Tax hike plan is excessive

Tuesday, March 17, 2009

A government budget crisis rarely is solely the result of a struggling economy. The budget crisis facing the state of Illinois is no exception.

Illinois has repeatedly failed to keep up with state employee pension costs and underestimated the cost for Medicare. It has overspent even during good economic times.

There are tough decisions that families and businesses must make when income or revenue dwindles. Vacation may have to be put off. That big software upgrade may have to wait another year.

What households and business owners can’t do is snap their fingers and raise a revenue stream by as much as 50 percent. But that's something Gov. Pat Quinn is suggesting – increase the state income tax for many Illinois families by as much as 50 percent, from 3 percent to 4.5 percent, in the face of a budget deficit potentially as high as $11.5 billion.

The move seems excessive and the potential permanence is troubling. Quinn’s staff suggests that families of four earning less than $60,000 wouldn’t see any tax hike. That's significant. But there are plenty of families earning more than that who already face pay cuts, potential layoffs, or the end of their business while watching their retirement savings smolder.

Other options are being discussed, as they should. Quinn and lawmakers first should look hard at cutting spending and services. Businesses are making extremely difficult decisions on a daily and weekly basis, from cutting staff and salaries to furloughing employees. It’s no more desirable than it is for private industry, but it’s not unreasonable for the state to consider doing the same.

Can certain state agencies go to four days a week until things turn around? Such measures seem less permanent for all Illinois residents than a significant income tax hike. We at least need to have a serious discussion about where cuts can be made before such a large tax increase is imposed.