its wage/income tax as a way to spur urban revival. And in Michigan, the legislature is in the last stages of phasing out its hated business income tax -- the most onerous in the land. "States are now in a ferocious competition to attract jobs and businesses," says economist Arthur Laffer, who is advising several Governors and legislators on the issue, "and one of the best ways to win this race is to abolish the state income tax."
The timing for fixing state tax codes could hardly be more ideal because states are swimming in budget surpluses thanks to the booming national economy. This should be a big year for state tax cuts. Governors in Arkansas, Florida and West Virginia have already announced major tax relief plans for 2007. Even New York City has a $1 billion surplus and Mayor Michael Bloomberg is promising a property tax cut.
But the biggest target is the income tax. Newly re-elected South Carolina Governor Mark Sanford is talking of reviving his plan to phase out the income tax over 18 years. Mr. Sanford ran into opposition from the legislature in his first term, but he tells us that "I still consider this one of my top priorities and if the legislature wants to do it, I would be ecstatic."
Georgia may beat Mr. Sanford to the punch. House Republicans in Atlanta have announced that one of their top priorities is to use the half-billion-dollar budget surplus as a downpayment to "dismantle the current tax code." House Republican Majority Leader Jerry Keen tells us the debate in Atlanta is between a flat-rate income tax and a plan that would "do away with the personal income tax but broaden the sales tax by eliminating 107 exemptions. We're committed to a pro-growth tax plan that announces to the country that Georgia is open for business."
In Missouri the legislature is reviewing a plan by the state think tank, the Show Me Institute, that would increase the rate of the sales tax to 7.5% and limit spending growth to population plus inflation, in return for eliminating the state's income tax over 10 years. House Speaker Carl Bearden says "I would like to see a phasing out of our current tax structure in Missouri. . . . Eliminating the income tax can have a huge positive impact on a state's economy."
The idea of financing state services without an income tax is hardly radical. Nine states today -- Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming -- manage well without one. With a few exceptions, the non-income tax states are America's most prosperous. Meanwhile, the high income tax states, which tend to be congregated in the Northeast, keep surrendering jobs, people, and voters to the South and West.
State lawmakers also seem to have learned from two of the most recent states to adopt an income tax: New Jersey and Connecticut. As recently as 1965 New Jersey had neither an income nor sales tax, but managed to balance its budget every year. Now it has both taxes -- its income tax is the 5th highest in the nation -- but the state is facing what Stateline.org calls a "staggering budget deficit." Allied Van Lines reports that the Garden State is now one of the leading places for people to flee.
The latest state to adopt an income tax was Connecticut in 1991, but a new report by the Yankee Institute reveals that the tax has been a calamity. The state has ranked last in employment growth since 1991, losing 240,000 of its native born citizens between 1991-2002. No other state has since enacted an income tax, and lawmakers in Georgia, Missouri and South Carolina say Connecticut is now the model for how not to run a state economy.
Whether these states will be able to eliminate their income taxes in the next few years is an open question. But what's undeniable is that the debate in state capitals has swung decisively in the direction of chopping income tax rates, not raising them.
Quote of the day.
"A taxpayer is someone who works for the federal government but who doesn't have to take a civil service examination."
Ronald Reagan
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