75% increase to state income tax

[doctorwho]

Jan 13, 2011 13:54:13 GMT -6 Arch said:

I don't share your view that people somehow have unlimited funds to keep paying more and more and more for less. Call me silly, but I just don't.

I know I do not either nor do the vast majority of people I know. Disposable income is a thing of the past- each tax hike takes something with it. Each month I look for things I can cut costs on - soon to go here will be my main land line with AT&T. Just don't need it any more really, so why give AT&T the money

But kids my oldest daughters age- 26,27 etc- they aren't making much yet, and a 2% hit is a killer. This is also the age group that a few yers ago fueled the sports bars- movie theatres etc- nite life. Today they are watching their pennies like most.

The double tax hit on small business and state income tax will have a severe ripple effect regardless of what that arrogant governor and people like Mr Madigan say. They are so out of touch it is sickening. I have made a pledge to keep as many of my spending dollars local and for small businesses in the area...

I would love to ask our lovely SB what they think of as our tax rates are about to climb to make up for foreclosures (missed taxes) - and dropping preoperty values for that white elephant on Eola that was never ever needed and couldn't be more clear today.

Like you casey I am looking to go..done with this nonsense- I just hope as June 2012 approaches there is some market for my home..there is little today. And gee- imagine anyone who actually does their homework and see the financial storm headed to 204..on top of what is already screwed up statewide. I'd steer the hell clear of here.

[macrockett]

If you don't know who Mike Shedlock, the author of the message below, he is a money manager here in IL. seekingalpha.com/author/michael-shedlock

globaleconomicanalysis.blogspot.com/2011/01/campaign-to-recall-illinois-governor.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29

Campaign To Recall Illinois Governor Pat Quinn Underway

I have exciting news this morning. I am launching a campaign to recall Illinois governor Pat Quinn.

This is not a frivolous effort. It is a serious undertaking and one in which I intend to see to the end. It will take hard work and lots of volunteers but we will be successful.

I need volunteers to ...

Gather signatures
Talk to state legislative representatives to get them on board
Provide legal help
Design a website
Help with advertising


I will pay for website hosting and domain names.

We need to be successful because Governor Quinn has plans that will destroy Illinois.

Massive Tax Hikes Will Drive Businesses Out Of Illinois

The Chicago Tribune reports Governor Quinn has reached a deal with top Democratic lawmakers including Senate President John Cullerton to ....

Hike the state income tax by 75%, from 3% to 5.25%
Hike the corporate income tax rate by 75% from 4.8% to 8.4%
Hike the cigarette tax by $1 a pack
Use the tax hikes to borrow more money to fund pension plans


The Tribune notes "As a measure of how desperate state government's finances are, Cullerton said the state would use the income-tax hike to borrow $12.2 billion. Of that, $8.5 billion would pay overdue bills and $3.7 billion would cover a government worker pension payment lawmakers skipped when putting together the current budget, he said."

Raising corporate and personal income taxes to borrow $12.2 billion is not "desperation", it is fiscal insanity. It will drive businesses out of Illinois and push many struggling taxpayers into bankruptcy.

Quinn is unlikely to get all of those measures passed, but it does not matter. Those are his intentions and they they show his blatant incompetence and disregard for both taxpayers and businesses. Moreover, he will try again.

Enough Is Enough

John Tillman at the Illinois Policy Institute says ...

Amazingly, the deal will also hike the corporate income tax rate. Combined with the personal property replacement tax and the federal corporate tax, Illinois would have one of the HIGHEST corporate income tax rates in the world. You don't have to be a rocket scientist to figure out this means bad news for job growth in Illinois.

With high property taxes, high sales taxes and now high income taxes, the flight to low-tax states will only pick up speed.
Enough is enough.

Indiana Governor Mitch Daniels On Quinn's Plan

The Illinois Policy Institute is not the only one who thinks Governor Quinn's proposal would be horrid for Illinois. So does Indiana Governor Mitch Daniels according to The Northwest Times of Indiana.

"We already had an edge on Illinois in terms of the cost of doing business, and this is going to make it significantly wider," Daniels said.

The Tax Foundation, a nonpartisan tax research group in Washington, noted if the proposed corporate tax hike becomes law, Illinois businesses will pay the highest combined national-local corporate tax rate in the industrialized world.

That is the wrong course for Illinois to take, Daniels said.

"It does show that you can make very different choices, and the contrast between the choice we've made and the one they have is stark," he said. "Obviously I think ours is wiser, but self-governance means people get what they vote for."

Indeed, people get what they vote for, but how did Quinn win?

Governor Quinn Bought The Election

Governor Quinn barely won the election against a very weak opponent in spite of an amazing 85% vote turnout for Quinn in Chicago. Sadly, Mayor Daley did nothing to stop this, although the mayor is complaining mightily now about the Governor's proposals.

“It’s worth remembering that Governor Quinn only found one program—out of thousands—to veto outright when he signed this year’s spending bill in July. Had he taken a closer look at structural spending reforms and not agreed to politically motivated “no layoff and closure” deals with public employee unions, we could be on the path back to recovery instead of being stuck in ever-mounting debt,” noted John Tillman at the Illinois Policy Institute.

Those "no layoff" agreements bought Quinn votes. So did other union-pandering deals. It did not matter that Illinois could not afford those deals. Quinn did what he could to get elected, taxpayers be damned.

There still is no serious discussion from Quinn as to how to rein in exorbitant taxpayer giveaways to public unions. His only "solution" is to raise taxes.

Four Big States - Four Big Problems

California, Illinois, and New York all have massive fiscal problems. They all have other things in common.

Collective Bargaining
Prevailing Wage Laws
Illinois, California, and New York are NOT "Right to Work" states


In essence, Public unions own Illinois, California, and New York.

New Jersey Governor Chris Christie is starting to turn things around. Wisconsin and Ohio also have newly elected governors willing to take on public unions.

In Illinois, Governor Quinn remains beholden to public unions, not taxpayers, in spite of massive voter rejections nationally of tax-and-spend policies.

Organized labor contributed mightily to his campaign, and Governor Quinn wants to pay them back. His proposals will do that by taking money out of your pocket so that the public unions get wages and benefits that most taxpayers will never see.

Quinn bought the election, even if barely.

Constitutional Amendment To Recall Governors

Last November, Illinois voters were presented a chance to vote on a constitutional amendment allowing governors to be recalled. I am pleased to report the Illinois Governor Recall Amendment Passes With Two-Thirds Of Vote.

The Illinois constitution was changed last night, with an amendment swept in by a wide margin.

Over two million voters approved a process for the public to recall governors during their term, giving the measure well over the 60 percent of voters required for its passage. The amendment is widely viewed as a reaction to the corruption charges against former Governor Rod Blagojevich.

What Does A Recall Effort Take?

A voter has to file an affidavit stating his or her intent to circulate petitions to recall the governor. The affidavit cannot be filed until after the governor has served six months in office.
Permission from lawmakers: The affidavit has to include the signatures of 20 members of the Illinois House and 10 members of the Illinois Senate. Half of the signatures from lawmakers have to be from Democrats and half from Republicans.
Petitioners have to gather signatures equal to 15 percent of the number of people who voted in the last gubernatorial election.
Of those signatures, organizers would have to get at least 100 signatures in each of at least 25 different counties. Petitioners would have 150 days to get them and the State Board of Elections would have 100 days to certify them.
When would the recall election be held? No later than 100 days after the State Board of Elections certifies the signatures.
Passage: A majority of voters have to vote to recall the governor in order for him or her to be removed.
Who becomes governor: If the governor is recalled, the lieutenant governor becomes acting governor until a special election is held. If there is no lieutenant governor, the attorney general becomes acting governor. If there is no attorney general, the secretary of state becomes acting governor.
Special election: A special election to select a new governor has to be held within 60 days if the governor is recalled. That process starts on the day of the recall election if multiple candidates from the same political party file for the office. If that’s the case, a special primary election would be held on the same day of the recall election. Candidates must gather 5,000 signatures in order to run in the special election. The new governor will serve for the unexpired portion of the recalled governor’s term.
The Better Government has noted that nothing in the amendment prevents the recalled governor from running in the special election after he or she is recalled. It also noted that the amendment does not require grounds for recall.


The above bullet points are from the State Journal Register.

Note that the amendment does not require grounds for a recall, but we have them: Blatant fiscal incompetence and vote buying.

The state House of Representatives consists of 118 representatives elected from individual legislative districts for a two-year term with no limits. The Illinois Senate is consists of 59 senators with staggered two- or four-year terms.

Thus, getting approval from 20 members of the Illinois House and 10 members of the Illinois Senate (half from Democrats and half from Republicans) is not a prohibitive task.

Governor Quinn Supports Recalls

It is a fitting sense of irony that Governor Quinn Trumpets Recalls.

"I think the ultimate way to get ethics in Illinois is have the power of recall in our constitution," Quinn said.

I could not possibly agree more with Governor Quinn. It is perhaps the only major political stance he has taken that I can endorse 100%.

Will You Stand Up To The Injustice?

We have to wait six months to file, but there is no sense in waiting. There are many tasks to be performed and I will need volunteers from every county to gather signatures. I estimate we need about 520,000 signatures. My goal is to get 700,000.

If you can volunteer, time, web design, advertising, legal help, or any kind of general assistance, I would appreciate it. We need to put a stop to Quinn's proposals that will drive businesses and jobs out of the state and massively raise your taxes as part of the bargain.

Please email Recall Governor Pat Quinn Today ([e-mail]) and lend your support to the effort to save the state of Illinois from Quinn's fiscal recklessness. Please let me know what you can do to help.
-------------------------------------------------------------

You might also be interested in where some of the money goes in Illinois:

forthegoodofillinois.org/blog/2011/01/springfields-dirty-little-secret/

[southsidesignmaker]

Mac,
Mike Shedlock and his blog are getting strong press and traction with local business owners. I was just going to post the same article which was forwarded to me from a close business associate. Unfortunately this business associate has had enough, as his home and business are both up for sale, he is heading to the sunshine state.

[Arch]

I was speaking with 2 different business owners this weekend so far and between the two of them they are going to not hire the combined 7 people they were planning on hiring this year and will be eliminating 3 full time headcount in order to deal with this tax change.

Way to go IL... Way to go...

[macrockett]

Articles on the tax increase:

taxprof.typepad.com/taxprof_blog/2011/01/indiana-and-wisconsin.html

Here is the Reuters article, with some good advice:

Illinois, a kleptocracy in action
Jan 14, 2011 13:58 EST

What should America do about its troubled economy? Sometimes the real world provides the best laboratory for political and economic experiments. Democratic capitalism vs. totalitarian communism? One quick look at East Germany and West Germany in the 1980s or North Korea and South Korea today provides easy analysis of which is the preferable way to create and organize a peaceful and prosperous society.

Now we have Illinois vs. Indiana. The Prairie State has the worst debt rating of any state in the union and heading into 2011 faced a funding shortfall equal to 40 percent of its total budget. Only Nevada, hit particularly hard by the housing depression, is as nearly bad off, according to the Center on Budget and Policy Priorities

Yet directly east of Illinois is the Hoosier State with a AAA credit rating. Indiana faces a 2011 shortfall of just 9 percent and expects to balance its budget even though the economic downturn has struck just as hard as in Illinois. Under Governor Mitch Daniels, a noted budget hawk who may run for the Republican 2012 presidential nomination, Indiana has continually pared back spending. It now has the fewest public employees per capita of any state. And it spends half as much per citizen as Illinois.

But faced with a fiscal crisis, Illinois decided this week to raise taxes by $7 billion a year, jacking up the individual rate to 5 percent from 3 percent and the corporate rate to 7 percent from 4.8 percent. That the state didn’t instead cut spending dramatically is not really surprising. One-party kleptocracies — and that pretty much is what Illinois is — always want more taxpayer money, not less.

Yet it is unlikely the state will raise anywhere near that $7 billion now that it chose to undermine its competitiveness. This, from the nonpartisan Tax Foundation:

Our 2011 State Business Tax Climate Index ranked Illinois 23rd in the country, middle-of-the-pack compared with its immediate neighbors. Illinois’s low, one-rate individual income tax offers the advantages of simplicity, stability, and a competitive rate relative to other states, outweighing more negative elements of the state’s tax system.

If this legislation enacted on January 12, 2011 had been in place on July 1, 2010 (the snapshot date for the 2011 State Business Tax Climate Index), Illinois would have ranked 36th instead of 23rd. This is a fall of thirteen places, past South Carolina, Georgia, Pennsylvania, Tennessee, Alabama, Nebraska, Oklahoma, Maine, Massachusetts, New Mexico, Arizona, and Kansas.

On the individual income tax sub-index, Illinois would have ranked 14th instead of 9th, a drop of five places. On the corporate income tax sub-index, Illinois would have ranked 45th instead of 27th, a drop of 18 places.

Three lessons here:

1. Neither states nor countries exist in isolation. Just as it’s foolish for Illinois to act as if what Indiana and Wisconsin are doing fiscally is irrelevant, so to must the U.S. take into account that is has, for instance, a marginal and effective corporate tax rate far above that of the average advanced economy. The Obama White House may call for a cut. If he doesn’t, the congressional GOP should.

2. As the Indiana experience shows, the earlier you get started on budget cutting the better. Even though Uncle Sam has been running trillion-dollar deficits in recent years, the bond market hasn’t seemed too worried about the accumulation of all that debt. This has given President Barack Obama and Congress a window to make fiscal fixes that are reasonable rather than radical.

But the window could easily, and even quickly, close someday. If it does, the Federal Reserve chairman and the Treasury Secretary may be forced to trudge up to Capitol Hill and beg for action to reassure markets, such as a big tax hike (like a VAT). This is exactly the scenario some GOP spending hawks fear.

3. States should realize that Washington is not coming to their rescue, unless making it possible for them to declare bankruptcy counts as a “rescue.”

[southsidesignmaker]

"Personal income tax

* Indiana collects from its residents a flat tax of 3.4 percent of federal adjusted gross income with modification.

Now we have Illinois vs. Indiana. The Prairie State has the worst debt rating of any state in the union and heading into 2011 faced a funding shortfall equal to 40 percent of its total budget. Only Nevada, hit particularly hard by the housing depression, is as nearly bad off, according to the Center on Budget and Policy Priorities

Yet directly east of Illinois is the Hoosier State with a AAA credit rating. Indiana faces a 2011 shortfall of just 9 percent and expects to balance its budget even though the economic downturn has struck just as hard as in Illinois. Under Governor Mitch Daniels, a noted budget hawk who may run for the Republican 2012 presidential nomination, Indiana has continually pared back spending. It now has the fewest public employees per capita of any state. And it spends half as much per citizen as Illinois."

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++


Indeed Indiana has been very proactive in realizing that a tax and spend, spend , spend attitude in unsustainable over the long term.

[asmodeus]

I would love to ask our lovely SB what they think of as our tax rates are about to climb to make up for foreclosures (missed taxes)

I thought the bank holding the mortgage had to still pay the property taxes.

As an aside, on my most recent refinancing, the bank gave me a better rate for choosing to have an escrow account for taxes and insurance. (I normally would just pay those myself with no escrow account.) Apparently it gives them a bit of extra cushion if someone walks away from the property.

[southsidesignmaker]

Asmo,

Interestingly as I went to refinance to take advantage of better rates our loan officer informed me that it would also be necessary to escrow our taxes and insurance. When I informed him that the rate of interest paid for these accounts was minimal when compared to the open market his attitude was unchanged. I noted that on a yearly basis this arrangement would cost my estate $650.00at minimum and on a good year upwards of $1500.00 in lost interest costs. When the banker informed me that there was a $100.00 a year cost for the escrow account I informed him Thanks but No Thanks.

We are searching at present for a mortgage without these restrictions.

All taxes would have to be paid if a home is sold short or via a foreclosure. Personally I just don't want to be held accountable or penalized for others stupidity.

[sam2]

We've been out of the mortgage market for awhile, but at one time, we were able to avoid the escrow by opening a pledged CD at the mortgage holder's institution. Essentially, we deposited a year's worth of property taxes in a CD and could not withdraw the funds without the bank's approval. If we failed to pay our property taxes, then the bank would take the funds in the CD to pay them.

We obtained market rate interest income. You could have a multi year cd and get a comparatively decent rate, even today.

Might be worth a look.

[EagleDad]

I won't do escrow and my mortgage lady knows it. I've found that if you are forceful with them from the get-go and make it clear that it is a non-starter, it somehow magically seems to evaporate. Then again I haven't refinanced in the last year or two so maybe things have changed.

I think escrow is pure evil on multiple fronts. The biggest one being I think if someone has to sit their butt down and write a 10,000 check once a year, they suddenly start to read and pay very close attention to their tax bill, what is in it, and how it changes.

When a person escrows (as I myself did when I was younger), they tend to look at their tax bill as one of the 100 medical statements you get every time you visit the doctor (You know, the ones that say "this is not a bill", here's some insane unrealistic amount your dumbass doctor who has been billing Blue Cross for 20 years tried to bill knowing full well what the rates are, so we once again for the zillionth time rejected it, and we'll send you 20 more in the mail while we both figure it out again ). These people have no association to cash in their wallet so they throw it out. They are the sheep that make up 90% of society. My guess is they also voted for Pat Quinn. I think people should have to pay their Illinois State taxes next year out-of pocket also.

Don't even get me started on PMI.

[moneypit]

Jan 15, 2011 11:53:12 GMT -6 macrockett said:

If you don't know who Mike Shedlock, the author of the message below, he is a money manager here in IL. seekingalpha.com/author/michael-shedlock


Here is an update from Mike Shedlock if you are interested.....
A couple of people are asking about the status of the effort.

Please remember this is a volunteer effort. We are working on a website and
have made progress.

This is a labor of love not a for profit endeavor.

*Please look up your senators and house reps. Call them up, get on their
calendar. If they voted for the tax hikes, pester the hell out of them and
have people you know do the same.*

*We need to let them know we are fed up.*


In the meantime, please be patient. I have talked with both Tillman at the
Illinois Policy Institute and Tobin at National Taxpayers United.

They both support what we are doing in general terms except the Illinois
Policy Institute is a nonprofit tax deductable organization so it cannot
back efforts pertaining to a person or a political party.


It can back policy changes and generic amendments. I have several in mind
that Tobin may support as well. Tobin knows what he is doing. He has
collected 500,000 signatures once before and even got voters to approve it.,
Unfortunately the IL supreme court threw it out.


So we must go about this smart. That takes time.


In the meantime here are a couple of blog posts that I have written
regarding the Pension crisis. Both Mention Illinois.


Vallejo Bankruptcy Plan Offers Unsecured Creditors 5-20%; Bernanke Will Not
Rescue Cities

globaleconomicanalysis.blogspot.com/2011/01/vallejo-bankruptcy-plan-offers.html


LA Mayor Says "No Question You’ll See Some Cities Default"; Mayor Daley Says
"I wouldn’t doubt it"; NY Mayor Goes After Public Pensions

globaleconomicanalysis.blogspot.com/2011/01/la-mayor-says-no-question-youll-see.html


Thanks

Mish

[moneypit]

Another update this morning from Mike Shedlock....

Hello All

A couple people asked what to say to their reps


The idea is to use your own words.

We could easily draft some text but it would look like canned text and
everyone would say the same thing


In your own words tell them them you are against the hike and and want a
recall of Quinn.

Tell them you expect him/her to be in favor of a recall and would like to
meet with them to discuss it.

Do not let them bully you into believing this was necessary. Ask what cuts
were made.

What shared sacrifice there was from unions, etc etc. Let them know where
you stand and you want the hikes backed out. If you have a business,
threaten to leave. All in your own words.


Here is a post on the first known corporation to leave Illinois over the tax
hikes

More will come.

May of you are aware of this

Some of you may not be


Illinois' First Tax Hike Victim: Jimmy John's Founder to Move to Florida,
Corporate Headquarters May Follow

globaleconomicanalysis.blogspot.com/2011/01/illinois-first-tax-hike-victim-jimmy.html

Mish