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Illinois Archive

Tuesday

27

September 2011

0

COMMENTS

Illinois Was Kind Enough to Demonstrate Folly of Trying to Tax Way to Balanced Budget

Written by , Posted in Big Government

Everyone thank Illinois for being the “laboratory of democracy” foolish enough to demonstrate the folly of trying to use massive tax hikes to fix a spending problem.

Despite a major income tax increase, the state of Illinois is expected to end the budget year more than $8 billion in the red, according to a report set to be released Monday by a nonpartisan tax watchdog group.

…In all, the state will be $8.3 billion short on June 30 if nothing is done, according to the report. The majority of that money, roughly $5.5 billion, will come in the form of unpaid bills from companies that provide everything from meals for the elderly to toilet paper for prisoners. Another $1.2 billion is composed of Medicaid payments the state will push off until the next budget year, while the remaining $1.6 billion is owed to companies for tax returns and health insurance bills for state workers.

For years, practitioners of big government spent freely in Illinois, putting into effect their vision for large welfare government. Unable to admit the miserable failure of their experiments, they passed a massive 66% income tax hike in a foolhardy attempt to shield themselves from the repercussions of their profligacy. They have failed again.

Much of their problem stems from generous pensions, a system dominated by the undue political influence of labor unions and their corrupt leaders. Perhaps the state should consider diversifying their political brand, and finding politicians less beholden to such narrow special interests.

Thursday

20

January 2011

0

COMMENTS

States War on Business

Written by , Posted in Big Government, Economics & the Economy, Free Markets, Taxes, The Nanny State & A Regulated Society

Why any entrepreneur would try to make a living for themselves in a state like New York or Illinois is beyond me. Maybe it’s just because I’ve never really gotten the allure of big cities, but why would anyone subject themselves to the rule of such petty bureaucratic tyrants?  The big government regulatory states have no respect for those seeking to earn a living, so not find somewhere that does?  Take this story:

…”They told us we had to move or we’d be towed,” Loera explained as the cops rigged the food truck to the tow truck.

They gave Paty’s truck a $55 summons saying it was not allowed to sell merchandise from a metered spot, Loera said. His mother, Patricia Monroy, who does not speak English, made the ultimate decision to stay put once her family translated what the cops were saying.

“My mother felt like she was not breaking the law,” Loera said. “We still had 45 minutes on the meter.”

…Loera had reached out to the Street Vendor Project after his Nov. 30 arrest, and members of the organization joined Paty’s for Tuesday’s return to raise awareness on issues vendors face: harassment from law enforcement and city offices, a harsh ticketing system and excessive punishment and regulations confusing to vendors and cops alike.

But no one anticipated the towing.

“Even if they were breaking parking rules — and I don’t think they were because I don’t think food is merchandise — that’s why they get a ticket. But that’s not a worth a tow,” Basinski said.

…The food truck was careful to follow parking rules, Loera said. It arrived on the Upper East Side about 10:15 a.m., changing spots about 11 a.m. and again an hour later.

Loera and his mother, who was tearing as the truck was being towed, hopped in a cab to follow it. They did not want a repeat of the last towing, when all of their perishables and other items — including its generator — had been removed from the truck, Loera said.

After they paid the $370 to get their truck back in November, they had to take out a $5,000 loan so they could restart the business that provides the livelihood for six families, Loera said.

And what was the basis of the complaints against the truck?

Paty’s had faced the ire of several residents on Community Board 8, who complain about food trucks in the area. They worry the trucks are illegally hogging metered parking spots and that they are unfairly competing with struggling brick-and-mortar stores.

Hogging metered spots? I’m sorry, but weren’t they paying for them just like anyone else? If the prices aren’t reflecting market value, then raise them. But there’s no basis to complain about people who are paying those prices. Unfair competition? Unfair that they made products that people wanted more than other products? How dare they!

Silly immigrants, they thought they were coming to America because it was free, but there’s no place in America for earning an honest living by providing services that people want. If you aren’t working for the government, your work isn’t legitimate.

Other states, like Illinois, are content to just tax their business into leaving. Some states understand the incentives created by tax and spend policies run amok. Take this statement by Wisconsin Governor Scott Walker:

Wisconsin is open for business. In these challenging economic times while Illinois is raising taxes, we are lowering them. On my first day in office I called a special session of the legislature, not in order to raise taxes, but to open Wisconsin for business. Already the legislature is taking up bills to provide tax relief to small businesses, to create a job-friendly legal environment, to lessen the regulations that stifle growth and to expand tax credits for companies that relocate here and grow here. Years ago Wisconsin had a tourism advertising campaign targeted to Illinois with the motto, ‘Escape to Wisconsin.’ Today we renew that call to Illinois businesses, ‘Escape to Wisconsin.’ You are welcome here. Our talented workforce stands ready to help you grow and prosper.

The Associated Press, on the other hand, sneers at the idea that high taxes will drive anyone out of Illinois (Hat-tip: Tax Foundation):

But economic experts scoffed at images of highways packed with moving vans as businesses leave Illinois. Income taxes are just one piece of the puzzle when businesses decide where to locate or expand, they said, and states should be cooperating instead trying to poach jobs from one another.

It’s true that taxes are just one piece of the puzzle, but it’s not like Illinois has paired its high tax policies with a business-friendly regulatory regime. Nor is this a small change, as Illinois has moved from the 21st to the 46th highest corporate tax rates among states. I’ll ignore for now the assertion that states should not be competing to produce good policy, and point out instead this story (Hat-tip: Reason):

The founder of Jimmy John’s said he has applied for Florida residency and may recommend that his corporate headquarters move out-of-state as a result of the Illinois tax increases enacted last week.

Jimmy John Liautaud told The News-Gazette on Tuesday that he is angry about the moves, which boosted the individual income tax from 3 percent to 5 percent and the corporate income tax from 7.3 percent to 9.5 percent.

“All they do is stick it to us,” he said, adding that the Legislature and governor showed “a clear lack of understanding.”

A lack of understanding apparently shared by the alleged economists unearthed by AP.

Is it any wonder why these states are economic and fiscal basket cases?

Monday

12

July 2010

2

COMMENTS

LeBron's Migration Mirrors That Of The Broader Public

Written by , Posted in Economics & the Economy, Taxes

Basketball is not my sport of choice, so I had no vested interest in the outcome of the recent drama surrounding LeBron James.  Even though I still consider Florida my home state, I don’t care that he’s chosen to play in Miami.  I am, however, struck by the degree to which LeBron’s decision mirrors that of so many ordinary Americans and businesses.  Namely, I note that he’s spurned high tax jurisdictions for income-tax free Florida.

Obviously, LeBron made his decision on more than just economic factors, though it’s fair to say that pay and other monetary factors mattered to some degree.  Although the sports community narrative involves James joining basketball super stars Wayne and Bosh – as well as some cries about the fairness of this team construction – the fact that all came together in Florida shouldn’t come as any surprise.  From 1999-2008, more Americans have migrated to the zero-income-tax-having Sunshine State than any other.  Meanwhile, the other states involved in the LeBron saga – Ohio, Illinois and New York – are 3 of the bottom 6 in net migration, with more Americans fleeing New York than any other state in the union.

These patterns should not come as any surprise when you contrast Florida’s lack of an income tax with the top marginal rates of Ohio (7.93%), Illinois (3.0%) and New York (12.62%).  But perhaps more importantly is the degree to which businesses are motivated by the same considerations.  Corporate taxes and regulatory environments shape corporate decisions every day, with states like New York and California increasingly driving businesses away as they look for more favorable environments.  This kind of tax competition is an important check on bad government policy, but it can be painful when you’re in one of the states being driven into the ground by short-sighted politicians.  While LeBron James just might have considered these factors in his decision, that ordinary Americans and businesses do is without question – and the consequences for high tax jurisdictions are as clear as Cleveland’s outrage.

Thursday

22

April 2010

0

COMMENTS

Unions March In Illinois, Demand More Taxpayer Money

Written by , Posted in Economics & the Economy, Labor Unions, Taxes

While Illinois, like so many state governments, is already struggling to pay for overly generous public pension plans, 15,000 union members marched on the state capital demanding yet more money in the form of higher taxes.

According to ALEC’s Rich States, Poor States, Illinois is ranked 47 out of 50 for its economic outlook.  It also already has the 10th highest worker compensation costs among the states.  Raising taxes to pay public workers yet more would be a disastrous move for the state, and likely foster continued migration of the wealthy out of the state in search of lower tax jurisdictions.