In my time in the General Assembly, I have never seen an atmosphere where the majority party in Springfield has seemed so determined to raise taxes on hard working Illinoisans and job creators. With their veto-proof majorities in the House and Senate, tax increase proposals are being filed at an unprecedented rate. Just last week lawmakers were presented with three tax hike proposals in three days. It's becoming clear that the majority party is desperate to take more money out of the pockets of taxpayers, and it appears they don't care how they do it or what group of people they hurt in the process.
One of these proposals calls for a constitutional amendment that would replace Illinois' existing flat tax system with a progressive tax. This tax system is being presented as a "fair tax" which would only affect the rich. But HJRCA02, sponsored by Naomi Jakobsson (D-Urbana), would increase taxes on anyone who makes more than $18,000 per year. It would strike at the heart of middle-class families that are already stretched to their limit. According to the Illinois Policy Institute, the average Illinois family would see a tax increase of $781 per year through the progressive tax. Fortunately, this resolution appears to be dead for now. However, a similar version in the Senate which would raise taxes for anyone making over $12,500 is gaining traction.
A second proposal, filed by Speaker Madigan himself, also calls for a constitutional amendment. HJRCA51 would increase the income tax rate by 3% for anyone making $1 million or more. This proposal was approved by the House Revenue & Finance Committee last week and is headed to the House floor for a full debate.
During his annual budget address, Governor Pat Quinn presented his own tax increase plan when he announced he would be pushing to make the temporary income tax hike of 2011 permanent. Speaker Madigan supports this plan. The Governor and the Speaker sold the 2011 income tax increase, which raised the personal income tax rate by 67%, as a temporary measure that would sunset in 2015. Today, less than a year before the promised sunset of that tax increase, we still have a $7 billion backlog of unpaid bills and the state is $127 billion in debt. The $26 billion that has come in so far from this tax hike has been squandered and no palpable results have been realized.
Along with a promise that the tax hike would expire in 2015, the public was promised that the temporary income tax increase would be accompanied by a new level of responsibility and frugality. We have seen neither. Instead, we have seen government continue to grow at a rate that outpaces inflation, and when spending should be reined in we are still seeing new programs being added and programs set to expire being extended.
A glaring example can be seen in the Medicaid system, where a recent preliminary audit showed that between 30%-40% who receive Medicaid benefits do not meet income and/or Illinois residency requirements. Removing those who do not qualify for costly Medicaid benefits from the rolls would have been a great step toward removing waste and fraud from that system. It also would have freed up much-needed cash that could have been used to fund essential areas of the budget. Unfortunately, the Democrat majority recently stalled efforts to complete the audit and scrub the rolls.
All key indicators point to the undeniable fact that Illinois is headed in the wrong direction. With regard to the business climate, economy and job creation, Illinois is near the bottom of the pack. We have the second highest unemployment rate in the country. We have the worst funded pension system. We rank second in the nation for people fleeing the state in search of a better living and working environment. We do not adequately fund education or infrastructure.
Legislators need to focus on improving our economy and jobs climate to spread out the tax burden among more people. With 570,000 Illinoisans currently out of work, we must take steps to encourage job growth. Every 1% drop in unemployment translates to half a billion in revenue for Illinois. This revenue is generated by new employees who start paying taxes and who buy goods and services. By putting people back to work we also reduce pressures on social programs like Medicaid, food stamps, etc.
Those who control the purse strings have proven that they are incapable of making wise spending decisions. The complete misuse of new revenues generated from the temporary income tax hike of 2011 is the most recent example of a long-standing pattern where throwing more money at Illinois' financial crisis is not producing results. Legislators do not deserve even one new tax dollar from Illinois citizens because they refuse to change their spending habits. Their record of mismanagement is well-documented. Why should a failure to produce results be rewarded with more money?