The biggest problem with passing Gov. Pat Quinn's
tax hike and budget proposals is not that almost every Statehouse interest
group opposes them.
The Illinois Federation of Teachers, for instance,
sent out a statement before Gov. Quinn had even finished his budget address to
say that any state legislator who votes for the governor's proposed
"pension cuts" would automatically lose the union's endorsement.
State workers are spitting mad about paying more
into the pension plan and being forced to take unpaid days off.
Business groups are beside themselves about the tax
hikes.
Mayors hate the idea that they won't get their usual
10 per cent slice of Quinn's proposed income tax increase.
These are very serious, almost insurmountable
obstacles, of course. But they're not the worst.
The biggest hurdle, by far, is that the governor focused
on a problem that he alone wants to deal with, but that nobody else really
cares about.
The governor, you already know, wants to raise the
state's personal income tax rate from 3 percent to 4.5 percent, but also triple
the $2000 personal exemption so that almost 5 million people will get a tax cut
or pay no extra taxes. Quinn claims this is about "tax fairness" as
much as it is about raising new money to close the state's $11.5 billion budget
deficit.
But, seriously, when was the last time you heard anybody
complain about the Illinois income tax?
At just 3 percent, Illinois has the lowest flat tax
in the nation. Quinn has pushed this tax fairness idea for decades, but almost
nobody else has. Tripling the personal exemption is just not something that any
legislator has ever cared much about.
Since the governor's tax proposal has no real
constituency within the General Assembly, he starts out with almost no
legislative allies.
Just about every member of the Illinois General
Assembly has fervently campaigned to reduce the property tax burden and
increase spending for schools. Also, suburban Cook County and Chicago
legislators are hearing loud and constant screams of anger from their voters
about their region's super-high sales tax.
There are some very angry, everyday people demanding
a solution to these festering problems.
Yet, Quinn's budget and tax hike proposals do nothing about any of them.
In fact, the governor's proposals may be making the
political situation for incumbent legislators far worse than they would be with
a more "normal" tax hike and budget fix.
For one, the governor has proposed a relatively tiny
education spending increase. That pretty much guarantees some local school
districts, which are also experiencing serious problems in this economy, will
have to raise property taxes even higher.
Local governments are strapped in this economy as
well and are dying for money. Without help from the state via their usual share
of the income tax hike they may also have to raise sales or property taxes.
Quinn wants to expand the state sales tax to cover
items like grooming and hygiene products, sweetened tea and coffee drinks that
are currently exempted from the full sales tax rate. That's not really a big
thing, but in this sort of environment it could make for big headlines.
And, not surprisingly, legislators aren't
particularly thrilled with voting for Quinn's 50 percent income tax hike and
still having to vote for well over a billion dollars in state budget cuts.
Quinn's tax exemption reform proposal took a tax hike that could've raised
almost $6 billion down to only about $2.5 billion.
The governor said last Friday that he hoped he could
convince the business lobby to support his tax hike by showing them how he's
forcing teachers and state workers to pay more into the pension systems. But
it's the height of folly to assume that the business lobby will ever get behind
a tax hike.
The only groups which can be counted on to reliably
support tax hikes are the very groups that Quinn has gone out of his way to
whack. Public school teachers, state workers and people like Chicago Mayor
Richard M. Daley are absolutely key, and all of them are firmly in the
"No" category.
I still think there will be a state tax increase in
our near future. I just don't think yet that it'll be this one. Quinn has a
horrific fight ahead of him.
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Rich Miller also publishes Capitol Fax, a daily
political newsletter, and thecapitolfaxblog.com