Just yesterday, showing an uncanny knack for timing, Rod Blagojevich declared himself to be “a governor who tirelessly and endlessly figures out ways to help average, ordinary working people.”
Now we know that Blago helped average, ordinary working people by trying to auction a U.S. Senate seat. Before that, 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. Policy Blog readers knew Blago as a governor who helped average, ordinary working people by promoting what would have been the largest state-level tax increase this decade.
Last year, Blagojevich sought to impose a $7.1 billion net tax increase on Illinoisans. He structured the increase mostly in the form of a new gross receipts taxA gross receipts tax is a tax applied to a company’s gross sales, without deductions for a firm’s business expenses, like costs of goods sold and compensation. Unlike a sales tax, a gross receipts tax is assessed on businesses and apply to business-to-business transactions in addition to final consumer purchases, leading to tax pyramiding. , even though such taxes are widely reviled by economists across the political spectrum as distortionary, opaque, and regressive. At the time, Indiana University Prof. John Mikesell said that “[t]here is no sensible case for gross receipts taxation.”
In promoting his plan, Blagojevich complained that big corporations were not paying “their fair share” under Illinois’ existing tax code. Never mind that corporations never pay taxes at all (their shareholders, employees and customers do), that gross receipts taxes are similar to 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. es and similarly increase consumer prices, or that a gross receipts tax is regressive compared to the corporate and personal income taxes that Blagojevich could have raised instead. Gross receipts taxes have one virtue—they are a money machine—and that appealed to the governor.
Much like Blagojevich’s own career, the gross receipts tax went down in flames, killed by his fellow Democrats in the state legislature. But Blago limped on for another year, shaded by an ethical cloud and boasting a remarkable 4% approval rating. Perhaps once he goes to prison (if he is convicted of the alleged crimes which he allegedly committed) Blago can carry on his populist shtick there, advocating for meatier bologna sandwiches or increased rec time.
As we wait for the (inevitably hilarious) trial, readers may wish to amuse themselves by scanning the U.S. Attorney’s complaint against Blagojevich, which is full of gems like the following:
“I’m going to keep this Senate option for me a real possibility, you know, and therefore I can drive a hard bargain. You hear what I’m saying. And if I don’t get what I want and I’m not satisfied with it, then I’ll just take the Senate seat myself… [A Senate seat] is a fu**ing valuable thing, you just don’t give it away for nothing.”
Truly a man of the people.
More posts on taxes in Illinois here.Share