Quinn's Tax Increase Plan Would Drive Business Away
On the heels of a 19,000-vote victory, Gov. Pat Quinn claims he has a voter "mandate" to raise Illinois' income tax.
In fact, a 1 percentage point election win for an incumbent in a state as deeply blue as Illinois is not a mandate for anything of the sort. If the elections and public sentiment are a mandate for anything, that mandate is to leave the current income tax rates alone.
Not only have many in Quinn's own party already run away from his proposed income tax increase, polls have consistently shown the public opposes the notion.
Quinn's tax increase proposal was debated in Springfield not long ago, and the governor couldn't even get all the members of his party in the House to support it. Now he will have to work with a Legislature with six more Republicans in the House and two more in the Senate who were elected in large part because of their opposition to high taxes and uncontrolled spending.
The same electorate that gave him another term has steadfastly opposed his tax increase idea. According to a poll by the Paul Simon Public Policy Institute on Oct. 18, only 40.9 percent of Illinoisans support raising the state's income tax. Previous polls have consistently shown even greater opposition.
As a matter of public policy, increasing the state's low, flat 3 percent income tax would wreck one of the least destructive aspects of Illinois' business climate. The Heartland Institute recently released a booklet, "Ten Principles for Improved Business Climates," that outlines exactly what states need to keep in mind to become more competitive regionally, nationally and globally. Low, flat tax rates are essential.
Businesses and capital are able to mobilize and relocate more easily than ever before. That means states can't get away with deleterious changes in regulations and increases in the tax burden. This is why Quinn's belief that Illinois should destroy its lone comparative tax advantage is so alarming.
In addition to creating larger revenue swings, an income tax increase would further slow the already anemic economic recovery in the state. Every expansion of the government's money pool diverts much-needed capital away from the private sector, the ultimate source of all sustainable economic growth. The most economically friendly way to balance a budget is to grow the private sector and restrain spending. Illinois has been doing just the opposite.
Quinn should look toward real reforms that would put the state on solid fiscal ground, including comprehensive spending limits; an overhaul of the government work force, and reform of the state's toxic public pension system. Those reforms would help keep government spending to a reasonable, sustainable level and allow the state's economy to recover.
Often the best thing government can do is . . . nothing. Quinn should heed his mandate to do exactly that when it comes to tinkering with the state's income tax.
John Nothdurft is the budget and tax legislative specialist for the Heartland Institute.
This op-ed was originally published in the Chicago Sun-Times.