Governor Rauner Screws Illinois

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Published : June 22nd, 2017
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Category : Opinions and Analysis

Illinois governor Bruce Rauner caved in on tax hikes and got absolutely nothing in return.

A blistering Wall Street Journal editorial, The Illinois Capitulation, has the sorry details.

Bruce Rauner spent a chunk of his personal fortune running for Governor in 2014 to save Illinois from its tax-and-spend political class. More than two years later it looks like the former private equity star has made better investments.

On Tuesday evening the Governor with the worst job in America explained why he and his fellow Republicans have offered to raise taxes for the sake of ending a multiyear budget impasse with Democrats. He said he’ll accept a four-year increase in the flat state income tax to 4.95% from the current 3.75%, expand the sales tax and implement a cable and satellite TV tax.

This is a political defeat by any definition since Mr. Rauner campaigned on lowering the income tax to 3%, not on restoring the rate close to what it was under the last Democratic Governor. The “temporary” 5% rate partially sunset in December 2014. Democrats who run the legislature refused to negotiate over a budget unless Mr. Rauner agreed to a tax increase, and now they’re refusing to make notable spending or economic reforms in return.

The political tragedy is that Mr. Rauner didn’t make this mess; he was elected to clean it up. Former Governors Rod Blagojevich and Pat Quinn, a crook and a schnook, borrowed some $17 billion through pension obligation bonds. Since 2009 the state bond rating has been downgraded 21 times. The biggest culprit is state House Speaker Michael Madigan, who fronts for the government unions.

Mr. Madigan hasn’t said if he’ll accept Mr. Rauner’s offer, and perhaps he’s holding out for even more concessions. Mr. Rauner may come out the political loser, but the citizens of Illinois will suffer the most.

Proposed Deal

  1. Four-year tax hike to 4.95%, up from 3.75%
  2. Expansion of sales taxes
  3. New taxes on cable  and satellite TV
  4. Four-year property tax freeze
  5. No right-to-work reform
  6. No collective bargaining reform
  7. No pension reform
  8. No workers’ compensation reform
  9. No spending cuts
  10. No term limits
  11. No gerrymandering reform

That alleged property tax freeze is just at the state level. It does not include a freeze by home rule districts.

For those not in home rule districts, a property tax freeze “is the ultimate state unfunded mandate” according to Brad Cole, a former mayor of Carbondale who is executive director of the Illinois Municipal League, an association of local governments.

Rauner’s proposal contains ten very bad ideas and one idea of dubious merit because it will be undone in four years and may be skirted by home rule districts in the meantime.

“We’ve got to bring down our property tax burden. We cannot have the General Assembly pass a massive tax hike on income and sales and not provide property tax relief that is true and lasting.”

Rauner’s  proposal does precisely what he says it won’t, “Pass a huge tax hike without property tax relief that is true and lasting.”

Expect the exodus of Illinois citizens and businesses to pick up steam. Rauner should be ashamed at his offering.

I cannot wait to get the hell out of this state. The time is coming and we have plans.

Mike “Mish” Shedlock

Source : mishtalk.com
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Mish 13 abonnés
Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. He writes a global economics blog which has commentary 5-7 times a week. He also writes for the Daily Reckoning, Whiskey & Gunpowder, and has over 80 magazine and book cover credits. Visit http://www.sitkapacific.com
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