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Illinois Wakes Up
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| Contributor | ArmyDem |
| Last Edited | ArmyDem Jan 17, 2011 01:08pm |
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| Category | Editorial |
| Media | Newspaper - New York Times |
| News Date | Sunday, January 16, 2011 07:00:00 PM UTC0:0 |
| Description | Published: January 16, 2011
For years, Illinois, like so many states, pretended that it had not fallen off a budgetary cliff. It was spending too much and taking in too little revenue, but every year it would kick its problems into the next. Unable to pay its bills, it finally accepted reality last week and raised taxes on incomes and businesses — a first step toward getting its house in order.
The action was immediately ridiculed by several governors around the nation who are still pretending that they can cut their way out of the enormous shortfalls they face, without raising taxes. Wisconsin and Indiana predicted a windfall of angry corporations and residents would head their way from Illinois. Even Gov. Chris Christie, the New Jersey Republican, vowed to fly to Illinois to invite businesses there to defect to his state.
That makes great political theater. But businesses and voters in Illinois, and around the country, should take a closer look at the facts and figures, including their own.
After 22 years of not raising income taxes, Illinois saw its budget shortfall grow to $15 billion. It had the lowest state credit rating in the nation, and it wasn’t paying its bills to hospitals and schools.
The Illinois tax rate was low before and remains low for big states. The income tax will rise from a flat 3 percent to a flat 5 percent. That will cause pain at the lower and middle levels of the economic scale, but the state’s millionaires will probably stay put. (The top rate is 10.55 percent in California, 8.97 percent in New Jersey and New York, and 7.75 percent in Wisconsin.)
Illinois’s corporate tax is going up to 9.5 percent from 7.3 percent, but that by itself is unlikely to send businesses packing. What businesses crave most is a stable environment in which to make profits, and Illinois was anything but stable. Businesses tend not to like it when health and education systems break down. |
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