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State and local tax hikes in Illinois have hurt economic growth, lowered the standard of living, and contributed to out-migration

Illinois has hurt its economy by piling on taxes since the Great Recession  From Illinois Policy April 2017

State and local tax hikes in Illinois have hurt economic growth, lowered the standard of living, and contributed to out-migration.

State and local tax hikes in Illinois have hurt economic growth, lowered the standard of living, and contributed to out-migration.

Illinois has seen record numbers of people leaving the state since the end of the Great Recession. Out-migration contributes to Illinois’ shrinking workforce, which has contracted by 200,000 over the last decade. Record income-earning power has also moved across Illinois borders, bound for other states. Meanwhile, the state’s rocky finances have worsened every year as pension liabilities climb to unmanageable amounts at the state and local levels. Just the interest on the state pension debt costs $9 billion per year.

One of the factors driving these outcomes is undoubtedly the onslaught of tax hikes Illinoisans have faced since the end of the Great Recession, coupled with a lack of political will to address spending drivers.

State and local officials have increased taxes as a way to bail out massive debts and budget shortfalls. Take, for example, the three largest taxing bodies in Illinois – the city of Chicago, Cook County and the state of Illinois. All of them have enacted significant tax increases since the end of the Great Recession.

According to a Chicago Tribune report, Chicago has enacted tax increases worth $1.9 billion per year since 2011, largely to try to shore up pension funds. On top of that, Cook County has approved $700 million worth of new sales and beverage taxes.

State government imposed income tax increases of 67 percent on individuals and 46 percent on corporations in 2011, which brought in an additional $7 billion per year. That increase partially sunsetted in 2015, leaving individuals with a 25 percent income tax increase and corporations with a 9 percent increase, compared with 2010’s rates. This equals an additional $3 billion in tax revenues per year.

These are the largest tax increases that have affected the state, but the tax increases have not been limited to these three units of government.

Economic research demonstrates that tax increases result in reduced economic growth

Tax increases, by definition, reduce the take-home wages of working people. The average Illinois household paid more than $1,000 in additional taxes to the state after the 2011 income tax increase, and Chicago households have forked over an additional $1,700 per year. The amount of the tax increase comes directly out of family and business earnings, leaving them with a lower standard of living than they would have had without the tax increase. Furthermore, taxes cause a “deadweight loss” that reduces the standard of living for the taxed populace as a whole. This explanation can be found in any economics 101 textbook.

DEAR READER:

To make informed decisions, the public must receive the unbiased truth. Unfortunately, that isn’t what we often get out of our elected officials or the legacy media. At the Illinois Policy Institute, that is something we are going to fix.

We are an independent nonprofit consisting of more than 20 writers and policy experts. Our mission is to generate public policy solutions that promote personal freedom and prosperity in Illinois.

  • We have produced the only viable plan to balance the state budget while also reducing the tax burden placed on residents like you.
  • Our work is consumed by more than 500,000 Illinoisans each month, free of charge.
  • We are funded solely by the support of the general public. We receive no government dollars.

But to continue to provide unbiased reporting and viable policy solutions, we need your support.

If you want to see a more prosperous Illinois for your family and friends, please take a minute to help make a difference. Thank you.

A review of the academic literature on tax hikes shows policy leaders in Illinois need to reconsider their reliance on increasing taxes. The Tax Foundation has summarized the effects:

Nearly every empirical study of taxes and economic growth published in a peer reviewed academic journal finds that tax increases harm economic growth. [Of 26 academic tax studies the Tax Foundation reviewed,] all but three of those studies … find a negative effect of taxes on economic growth. … Of those studies that distinguish between types of taxes, corporate income taxes are found to be most harmful, followed by personal income taxes, consumption [i.e., sales] taxes and property taxes.

Foremost among the studies the Tax Foundation reviewed is one by Christina Romer, President Barack Obama’s former chief economic adviser. Romer concluded:

[T]ax increases are highly contractionary. … [A] tax increase of one percent of GDP lowers real GDP by roughly three percent.

In addition, an International Monetary Fund study of 170 cases of fiscal consolidation, which are episodes where governments seek to close budget deficits through tax increases or spending reductions, found that spending cuts are much less harmful to economic growth than are tax increases.

And a data-rich panel study looking at tax differences among states, and evaluating taxation as a percentage of state personal income, found a robust negative effect of taxation on personal income growth.

Against this backdrop, consider that Illinois’ state and local tax burden as a percentage of total state income was tied for the fifth-highest in the U.S. in fiscal year 2012, according to a Tax Foundation study.

Illinois lawmakers need to seek a new way forward

Academic literature on taxation should be sobering for Illinois, and speaks directly to the economic pain Illinoisans have faced through the state’s post-recession tax hikes. Illinois has gone too far in the direction of increasing taxes, and the prospect of more taxes would exacerbate out-migration and weak economic growth, risking the grave financial crisis about which Moody’s Investors Service analysts have warned.

Polling results released in October 2016 by the Paul Simon Public Policy Institute indicate that nearly half of Illinoisans want to leave the state, and taxes are the top reason. After the 2011 income tax increases, Illinois experienced a record number of both people and income leaving the state, and by a variety of measures experienced the worst wealth flight in the country.

To address its debt, unpaid bills and budget deficits, Illinois needs to reform its spending, first and foremost. All parties should put forward spending plans to balance the budget without a tax increase. At both the state and local levels, that means changing collective bargaining with government unions to align public employee compensation with what taxpayers can afford. Policymakers must analyze public pensions, Medicaid, education finances and prevailing wage laws for potential cost-saving changes. Illinois lawmakers should prioritize taxpayers and the neediest residents, and put everything else under consideration for spending changes.

Illinois lawmakers should admit the truth: Tax hikes harm families, businesses and the larger Illinois economy. This is borne out in economic theory, economic research, Illinois’ experience since the Great Recession, and the lives of everyday Illinoisans. At the end of the day, another tax hike on Illinoisans guarantees lower take-home pay, a lesser standard of living and a bleaker outlook for Illinois’ future.

TAGS: Great Recession, income tax, jobs, outmigration, taxes

Source: Will County News

‘Grand bargain’ would cut private sector pay and continue government worker perks

‘Grand bargain’ would cut private sector pay and continue government worker perks  From Illinois Policy April 2017

Illinois state government works to prioritize special interests over taxpayers – and the budget deal being negotiated in the Senate would continue that.

Illinois state government works to prioritize special interests over taxpayers – and the budget deal being negotiated in the Senate would continue that.

Tax increases cannot solve Illinois’ fundamental debt and spending problems, but Illinois senators still want to give it a shot. State Sen. Christine Radogno, R-Lemont, along with Senate President John Cullerton, D-Chicago, are fighting for yet another tax increase on Illinois families – without reforming government spending – with the Senate’s “grand bargain” budget plan. More taxes will reduce the take-home pay and standard of living for Illinois workers, and polling shows that Illinoisans are fed up with the deluge of tax hikes they’ve faced since the Great Recession.

It’s time for a role reversal: Illinois government should find ways to reduce its spending so families can keep their hard-earned dollars. And politicians should stop raising taxes on private sector workers to continue appeasing special interests, such as influential government unions.

Illinois politicians should prioritize private sector taxpayers and those most dependent on social services. That means reforming the pay and perks of government unions, local governments, the education and health care bureaucracy, road builders and trades unions, tax credits for big businesses and bankers looking for a bailout. The Senate deal goes in the wrong direction and will harm the state.

Illinois needs to stop taxing away private sector wages and instead reform sweetheart deals for government unions and other special interests. The facts speak for themselves:

illinois personal income growth

  • Illinois state worker pay increases have dramatically out paced median pay increases in the private sector.

Illinois state workers are the highest-paid in the nation, after adjusting for cost of living, and they retire with free health insurance and $1.6 million in pension benefits courtesy of suffering private sector taxpayers.

AFSCME state worker pay

DEAR READER:

To make informed decisions, the public must receive the unbiased truth. Unfortunately, that isn’t what we often get out of our elected officials or the legacy media. At the Illinois Policy Institute, that is something we are going to fix.

We are an independent nonprofit consisting of more than 20 writers and policy experts. Our mission is to generate public policy solutions that promote personal freedom and prosperity in Illinois.

  • We have produced the only viable plan to balance the state budget while also reducing the tax burden placed on residents like you.
  • Our work is consumed by more than 500,000 Illinoisans each month, free of charge.
  • We are funded solely by the support of the general public. We receive no government dollars.

But to continue to provide unbiased reporting and viable policy solutions, we need your support.

If you want to see a more prosperous Illinois for your family and friends, please take a minute to help make a difference. Thank you.

illinois tax burden

  • State worker base wages have surpassed even the average wage of Illinois manufacturing workers, an industry that creates Illinois’ middle class. Meanwhile, middle-class manufacturing workers have been hemorrhaging tens of thousands of jobs in part because of the state’s tax and regulatory policies.

AFSCME vs. Illinois manufacturing

  • Debt and pension costs are spiraling out of control and driving up taxes on middle-class families. Just the interest cost on Illinois’ pension debt is $9 billion per year, and current pension payments don’t even cover that. Yet lawmakers do not even discuss changing the constitution to make reasonable reforms to pensions that prioritize taxpayers.

illinois pension debt

  • Taxpayers are being treated unfairly at the local level, too, stemming from pension promises and the extraordinary powers Illinois gives to government unions. For example, the median wage of a Chicago taxpayer was $31,096 between 2009 and 2013. The median salary for a CPS teacher, on the other hand, was $78,910. On top of that, the average Chicago teacher pension is nearly $70,000 per year. Such examples of unfairness are widespread across Illinois.

Chicago teachers are the highest paid of the 50 largest school districts in the U.S. despite the fact that Chicago’s population and CPS’ student body are both shrinking. Yet, the Chicago Teachers Union repeatedly threatens to go on strike unless it gets to extract more from private sector taxpayers.

CPS teacher pay

illinois outmigration

Illinois politicians need to stop cutting into family savings and instead reform the sweetheart deals they give out to politically powerful special interests. Governments across Illinois have been raising taxes since the Great Recession. Radogno and other senators are proposing billions of dollars in new taxes without reforming the fundamental unfairness of how Illinois government works. The Senate deal would mean more pay cuts for Illinois families, and more pay and perks for the politically connected.

Every time Illinois lawmakers raise taxes they are prioritizing government unions, multi-million dollar pensions, free government retiree health insurance, local government subsidies, education and health care bureaucracy, special business tax credits, road builders and trades unions and now even banker bailouts over Illinois families.

Illinois’ system is deeply unfair. Illinois government favors the politically connected over regular taxpayers. The Senate deal will make this unfairness worse. Senators should drop the ‘grand bargain’ and instead fight for Illinois families and homeowners.

TAGS: AFSCME: American Federation of State County and Municipal Employees, budget, Christine Radogno, grand bargain, manufacturing, outmigration, property taxes, taxes

Source: Will County News

House resolution would oppose Illinois Senate’s internet streaming tax

House resolution would oppose Illinois Senate’s internet streaming tax

Legislation with bipartisan support in the House would oppose the internet streaming tax proposal in the Senate’s “grand bargain.”

Legislation with bipartisan support in the House would oppose the internet streaming tax proposal – which might not even be legal – in the Senate’s “grand bargain.”

Taxing internet streaming is one of the proposals that make up the Illinois Senate’s grand bargain negotiations, but a resolution that could soon hit the Illinois House floor would oppose it.

State Rep. David McSweeney, R-Barrington Hills, filed House Resolution 192 March 3. The measure opposes the expansion of the state sales tax to include video and streaming services and made its way out of committee March 29 with bipartisan support – 12 Democrats and three Republicans cosponsored HR 192.

State Sen. Toi Hutchinson, D-Chicago Heights, filed an amendment to Senate Bill 9, one of the pieces of legislation that comprise the “grand bargain,” March 2. Hutchinson’s proposal would apply a 6.25 percent sales tax to cable and satellite TV, as well as internet streaming services such as Netflix, Spotify and Xbox Live. SB 9 would expand the 6.25 percent statewide sales tax to an array of other services, including repairs, landscaping, laundry, tattoos, body piercings, tanning and much more.

In response, HR 192 explicitly states, “Illinois should not increase taxes on citizens who depend on cable TV and satellite services for news and entertainment … we oppose expanding the State sales tax to cover the delivery of audio and video services, by cable TV, satellite dish, or other infrastructure, to Illinois homes and households…”

DEAR READER:

To make informed decisions, the public m

We are an independent nonprofit consisting of more than 20 writers and policy experts. Our mission is to generate public policy solutions that promote personal freedom and prosperity in Illinois.

  • We have produced the only viable plan to balance the state budget while also reducing the tax burden placed on residents like you.
  • Our work is consumed by more than 500,000 Illinoisans each month, free of charge.
  • We are funded solely by the support of the general public. We receive no government dollars.

But to continue to provide unbiased reporting and viable policy solutions, we need your support.

If you want to see a more prosperous Illinois for your family and friends, please take a minute to help make a difference. Thank you.

A statewide tax on internet streaming would hit Chicagoans particularly hard, as city residents with subscriptions to internet-streaming services already pay a 9 percent citywide “amusement tax” on them. That citywide tax has been met with legal challenge from the Liberty Justice Center, which filed a lawsuit on behalf of customers against the city, arguing that the tax is illegal and unconstitutional under state and federal law. A Cook County Circuit Court judge denied the city’s rust receive the unbiased truth. Unfortunately, that isn’t what we often get out of our elected officials or the legacy media. At the Illinois Policy Institute, that is something we are going to fix.equest to dismiss the lawsuit in July 2016, allowing it to proceed.

Likewise, the Senate’s statewide tax on streaming services could be legally dubious, as well. The Senate’s tax would be imposed on “the privilege of using [the taxable service] in this State,” according to the proposed legislation. But that ill defines what using a streaming service in Illinois means. Does it apply to a person with a layover at O’Hare International Airport who is passing the time watching Netflix on her tablet? Or does it apply to any resident of Illinois regardless of whether she is within state lines when she uses Spotify or Netflix? The bill doesn’t say.

The Senate’s bill would also require any company in the world that offers streaming services on the internet to become an Illinois tax collector simply for having a customer in Illinois – a likely illegal requirement. The Illinois Supreme Court in 2013 ruled unconstitutional the state’s “Amazon tax,” which forced online retailers to collect Illinois taxes regardless of whether they had a storefront or other physical presence in the state.

Whether pointing out the legal ambiguity or the economically harmful nature of them, challenges to the multibillion-dollar tax hikes in the “grand bargain” are an encouraging sign for taxpayers. The internet streaming tax proposal – which also applies to an array of other services – is regressive in nature and only adds to the burden created by the income tax and corporate income tax hike proposals in the Senate has put forward.

HR 192’s bipartisan support should push it along to the House floor for a vote. Calling out the Senate’s damaging tax hike proposals should also lead lawmakers to have conversations on the economic reforms the state truly needs – instead of a laundry list of tax hikes.

TAGS: David McSweeney, grand bargain, Illinois Senate, taxes

Source: Will County News

Forgotten Illinois: Newton

Like much of the Rust Belt, Newton is facing difficult economic challenges. But the community continues to stick together.

 

Source: Will County News

Media fights with Trump are killing journalism

America: Media fights with Trump are killing journalism

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A huge majority of American news consumers want journalists to provide accurate coverage of important political issues rather than waste airtime and column inches arguing with the president.

That’s according to polling data from Pew Research which shows that Americans are hyper-aware of growing animosity between the Trump administration and the national news media. Ninety-four percent of Americans told the organization that they are aware of tension between the administration and the media covering its actions.

Among those polled, 83 percent said they would characterize the situation as “generally unhealthy.”

“The findings do not speak to who Americans blame for these tensions or what Americans want done about the situation. But what is clear is that they currently have high levels of awareness and concern,” Pew reported.

What concerns Americans most, according to the data, is that they aren’t receiving adequate coverage of important political news as both reporters and the administration focus increasingly on discrediting one another. Seventy-three percent of respondents told Pew “tensions are getting in the way of access to important national political news and information.”

According to the polling agency, worries about current relationship between the executive and the news media are a bipartisan affair.

From the report: “Fully 88% of Democrats say the relationship is unhealthy, as do 78% of Republicans. And about seven-in-ten members of both parties say access to important political news is impacted. The findings are similarly consistent across other demographic groups such as age, race, income and education.”

 

Source: Will County News