Illinois is NOT broke, but our Tax System is!

HUH??? But all the media says Illinois is one of the worst business states in the universe!!!! If ET had landed in Illinois, he'd still be stuck! Sure...don't ya just love the crap the right/rich/corporate/take you pick like to try to shove down our throats? Too often it works because sound bytes and snappy little phrases work much better for people who don't feel like they have the time or the knowledge to understand these things. Oh, and you know its MY fault Illinois isn't paying its bills...so, what are some facts? 

First: Illinois has the least amount of state employees per capita than any other state, yes, that means that even Mississippi cares more for their residents than we can. You can't lay off more employees, because many places are down to bare bones minimum to begin with. 

Second: Why make cuts???? Our tax system is antiquated and needs to be updated. We also need to get rid of a couple tax laws that either aren't needed any longer or are not needed in a time when we, the middle class, state employees and/or retirees, are expected to pay more while the corporations are paying less.

So, some facts about the tax system. In my last post, I spoke about the difference between our flat tax and a graduated income tax, like all of our neighbors have('cept Indiana):

• Iowa: 9 rates that start at 0.36% to 9% (rate is higher than Illinois at $12K-6.12%)
• Kentucky: 6 rates that range from 2.0% to 6% (rate higher than Illinois at $5000)
• Missouri: 10 rates from 1.5% to 6% ( rate is higher than Illinois at $9,000)
• Wisconsin: 5 rates starting at 4.6% to 7.75% (rate is higher than Illinois at $13,580 - 6.15%)
• Indiana: 3.4%--ok, they're lower, but...its Indiana(spoken like a true FIB).

OMG!!! LOOK--all of the states have rates that actually are higher than ours at the top end! How could that be??? You mean all those fine business/media types have been lying to us?!?!?!?? Sure seems that way.

Not only that, but all, including Indiana tax services as well as goods. In other words, they have broadened the sales tax base.  So, what services? Dining, marina fees, landscaping, dry cleaning are some that were in a bill a couple of years ago(that also included seniors being able to get a property tax rebate on income taxes-now its just a credit). And how do those state sales tax rates compare?

• Illinois:       6.25%          Indiana:   7%
• Kentucky: 6%                Michigan: 6% 
• Iowa:        6%                 Missouri:  4%

Illinois is not out of bounds on sales tax, in fact it looks like we're about the same place as everyone else. 

Another area that we could set up a tax is on financial transactions--sales of stocks, etc., not withdrawing $100 from your savings. Again, this is something that would be small, but effective in 2 ways: first, more revenue, second-more stability in the market and less fluctuation--think gas prices and how they've been manipulated in the last couple of months by speculators...same thing can happen statewide vs. nationwide.

So, now that I've begun to get Illinois out of the trash bin that others have built for her, I've got a couple more ideas...

Large businesses in my state get a much larger piece of the tax cut pie than small and medium sized businesses, specially in the area of the "Single Sales Factor"(I will try to explain this later in another post because its very, very, wonky), suffice to say that this bomb allowed Caterpillar to pay NO sales tax in Illinois, this costs us about $600 million annually! But there are 2 other cuts/credits that businesses receive that just don't seem very fair:  the Retailer's Discount on Sales Taxes and Accelerated Depreciation.

Accelerated depreciation is very easy to understand. Some businesses get to depreciate equipment (computers, cars, JETS) at a faster rate than other businesses--doesn't sound very fair to me.

The Retailers Discount goes sorta like this---I go to a store, buy $100 worth of clothing and pay the 6.25% state sales tax. The retailer then sends the $6.25 to the state at the end of the quarter/year, right? Nope. This  tax cut allows the retailer to keep some of the sales tax. It was established years ago when it was more difficult to figure out the taxes in a small window of time. My idea? To the State legislature...ummm, we have computers now, this problem is alleviated! Get rid of this giveaway NOW! 

Yes, Illinois needs to budget the balance, but there are many ways to balance that would be fair to the state employees, the retirees and to all of the people in Illinois, not just kow-towing to the Chamber of Commerce and the Chicago Civic Federation.