Like two great beasts locked in mortal combat our two political parties are engaged in an ideological struggle over the dregs of a weakening state economy. This struggle has ill-served the citizens of Illinois.
Our governor believes he is aiding the state’s business interests by attacking labor unions and withholding financial resources from higher education. The legislature believes that borrowing from state pension funds and cutting state programs will ensure a better tomorrow. Citizens need only look at the results — a low rate of economic growth and high unemployment — to realize that all these efforts have been in vain.
What is needed is a new vision of what Illinois could be — a land of opportunity for both business interests and job seekers alike. This new vision requires, however, that we recognize the following:
First and foremost Illinois has a revenue problem. The state has experienced budget deficits every year for more than 20 years. Illinois currently owes $8B to its vendors and $112B to its five constitutionally mandated pension funds. It is financially impossible for Illinois to “cut” its way to solvency.
Illinois has a consumer-based economy not an industrial one — 72% of consumer spending is for services, 17% for goods. Illinois taxes primarily goods.
Illinois is one of only five states that does not tax annuities, aka pensions.
Forty-one states have an income tax. Thirty-four have a “Fair Tax”; Illinois is one of only seven that has a regressive flat tax. This flat tax has not produced sufficient revenues to enable the state to pay all its bills.
Providing access to a high-quality public education is more likely than tax incentives to improve a state’s economy over time.
Despite Article VI of the Illinois Constitution, which declares that “The state has the primary responsibility for financing the system of public education,” Illinois finances only 26% of the education system. As a result the “Land of Lincoln” ranks last in the nation in the portion of educational funding paid by the state and first in the portion paid by local property taxes: 66% (the federal government provides 8%).
The over-reliance on regressive real estate taxes is unfair to the poor and middle classes because they pay a greater portion of their earnings than do the wealthy. Also the rate of growth in property taxes has significantly outpaced the rate of growth in income for those in the lower-income brackets.
Well over 95% of Illinois corporations are small S corporations which pay no corporate income tax. The remaining 5% are C corporations, the majority of which paid $5,000 or less in income taxes.
All of the bulleted points above have implications for the state’s economy and therefore must be understood by the average voter before Illinois can move forward.