States from New Jersey to California are slashing budgets in response to their fiscal crises, but Illinois is trying a different way, adopting a whopping 67 percent hike in the income tax. Indiana Gov. Mitch Daniels has the appropriate response.
CHICAGO (WLS) - As Illinois prepares to raise income taxes, Indiana Governor Mitch Daniels tells Don and Roma he's trying to keep from laughing at our plight.
"Oh you guys are nothing if not entertaining over there. It's like living next door to 'The Simpsons', you know the dysfunctional family down the block? Watching you guys, I mean I shouldn't make too light of it, I think this is really a bad situation," Daniels said.
Daniels says in this economy, raising taxes is the wrong thing to do.
"If you want to bring new jobs to your state the last thing you do is make it more expensive to hire people, and so we've been working for six years, we're now at the top of everybody's list of a good place to do business, and going in the other direction really is something that we're not prepared to do, and I hope you guys find a way not to also,” Daniels said.
NPR's piece, noting that 40 states have projected budget gaps for the coming year, says everything from service cuts to tax increases to business-fee hikes will be tried. Daniels and other governors (like Wisconsin's) will be ready to take advantage of those that go the taxing route.
Comments
A 17% hike in sales taxes plus causing county income tax increases doesn't count as raising taxes at all; but Illinois is risible.
Hopefully companies will look closer at Indiana. But some companies, like Navistar, didn't even care that it would cost more to locate in Illinois.
For 2009-2010 Indiana ranked 46th in the Country for GDP. We must do better.
And then there is this:
In the short run it would like IL is going the wrong direction. However, could they finally be the first state to face reality and try to get their economic house in order? In Indiana Mitch has taken the view that to balance the budget we borrow money for unemployment benefits. When will this be paid back and what type of tax hike are we looking at? Lower benefits are just the opposite side of the coin as a tax increase. Personal income taxes do not directly affect employers, but unemployment insurance does. So are jobs the really attractive to Indiana when the past ten years of neglect has to be paid for by those companies are here now or by future unemployed with lower benefits (the opposite of raising taxes on income).
Don't get me wrong, I lived in IL for a number of years and found their property taxes were extremely high. Much like IN, a much higher percentage of per capita was spent in Chicago like it is here in Indianapolis.
However, unlike IL, Indiana has not addressed the unfunded liability of teachers, fire and police pensions they took over with the property tax changes. Instead of sweeping these future costs and current liabilities under the rug, maybe Daniels needs to speak out on what the plan is to address these. Who knows, maybe the only answer is a rise in Indiana's tax from 3% to 6%.
I would not be poking fun at IL when are own economic house maybe just as bad or worse? At least they have the guts to address the problem instead of kicking the can down the road.
I missed typed, IN has an income tax of 3.4% no real deductions, Allen county 1% and a sales tax of 7%. IL income tax was 3% (larger personal exemptions $2,000 each v IN of $1,000 plus another $1,500 per qualified child). IL allows full deduction of property tax while IN caps it at $2,500.
Indiana is basically a 4.4% while IL was 3%. Even after the IL tax increase to 5% the net difference between IN and IL are little after taking into account exemptions.