Bracing For Tax Hikes
Governor J.B. Pritzker will be giving his first budget address this week on the heels of the passage of two controversial bills that will lead to state spending increases, all the while our current state budget is running at a deficit of $3.2 billion.
With Pritzker’s big spending priorities and the state’s backlog of unpaid bills and unfunded pension liabilities, families are bracing for more tax hikes. Pritzker’s inevitable announcement of new tax hikes to raise revenues may include a retirement tax, a rise in the gas tax, a graduated income tax hike, a tax on streaming services, and taxes on vaping and e-cigarettes. He may also introduce his plan to legalize recreational marijuana and sports betting to generate more revenue.
Pritzker’s first legislative “accomplishment” of a minimum wage increase to $15/hr by 2025 is a loss for taxpayers. In addition to driving jobs and employers out, the minimum wage hike will hit local governments hard forcing them to hike property taxes or cut services.
In what will otherwise be seen as an expensive and long four years for Illinoisans, here’s what Pritzker should address.
Tax hikes will not solve the state’s problems. We’ve tried that. Despite two massive tax hikes in the last eight years, Illinois remains in financial distress. Instead of doubling down on these failures, we should be pursuing bipartisan efforts like passing a constitutional spending cap to force the state to spend within its means and protect the pocketbook of Illinoisans. Expanding the state’s tax base with pro-growth policies rather than pummeling those who have stuck around, will have a more positive long term outcome on the state’s economy.
An obvious problem that has been long ignored by the state’s political class is the overwhelming pension debt and the state’s inability to make the over promised payments.
The pension debt problem is not going anywhere and can’t be fixed overnight but it pervades all aspects of the state’s budget. For example, Pritzker wants to increase education spending despite the fact that Illinois already spends more per student than any other state in the midwest and ranks 13th in spending per student in the country. But the high costs aren’t producing results, only 37% of Illinois students are reading at grade level and only 32% in mathematics.
Also, half of the state’s education budget goes toward funding pensions. Pritzker should stop the pension bleeding and put all new hires into a 401k system to ensure more dollars are going into classrooms.
Despite the lack of positive outcomes and high costs in the public education system, Pritzker continues to speak out against the tax credit scholarship program that is lifting poor students out of underperforming schools and allowing them to attend schools that better address their educational needs. The expansion of choice in the state’s education system gives low income families the opportunity to better their children’s opportunities and economic success. Pritzker would be doing a great disservice to those families if he decides to end the program.
Pritzker can no longer hide behind catchy campaign slogans and flashy TV commercials but must address these stifling problems head on. It is clear Pritzker is swallowing the tough reality of the current state of Illinois, but if he chooses the route of more taxes and government spending, then Illinois will continue down the same spiraling path that forces families and businesses out.
Policies like spending caps, the implementation of a 401k system for state employees, and the expansion of school choice would signal to Illinois residents and businesses that the state is recognizing its structural problems and looking for ways to decrease state spending, create more economic opportunity, and allow residents to keep more of their own hard earned money.
That is the signal Gov. Pritzker should be sending.