Taxing the Rich is the Only Real Solution to Illinois’ Budget Deficit
Corporate tax loopholes have been very effective at draining at least a billion dollars a year out of public funds and redirecting it into idle private profits.
The state of Illinois stands at a crossroads. Our elected officials must fix the state’s structural deficit estimated to be in the range of $3.3 to $6.1 billion. This deficit is usually attributed to a history of corruption, irresponsible spending and political patronage, which places the blame squarely at the doorstep of shortsighted politicians. But this argument misses the big picture.
The hard truth is that it costs money to educate our children, maintain our infrastructure, provide a basic social safety net and make other critical investments in the common good, and for far too long our elected officials have failed to raise the revenue to make these investments that most Illinoisans believe are important.
The state’s flat income tax rate, one of the most regressive in the United States, ensures that the wealthy pay far less, proportionally, than middle and lower income earners.
Corporate tax policy ensures that corporations pay little to no taxes on the vast bulk of their profits. Fully two thirds of Illinois corporations pay no income taxes to the state.
Lastly, a variety of ill-advised tax breaks and loopholes, implemented to attract jobs and business to the state, have undeniably failed on this count. Since they were put into place Illinois has continued to steadily lose manufacturing jobs. However, these loopholes have been very effective at draining at least a billion dollars a year out of public funds and redirecting it into idle private profits. Illinois continues to be governed on a “trickle down” economic model that has comprehensively failed over the past 3 decades.
These tax polices have culminated in an abject failure to bring equitable growth and shared prosperity to Illinois. Instead, many observers are beginning to admit that it’s time to raise revenue. That revenue should come from those who can afford to pay without enduring real hardship and who have been shirking their share of responsibility now for decades.
The public is against higher taxes on middle and lower income families, but decidedly not against taxing the rich and corporate wealth. Public opinion research has consistently shown that large majorities are in favor of taxing those who can most afford it more fairly in order to address budget concerns, preserve vital public services, and ameliorate economic inequality. Moreover, independent research has also confirmed that even moderate movements towards tax fairness, like taxing the highest incomes in the same proportions as middle and lower earners, would alone generate enough revenue to cover the state’s pension liabilities. And besides this, closing the myriad corporate tax loopholes that currently drain so much money from the state budget would go a long way toward resolving the pressing issues faced by Illinois in a responsible and equitable manner, instead of addressing them through a false mantra of “shared sacrifice,” which pretends that everyone will pay the costs of fiscal responsibility, while actually placing the brunt of such costs on those who can least afford it.
Such actions are in line with a vision that sees investment in the common good, in transportation, infrastructure, education, and a social safety net, as an indispensable function of our governmental institutions. And contrary to an all too prevalent conception, the evidence shows that progressive fiscal policies do not kill jobs or scare away business, but are rather vital tools for creating the necessary basis for a thriving economy.
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