Illinoisans are being asked to vote on a “Fair Tax” in November. Most of the information being provided is focused on taxing higher-income individuals while opponents are worried that the Illinois Fair Tax Bill opens the door for higher taxes for all.
While this is a valid concern, I think we need to ask more questions. What will the estimated $3.6 billion to be raised from the additional tax be used for? When you and I go to the bank to ask for more money, the lender wants to know how the funds will be used.
While we are not “lending” Illinois money, we certainly have a vested interest in how the money will be spent.
The largest liability the state has is underfunded pension liability. The deficit is over $137 billion, yet the Fair Tax proposal requires less than 10% of revenue to pay down this liability. Where will the other 90% be spent?
This will be toward current programs and any new programs our legislators deem necessary.
Does this mean our elected officials think there is no waste that can be eliminated or savings found in our state? Illinois has over six thousand separate taxing units, the most in the nation.
The Chicago region has more than 1,226 local governments. The New York metro area has fewer than 200. Can’t there be savings in the combination or elimination of some of these agencies? Where is the 5, 10 or 15-year plan for Illinois? We live from year to year.
The answer is always more taxes. As I have written before the state receives more than $50 million monthly in new marijuana taxes. Only 10% is earmarked for debt reduction.
Is it any surprise that any tax increase is seen with scorn, even when the increase may be justified?
If Illinois shows the bond rating companies they are serious about addressing debt and the pension under-funding borrowing interest rates could be lowered. This means less money for interest payments and more funds for state programs that need the money.
Illinois taxpayers deserve to know how additional tax money will be spent. So far neither side has addressed this issue. Tell voters how the money will be spent and then we can make an informed decision.
For more information, contact David Mills, CPA, LLC.