Columns / Discourse / January 26, 2011

Observing America: Illinois’ financial state

The State of Illinois continues to fall behind other states on balancing its budget. On Jan. 11, the State Legislature of Illinois passed a tax plan that will, according to The Associated Press, increase the personal income tax rate by 66 percent from 3 percent to 5 percent, raise the corporate tax rate from 4.8 to 7 percent and add to the cigarette tax by $1.98 while cutting about 2 billion dollars of spending (http://www.npr.org).

The budget plan supported by the Illinois Democrats and Governor Quinn will meet only about $7 billion dollar revenue. Newly elected Democratic Governors Jerry Brown of California and, of New York, Andrew Cuomo, have proposed plans that will provide more cuts in government spending than Illinois. For example, The Wall Street Journal reported that Governor Jerry Brown’s plan will cut $12.5 billion dollars of government spending and bring $12 billion of revenue from increasing tax rates. The New York Times reported that Governor Cuomo is also closing the $9 billion budget gap by making major cuts such as eliminating 15,000 government positions.

Governor Pat Quinn supporters came up with his tax plan to close a $13 billion deficit. However, as The Associated Press reported it would only bring about $7 billion of revenue, falling $6 billion short of closing gap and forcing the state government to make additional cuts to close the deficit.

Additionally, these tax increases are pushing its neighboring states to take advantage of these tax increases.

The Northwest Indiana Times has already reported how Illinois’ tax increases could prompt Illinois residents to move to neighboring Indiana. The Indiana Times cited Peter Novak, chief executive officer of the Greater Northwest Indiana Association of Realtors, saying “a marketing campaign to attract Illinois residents should be rolled out, educating people about Northwest Indiana.” The Chicago Tribune also reported that corporations are considering leaving Illinois due to the increased tax rate. For example, “The impact to the Chicago Board Options Exchange could be 2.4 percent,” according to Sandler O’Neill & Partners.

The Indiana Times also cited the non-partisan Illinois Policy Institute, saying that, “Indiana already ranks as one of the top four states where Illinois residents go when they move out.”

One other state that plans to capitalize on Illinois’ tax increases is Wisconsin. The Wall Street Journal reported that newly elected Republican Governor Scott Walker told the Illinois residents to “escape to Wisconsin.” Governor Walker asserts that he will be tougher than Governor Quinn on reforming public pensions, budget reform and Medicare while cutting taxes. Governor Walker, as Cuomo, Brown, conservative celebrity Republican Governor Chris Christie and President Barack Obama – who extended the Bush Tax Cuts for two more years – assert that lowering taxes will stimulate businesses. The measure already has bi-partisan support.

Governor Quinn may endanger the situation of the state of Illinois. By increasing taxes and not cutting spending sufficiently, like Cuomo or Brown are doing, businesses and residents may leave the state for Wisconsin or Indiana. The Director of the Illinois Policy Institute, Collin Hitt believes that Quinn’s tax plan “will [lose] thousands of taxpayers. If this bill passes, it will probably burst the pipes” (http://online.wsj.com/).

Alex Uzarowicz
Alex Uzarowicz has been a weekly conservative political columnist for The Knox Student for three years. He also writes for The College Conservative. Alex will graduate in June 2013 with a degree in political science, after which he will head abroad to begin his Peace Corps service.


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