Marathon Pundit: Illinois' tax problem

Governor Pat Quinn, Rod Blagojevich's two-time running mate, is proposing not only a 50 percent increase in the state income tax, but also a hike in corporate taxes.

Writing for the Heartland Institute, Kristina Rasmussen, who I met at last week's Illinois Bloggers Conference, takes a look at Illinois and taxes.

"Illinoisans already pay high sales taxes—Chicago’s 10.25 percent rate is the highest of any large city in America—and above-average property taxes," said Josh Barro, staff economist with the Washington, DC-based Tax Foundation. "The saving grace of the Illinois tax code is the low, simple income tax. Governor Quinn's proposal is to do away with the only good thing about Illinois taxes."

And she takes a look at cigarette taxes, something that concerns this non-smoker very much:

Quinn also is pushing for a $1 increase in the state's excise tax on cigarettes, currently at 98 cents a pack, with the intent of using the money to bring down the state’s Medicaid payment backlog. Taxpayer advocates are concerned the expected revenues from a tobacco tax hike won’t materialize as the higher price point drives users away.

"A tax increase with such uncertain revenue prospects is a terrible proposition,
" said Joshua Culling, state government affairs manager for the National Taxpayers Union. "In fact, I wouldn't be surprised to see a New Jersey effect, where the state actually loses money as a result of the cigarette tax hike."

Many are questioning the long-term impact of a tax hike on Illinois' economy. The state ranks 44th and 48th, respectively, in its economic outlook and performance, according to the ALEC-Laffer State Economic-Competitiveness Index.

Illinois

Marathon Pundit

Tuesday, May 12, 2009

Illinois' tax problem

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