By: Andrea Ryan
Yeah! Endless debt and
printed money bond issuing for everyone…until the “rendezvous with reality” arrives. Governor Pat Quinn just announced that Illinois’ day of reckoning is here. In spite of raising corporate taxes by 30% and personal income taxes by 67% , Illinois’ unemployment rate increased faster than any other state last year and their pension fund remains the most underfunded, sending the state spiraling toward deeper and irreparable insolvency.
For the Boston Herald, George Will writes,
After trying to tax Illinois to governmental solvency and economic dynamism, Pat Quinn, a Democrat who has been governor since 2009, now says “our rendezvous with reality has arrived.” Actually, Illinois is still reality-averse, so Americans may soon learn the importance of the freedom to fail in a system of competitive federalism.
Illinois was more heavily taxed than the five contiguous states (Indiana, Kentucky, Missouri, Iowa, Wisconsin) even before January 2011, when Quinn got a lame duck Legislature (its successor has fewer Democrats) to raise corporate taxes 30 percent (from 7.3 percent to 9.5 percent), giving Illinois one of the highest state corporate taxes, and the fourth highest combination of national and local corporate taxation in the industrialized world. Since 2009, Quinn has spent more than $500 million in corporate welfare to bribe companies not to flee the tax environment he has created.
Quinn raised personal income taxes 67 percent (from 3 percent to 5 percent), adding about $1,040 to the tax burden of a family of four earning $60,000.Illinois’ unemployment rate increased faster than any other state’s in 2011. Its pension system is the nation’s most underfunded, and the state has floated bond issues to finance pension contributions. Quinn’s recent flirtation with realism — a plan to raise the retirement age to 67 and cap pension cost-of-living adjustments — is less significant than the continuing unrealistic expectation that some Illinois’ pension investments will grow 8.5 percent annually. Although the state Constitution mandates balancing the budget, this is almost meaningless while the state sells bonds to pay for operating expenses (in just 10 years the state’s bonded debt has increased from $9.4 billion to $30 billion), underfunds pensions and other liabilities, and makes vendors wait (they are owed $5.6 billion).
The Illinois Policy Institute, a limited-government think tank, in a report cheekily titled “Another $54 Billion!?” argues that in addition to the $83 billion in pension underfunding the state acknowledges, there is $54 billion in unfunded retiree health liabilities over the next 30 years. Illinois, a stronghold of public employees unions, “is on pace to spend nearly $1 billion on retiree health care benefits in fiscal year 2013, more than double what it spent in 2003. Worse yet, these liabilities are growing more than twice as fast as tax revenues.” …
The Liberal leadership of Illinois, Democrat Governor and Democrat-controlled General Assembly, could learn something from this chart. Historically, when Americans were allowed to keep more of their money, the national deficit decreased, tax revenues increased, and jobs were created. Illinois is an ugly example of what happens when evidence-based common sense is rejected. You can’t avoid the laws of Economics.
Maybe Illinois’ ball of flames will be big enough for California and New York to witness. And the residents of Wisconsin and New Jersey can continue thanking Scott Walker and Chris Christie for saving them from the same fate.
Hat tip: Don