Illinois shows Oklahoma what not to do
January 13, 2011
Governor Mary Fallin and the Oklahoma legislature just received a valuable lesson in what not to do from the outgoing Illinois legislature and the returning governor. In the dark of night, on the final night of work for Illinois lawmakers before the new session begins, lawmakers passed SB 2505, which enacts a 66 percent personal income tax increase, bringing the rate from 3 percent to 5 percent. The measure also increases the corporate income tax rate from 4.8 percent to 7 percent. So for the hardworking “rich” family making taxable income of $50,000 a year in Illinois, you just saw your taxes go from about $1,500 a year to $2,500 a year. But take heart, tax-paying Illinoisans, your increased shared sacrifice will only last four years at the 5 percent rate. (And we all know that “temporary” tax hikes never find a way to become permanent.) I am also sure that the taxpayers of Illinois will find comfort in another feature of the measure, an “unprecedented” annual limit of 2 percent on the growth of spending increases. Illinoisans are sure to forget the fact that just a year ago in FY-09, the state of Illinois spent $4.3 billion more from the general revenue fund than had been collected in revenues, so this 2 percent cap is sure to make the shared sacrifice easier. This stunt is embarrassingly similar to the way the Oklahoma legislature and former Governor Brad Henry passed a 1 percent medical claims tax (which was later ruled unconstitutional) and other “revenue enhancements” at the end of the 2010 Oklahoma legislative session. One has to wonder if President Barack Obama has called his home-state lawmakers to let them know they just killed any effect of his and Congress’ attempt at promoting economic growth (in the form of the reduction by 2 percentage points of Social Security and Medicare payroll taxes). Thank goodness Governor Fallin and legislative leaders have repeatedly said that they will look at ways to reduce spending so that it is in line with available revenues, including letting the income tax cut from 5.5 percent to 5.25 percent take place. Governor Fallin’s inaugural speech seemed to express her intention to promote limited government, freedom and policies that will increase jobs. Hopefully Governor Fallin and legislators do not listen to some of the Oklahomans clamoring to increase taxes or revenues or to delay scheduled tax reductions. Thank you, Illinois, for a lesson in what not to do. Governor Fallin may now want to call Illinois CEOs and companies, like giant manufacturer Caterpillar, Inc., to let them know Oklahoma will do the opposite.