To tax or not to tax

To tax or not to tax.  That seems always to be the question - particularly in Illinois.

The array of opinions and arguments about whether to raise taxes is staggering.  At one end of the spectrum are the redistributionist folks who simply believe that Illinois should tax its citizens more -- like New York and California.  Not quite so far to that end of the spectrum are the folks who care more about getting more money for purposes they favor.  Way at the other end of the spectrum are another bunch who would not raise taxes under any circumstances - whatever the need.  And there are dozens of stops along the way.

So - faced with the snowstorm of argument and sound-bites - what's a middle-of-the-road voter in either party to do?

Why not think about this the way you would your family budget?  In a crunch, you cut your expenditures even though the cuts impact your life style and your comforts.  Cutting costs is the place to start - whether you are a family, or a family business, or a major corporation.    If you are a company, maybe you have to let some people go - or reduce salaries, or benefits.   Or you freeze the defined-benefit pension program and shift over to a defined-contribution program that costs less.

But state and municipal government are fundamentally different.   The biggest difference is that states and cities do not live in the same competitive pressure-cooker that families live in and businesses work in.  And the elected officials who run our state and cities are not judged the way business people are judged.   Our families and companies are forced to make hard choices;  if they don't balance their budgets, they are out of business.  By contrast, in state and city politics, officials are rewarded for avoiding hard choices.

Our governors, our state legislators and our mayors are more worried about staying popular - about getting re-elected - about not irritating the 15,000 street demonstrators who blocked the streets and exits from the Statehouse in Springfield this week.  If the hard choices aren't made, that's not so bad: it means somebody wasn't made angry.  So we neither reform nor cut.   And we continue to borrow.

This is why Illinois now has about $130 Billion (that's not a typo) of retirement-related obligations today.   The pro-tax crowd and the anti-tax crowd are united in this respect.  They don't worry about the mushrooming debt.   The pro-tax crowd wouldn't pay down the debt anyway; they would just spend the new money.  And the anti-tax crowd think anything - including more borrowing - is a lot better than raising taxes.  

So, what can the middle-of the-road voters in both parties do?  They can say to elected officials and candidates:  Balance the budgets!  Sure it will make somebody mad.  But just as we've had to reduce our family and business spending, you have to cut the costs of government and stop the borrowing.  Reforms and cuts come first.  Taxes must be the last resort.  Otherwise, the needed reforms and cuts will be bypassed.

In Illinois we have a real annual state budget deficit in the range of $14-15 Billion.  We spend $3 for every $2 we take in.  A governor with a meat-ax, backed by legislators who cared about the State's continuing viability, could cut perhaps $5 Billion per year - maybe more.  Pension reform as to current employees would reduce unfunded obligations by about $25 Billion.

The way to force hard choices is to stop the borrowing.  Borrowing has to be repaid, with interest.  Borrowing is a tax.  It's just a tax on the future - not the present.


Leave a comment
  • It takes political courage and political will to cut spending. it takes spineless cowards to raise taxes.

  • Quinn showed his cards by putting on the Internet a budget that did not meet any accounting standard of which I am aware.

    For the second year, Quinn has motivated the union and social service agencies to protest for taxes. At least he was good for one promise to the social service vendors--if other peoples' taxes don't get raised, you don't get paid.

    Of course, the question is what the average voter, who doesn't get the press's attention, can do. One can, of course, vote for Quinn's opponent. Quinn doesn't like democracy, as his constant refrain is that a nominated candidate should "step aside." However, the General Assembly has ultimate responsibility for the morass. In response to my frequent questions, nobody has told me how to vote out Madigan, Cullerton, and the 56 senators and 116 representatives from districts other than the politically gerrymandered district where I live.

Leave a comment