If you get the feeling we’re surrounded by fools, you’re not alone.
Fools crowd about us everywhere. But nowhere do the fools congregate more than in Illinois, both off the lake, upstate in Chicago, and downstate in Springfield where governors go to get indicted.
For example, downstate, in Springfield, the Illinois Legislature in 2011 hiked corporate taxes 30% and income taxes 67% in attempt to stop government pensions from bankrupting the state.
“The corporate income tax will rise from 7.3% to 9.5%, a 30 percent increase, becoming the fourth-highest state corporate income tax in the United States,” said the Tax Foundation at the time, “and the fourth-highest combined national-local corporate income tax in the industrialized world.”
Not only has Illinois not stopped the pension crisis, which now tops $100 billion, but they have turfed the economy, especially the creation of new jobs. And it's new jobs that really create new tax revenues.
The unemployment rate stands at 9.2% in Illinois versus 7.3% in the rest of the country.
People warned Illinois pols at the time that the precipitous rise in taxes would only hurt the economy and chase businesses to other more tax-friendly states.
"It's like living next door to 'The Simpsons', you know the dysfunctional family down the block?" quipped Indiana Governor Mitch Daniels, the state just to the east (and south) of Illinois.
And indeed it is.
But business is still booming for the politicos.
Because there is only one thing better than a sock-it-to-the-corporation tax increase.
And that’s an EXEMPTION to the sock-it-to-the-corporation tax increase.
Who needs lobbyists when you have friends like these?
Businesses are lining up in Illinois to ask for special carve-outs and exemptions from the tax, because you know... taxes are bad for business (rimshot!).
Everyone knows that.
Or at least the folks at Navistar and Sears know that.
According to the Wall Street Journal they are amongst the companies that got carve-outs worth $500 million in tax breaks to stay in Illinois, with Office Depot on deck waiting for their carve-out next.
“In addition to Office Depot,” says the WSJ “at least four companies are awaiting word on special tax credits that require legislative approval. A proposal offering Archer Daniels Midland Co. ADM incentives to remain in the state and hire new workers also failed to pass in the special session.”
But that’s only because we have elections coming up.
Why give Office Depot-- or ADM-- for free what politicos can charge them for twice?
Not to be outdone, the fools upstate in Chicago just saw their credit rating from Fitch’s rating service drop, “citing the city's sluggish economy and its inability to find a solution to its union pension obligations,” reports CNBC.
In July, Moody’s downgraded Chicago debt saying: “While the onus is on the state to reduce the city's pension obligations, it is the purview of the city to increase revenues to support those obligations. Absent significant growth in the city's operating revenues, escalating pension funding requirements will increasingly strain the city's operating budget, as pension outlays compete with other spending priorities, including debt service and public safety.”
Yeah, like cops are getting laid off. Ha!
In Chicago? Riiiight.
Don’t you know that’s someone’s nephew?
The solution, as Moody’s points out, is more and higher taxes. Politicos have gilded pensions so thoroughly that there is no chance in getting relief from pension spending in Illinois. And that income tax increase passed in 2011 was only supposed to be temporary anyway.
So right on time State Rep. Naomi Jakobsson (D), who represents land of the endless highway, at the intersection of highways US-57 and US-74 has proposed a tax increase that would raise taxes on anyone making more than $18,000 per year.
I think I made more than that in my first job in 1979 (Bellman, Evanston Holiday Inn, pictured below).
Supporters say that the tax would raise “as much as an additional $2.4 billion in revenue under one scenario,” reports the Southern.com.
And you know what that means?
When you’re faced with a $100 billion pension shortfall and you raise $2.4 billion from middle class families, you can do a lot more carve-outs for campaign-friendly corporations.
True, unemployment in Illinois won’t get better, but for a lot fools’ nephews, it won’t get worse either.
Wink.