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  • Illinois Shows that Taxing and Spending Has Consequences

    In January 2011, newly elected Illinois governor Pat Quinn imposed a 67% income tax increase on citizens and a sharp increase in the corporate tax rate to satisfy missed and unpaid bills. A month later, the state issued $3.7 billion in bonds just to make payments to unfunded state pensions. Unfortunately, these measures do not seem to have inspired Moody’s confidence. The agency rated Illinois as the worst credit risk of any state in the union in August.

    Senator Mark Kirk (R-Ill) produced a report on Tuesday that makes some startling claims about the severity of the fiscal problems in his home state. Some highlights:

    - According to a Standard and Poor’s study, Illinois’ per capita debt and unfunded liabilities amount to more than three times Wisconsin’s or Michigan’s and more than twice those of Missouri, Indiana or Iowa.

    -Illinois owes $8.3 billion in unpaid bills. That’s 10 times higher than the level in 2002.

    - Illinois debt service (interest) is approaching $3 billion a year. That’s four times the amount needed to plug the $712 million budget deficit at the Chicago Public Schools. (Note: CPS itself pays more than $470 million in debt service.)

    Credit ratings agencies aren’t the only organizations dissatisfied by the tax and spend approach. Following the tax hikes, a billboard campaign asked Illinois businesses if they were “Illinoyed by Higher Taxes?” and pointed out the fact that AAA-rated Indiana was the best in the Midwest in the Tax Foundation’s 2011 Business Tax Climate Index. Even the iconic CME Group, which owns the Merc and the Chicago Board of Trade, may be leaving to escape higher taxes.

    Senator Kirk hopes that shining some light on the depth of the issues may help garner support for pro-growth reforms. However, if his state continues to spend more and raise taxes the Chicago way, preferred by (former Illinois Senator) President Obama (see: Buffett Rule and the millionaire tax), the state will continue down its dead-end path.

    Jay Lucas is a member of the Young Leaders Program at the Heritage Foundation. Click here for more information on interning at Heritage.

    Posted in Ongoing Priorities [slideshow_deploy]

    8 Responses to Illinois Shows that Taxing and Spending Has Consequences

    1. Mike Shelby says:

      Looks like 0 can head back to IL and bring his brand of prosperity home in Jan 2013. Enjoy. M

    2. Bill says:

      Taxes do need to be raised more on the wealthy and we have to stop spending!

      • Ron says:

        The top 10% of your fellow Americans already pay 70% of the taxes.

      • Charlie says:

        I have a slightly different take on raising taxes, than you do, I think it's high time that the bottom 50%, start paying THEIR fair share. Maybe they'd pay a little closer attention to what's being spent, if it was THEIR money that was being wasted, and maybe they'd take strides to do something about it.

      • Bobbie says:

        I agree. There's no reason to raise taxes in the first place and alot of reason people that haven't been, need to start paying for their benefits and special interests the rest of us are tired of being forced to provide for and live without.

        The more government controls Bill, the less reason you'll need freedom. The more revenue government gets, no matter where it comes from (wealthy, responsible working etc.) the government has control of it. Builds government potential all the greater for things we never needed and still don't. "we need the rich to pay their fair share." "we need to redistribute the wealth." broad statements that one has to wonder who's going to see the cut government takes for their efforts when they're stepping in violates the constitution? Sincere wealthy people wouldn't favor government desperation in putting earned wealth in the hands of government control at a cost of good money. Sincere people use common sense and know less to government, more to the charities. Why would you want the expense of government taking away from the charity?

        The wealthy beggars who demand all wealthy pay more (warren buffet, george soros, michael more capitalists,) through the insistence of government and not through their individual humble free hearts, are promoting government dependency (control) on the rest of us. There is no need for the involvement of fed government during any process of donating to charities. These individuals along with many other wealthy people, want government involved at a cost that takes from the intended cause!

        Isn't it interesting no one thinks about expanding that 1% to decrease that 99% instead of destroying that 1% and all future opportunities to the ever possibility for the 99%?

    3. Smy752 says:

      Taxing the wealthy is like shooting your foot. You may have had good intentions when you used the trigger but the whole body feels the consequences. Better to recognize that your solution to the problem is faulty before the trigger is pulled. Faulty thinking often yields long term pain. Perhaps it would be wise to listen to those who tell you that aiming a weapon at your foot will cause great pain and discomfort.

    4. Kyle Prunty says:

      Too bad 53% of America was too stupid to understand this in 2008.

    5. IJay808 says:

      Oh No! The problem is they didn't spend enough…lol

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