State spends, taxpayers feel pinch


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Posted Online: Jan. 27, 2013, 6:00 am
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By Scott Reeder
Is your wallet a little thinner these days?

More than likely, the state of Illinois is to blame.

About the same time the Illinois Legislature jacked up income taxes 67 percent two years ago, the federal government gave us a temporary break on how much we pay into Social Security.

That cut inadvertently softened the wallop of the state tax increase, but the relief from Washington expired at the beginning of this year.

Now we get to experience the state tax increase in all of its glory. Bureaucrats in Springfield are sucking away one extra week of our pay.

And to what end?

The state is still broke. The pension system is floundering. Government employee unions' hunger for more dollars remains as voracious as ever.

Illinois revenues have never been higher in the Land of Lincoln's 190-year history.

But our politicians are still crying poor.

Why? Because they are still spending money faster than they are taking it in.

Rather than curbing the spending, they're laying the groundwork for another tax hike.

Advocates are calling it "progressive" tax reform.

Never mind that that the Illinois Constitution prohibits a graduated income tax rate; proponents are prepared to change the constitution.

Just last week, state Rep. Naomi Jakobsson, D-Champaign, introduced a proposed constitutional amendment to do just that.

The underlying reason for the proposed switch is a desire for the state to collect more money.

You'll hear some malarkey that a progressive income tax only will make the "rich" pay more.

To see just how wrong that thinking is, look to our neighbor to the west – Iowa. Over in the Tall Corn State, the top income tax rate is 8.98 percent. And the people who paid that rate in 2012 earned $66,105 or more.

Does anybody think that a family living on $66,000 is rich?

And yes, I'm aware that the Illinois Legislature could choose a different income level than Iowa to start taxing at the top rate. But the fact of the matter is that 31 of the 34 the states that have a progressive structure tax $50,000 at a higher marginal rate than Illinois will in 2015.

The question remains: why increase taxes at all when state revenues are at an all-time high?

"I don't support a progressive tax because we already have enough money coming in," said Rep. David Harris, R-Arlington Heights. "We need to look at spending … and the place to start is pensions."

Year after year, decade after decade, the Illinois Legislature has refused to institute comprehensive pension reform. Each year we keep dumping more money into our failing pension systems.

Next year, for example, the state will allocate $6.8 billion toward pensions -- almost $1 billion more than this year.

The state continues to pay its bills months late.

And even as spending increases, core government services are being cut. Our governor and Legislature seem unable to set priorities or make tough decisions.

Why give them more money?

Illinois' problem is that it is spending too much.

And every working Illinoisan is feeling the pinch because of it.
Scott Reeder is a veteran statehouse reporter and the journalist in residence at the Illinois Policy Institute; sreeder@illinoispolicy.org.














 




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