Illinois is wallowing in debt.
It’s been nearly two years since our legislators and governor have been able to agree on a state budget. And, there certainly is no agreement in sight — there isn't even a proposed budget.
In the meantime, programs are being cut, services are disappearing and state employees are losing their jobs.
It’s a desperate situation. And, even if someone waved a magic wand over the state capitol and a budget agreement was somehow reached, the state would still be looking at a long climb to get over the mountain of debt.
It’s pretty obvious to Illinois citizens, and former citizens fleeing the state at an alarming rate, the status quo isn’t working.
Perhaps it’s time to expand the Springfield tool box.
Fair Economy Illinois has proposed a budget plan that has some intriguing possibilities. In financially secure times, it would be hard to imagine that Springfield would find their solutions politically palatable. But, these aren’t even close to being ordinary times.
There are three main components Fair Economy Illinois is proposing — close corporate tax loopholes, enact a progressive income tax and enact a LaSalle Street tax. The organization claims the three actions will net the state $23.5 billion annually.
While the math behind the proposals isn’t crystal clear, the number is compelling enough to take a second look. And, the fuzzy math isn’t all the fault of Fair Economy Illinois.
The group projects that closing corporate tax loopholes could net the state $2.5 billion annually. Illinois has a relatively high corporate tax rate — 7.75 percent — but no one seems to know what the corporations actually pay.
Fair Economy Illinois is also proposing a progressive income tax, roughly based on Wisconsin’s tax system. A married person filing jointly in Wisconsin is taxed at 5.84 percent. The highest rate is 7.65 percent.
A recent poll taken by the Paul Simon Public Policy Institute at SIU showed 72 percent of Illinois residents favor a graduated state income tax over the state’s current flat rate. But, bear in mind, this is also a state that allowed it’s income tax rate to fall from 5 percent to 3.75 percent in the middle of a financial crisis.
The group said the progressive tax, based on Wisconsin’s current tax structure, would net the state $9 billion per year — pretty soon we’ll be talking about real money here.
The final leg of the proposal is enacting a tax on stock, bond, currency and derivative transactions on the Chicago Mercantile Exchange and the Chicago Board Options Exchange. Fair Economy Illinois said the value of products traded on these two exchanges exceed $500 trillion annually.
State Rep. Mary Flowers, D-Chicago, has proposed HB 5929 that would impose a $1 contract fee on agricultural futures and options and a $2 transaction fee on all other futures, a minimal expense considering the average transaction is $225,000, according to Fair Economy Illinois figures.
That tax would generate up to $12 billion annually.
Fair Economy Illinois’ proposal also includes provisions as to how the money should be spent — education, infrastructure information, pensions and green energy conversion. The group also estimates the adoption of their plan would create 180,000 new jobs.
Again, we’re not certain of exact facts and figures. And, Fair Economy Illinois’ spending plan would certainly encounter resistance in same areas, but, it is clear the status quo is unacceptable. It is also painfully clear the time to act is now. Inaction will only worsen the situation.
The ideas espoused by Fair Economy Illinois aren’t a panacea. They will certainly be met with debate, particularly by business interests. But, using the traditional financial tools has gotten us into a deep mess.
Looking outside the box can’t hurt.