Don Grady is a CPA and Professor of Accounting at National Louis University, Chicago
Did you see the editorial in the Chicago Tribune on March 30, 2014 comparing Illinoisâ âState of the Stateâ between 2010 and 2014? The editorial used 22 different indicators to measure Illinois against the other 49 states. The measure I found very interesting was the âoverall economic performanceâ where Illinois was ranked 38th in 2010 and dropped to 47th in 2014 â we are the fourth-worst state. Unemployment in Illinois is currently at 8.7 percent, ranked the second-worst state, only slightly better than Rhode Island where it is at 9.2 percent.
It was interesting to note that Gov. Quinnâs recent speech on the budget conveniently avoided mentioning the dramatic drop in the stateâs status. While not stating it specifically, he set the stage for a recommendation that the âtemporaryâ state income tax at 5 percent (up from 3 percent), become permanent. As a matter of fact, I believe I heard the Governor say that âwe are on the road to recovery.â I would like to see the road that he is referring to. Where is it?
As we have seen this past year, the Illinois legislature is wrestling with options to âfixâ the ever continuing economic plight of the state. The proposal to cut pensions was an attempt at a âquick fixâ for the shortage in pension funds. That proposal would unjustly cut the pensions of those who have contributed over the years to the pension funds as well as future pensioners. The latest idea was proposed by the Speaker of the House, Michael Madigan, to impose an additional 3 percent tax on millionaires. So, that will drive the millionaires out of Illinois too.
So whatâs next? Unfortunately, there are rumors that Illinois may start to tax Social Security and pension retirement funds â some of the few areas that have not yet been touched in the state. Imposing a state income tax on Social Security and pensions is just like taking a 5 percent cut in retirement income. That would be another âblack eyeâ for Illinois and another reason for retirees to leave the state.
Illinois needs to turn the tide and focus on cutting costs, not just finding ways to raise additional tax revenues. Another measurement tracked by the Chicago Tribune editorial was the percentage of state and local tax burden to total income for Illinois taxpayers. In 2008, Illinois was ranked 21st worst out of 50 states, while in 2014 Illinois is now the 11th worst â another statistic headed in the wrong direction. Did you know that Illinois is in first place with the âmost number of local governmentsâ at a staggering 6,963? Letâs cut some of those local governments too.
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