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Illinois Governor Quinn Proposes Income Tax Increase, Borrowing, Not Paying Bills

2 min readBy: Joseph Bishop-Henchman

From the Associated Press:

Calling himself a realist, Gov. Pat Quinn on Wednesday scaled back his proposal to raise income taxes, shifting to a call for an increase of just one percentage point to be used solely for preventing deep cuts to education.

The rest of Illinois’ record-breaking $13 billion budget deficit should be addressed mostly by borrowing money and letting more unpaid bills pile up, Quinn said in a brief speech to legislators.[…]

Quinn rejected calls for across-the-board budget cuts. His opponent in the fall election, Republican Sen. Bill Brady, favors cutting all of state government by about 10 percent.[…]

Although Quinn called for a taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. increase, he did not include it in the formal budget he’s submitting to the Legislature. Instead, his budget addresses the deficit by cutting expenses by $2 billion, borrowing $4.7 billion to pay old bills and letting about $6 billion in new bills pile up for another year.

State employees would have to take unpaid days off, saving $200 million. Prescription drug benefits for the elderly would be cut in half, saving $70 million. The state would share less tax money with local governments, saving about $300 million.

Quinn proposed a $2,500 tax creditA tax credit is a provision that reduces a taxpayer’s final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer’s tax bill directly. for each new job created by small businesses. He said it would create 20,000 jobs.

Illinois’s low, flat 3% income tax is the best thing about the state’s tax system. It’s simple and not that burdensome, comparatively. Property taxes in the state are above average, the sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. is high, and corporate taxes are middle-of-the-road. See more on Illinois ranks here.

Claiming that new revenue will be used “solely” for something is economically ignorant. Dollars are fungible, and since education is unlikely to be the first thing cut in the budget, the tax increase is preventing cuts to other programs, not education. It’s a nice show to pretend education has its head in the noose, but it’s all one pot of money.

Borrowing money to pay current bills, and leaving some unpaid, is pretty irresponsible. It shouldn’t even count as a balanced budget. I’m sure Governor Quinn, like everyone, would like to have both cake and ice cream. But revenues and expenditures need to match, and that takes discussion and hard choices. Is he not up to it?