[stick]

Attention leftists, school is in session. Today we're going to learn how raising taxes is not the answer to budget shortfall, debt and deficits. Our case study is the Democrat run state of Illinois.


Illinois gets downgraded by Moody’s

POSTED AT 3:05 PM
ON JANUARY 20, 2012
BY ED MORRISSEY
HOTAIR.COM

Say, remember when the state of Illinois took the Democratic approach to fixing their budget woes by raising taxes? The debt problems of the Land of Lincoln would disappear, Governor Pat Quinn argued, if the state hiked corporate and personal income tax rates by as much as two-thirds. The extra revenue would stabilize the state’s fiscal footing and pull them from the brink of financial disaster.

How well did that work out? As the Wall Street Journal reports today, Illinois debt has now been downgraded to the lowest rating of all 50 states by Moody’s:

Quote

Though too few noticed, this month Moody’s downgraded Illinois state debt to A2 from A1, the lowest among the 50 states. That’s worse even than California. The state’s cost of borrowing for $800 million of new 10-year general obligation bonds rose to 3.1%—which is 110 basis points higher than the 2% on top-rated 10-year bonds of more financially secure states.

This wasn’t supposed to happen. Only a year ago, Governor Pat Quinn and his fellow Democrats raised individual income taxes by 67% and the corporate tax rate by 46%. They did it to raise $7 billion in revenue, as the Governor put it, to “get Illinois back on fiscal sound footing” and improve the state’s credit rating.

So much for that. In its downgrade statement, Moody’s panned Illinois lawmakers for “a legislative session in which the state took no steps to implement lasting solutions to its severe pension underfunding or to its chronic bill payment delays.” An analysis by Bloomberg finds that the assets in the pension fund will only cover “45% of projected liabilities, the least of any state.” And—no surprise—in part because the tax increases have caused companies to leave Illinois, the state budget office confesses that as of this month the state still has $6.8 billion in unpaid bills and unaddressed obligations.

Another state tackling debt and budget issues went another direction, and Moody’s noticed the difference — and the WSJ warns Wisconsin voters to take a look at the alternative:

Quote

In contrast to the Illinois downgrade, Moody’s has praised Mr. Walker’s budget as “credit positive for Wisconsin,” adding that the money-saving reforms bring “the state’s finances closer to a structural budgetary balance.” As a result, Wisconsin jumped in Chief Executive magazine’s 2011 ranking of each state’s business climate—moving to 17th from 41st. Illinois dropped to 48th from 45th as ranked by the nation’s top CEOs.

Yet Mr. Walker, who balanced the budget without new taxes, is the governor facing a union-financed attempt to recall him from office this year. If Wisconsin voters want to see where a state ends up without the kind of reforms that Mr. Walker made, they need only look to the Greece next door.

Dan Mitchell says that the Illinois approach only exacerbated the problem by feeding the spending addiction rather than starving it:

Quote

In other words, higher taxes led to fiscal deterioration in Illinois, just as tax increases in Europe have been followed by bad outcomes.

Whenever any politician argues in favor of a higher tax burden, just keep these two points in mind:

1. Higher taxes encourage more government spending.

2. Higher taxes don’t raise as much money as politicians claim.

The combination of these two factors explains why higher taxes make things worse rather than better. And they explain why Europe is in trouble and why Illinois is in trouble.

They may finally be getting the message in Illinois. Republicans in the state legislature, outnumbered though they may be, have started an effort to repeal Quinn’s tax hikes. The failure of Quinn in Illinois does provide a valuable example of how not to address a fiscal crisis brought on by overspending, and one that voters in every state should study carefully.As part of that study, here is Mitchell’s video from May that teaches why this policy was always doomed to failure:

Seven Reasons Why Tax Increases Are the Wrong Approach

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So, Illinois raised individual state income and corporate taxes by 67% and 46% respectively, businesses, in response, left the state in droves, and the $7B in revenues they hoped to raise a year later came up $6.8B short.

Gotta love the leftist/socialist/Democrat approach to economics. Moronic is giving them too much credit.

Then contrast that with their neighbors to the north who no doubt benefited somewhat from the mass exodus of companies from across their southern border. To top it off, Wisconsin Democrats want Governor Scott Walker out, and go all in with the morons running Illinois. And they wonder why we question their love for freedom, liberty and America in general.

[MTP Reggie]

stick, on 20 January 2012 - 03:43 PM, said:

So, Illinois raised individual state income and corporate taxes by 67% and 46% respectively, businesses, in response, left the state in droves, and the $7B in revenues they hoped to raise a year later came up $6.8B short.

Gotta love the leftist/socialist/Democrat approach to economics. Moronic is giving them too much credit.

Then contrast that with their neighbors to the north who no doubt benefited somewhat from the mass exodus of companies from across their southern border. To top it off, Wisconsin Democrats want Governor Scott Walker out, and go all in with the morons running Illinois. And they wonder why we question their love for freedom, liberty and America in general.

I think morons may be offended by your lumping them in with democrats...

This post has been edited by MTP Reggie: 20 January 2012 - 03:53 PM

[stick]

MTP Reggie, on 20 January 2012 - 03:52 PM, said:

I think morons may be offended by your lumping them in with democrats...

Well, at least those morons are trying to govern. I've heard some morons in Illinois state gov't vote present a lot - leading by not taking a position. Kind of avoids that pesky ole governing thing.

[stick]

Quote

More than 100 percent of America’s long-run fiscal challenge is government spending.

So why reward politicians for overspending by letting them confiscate more of our income?

That's a damn good question.

[AntonToo]

Fiscal Year 2012 revenue receipts
through December for individual income,
corporate income, and sales taxes (“big
three” revenue sources) are
$14,538.5 million. Those receipts are
$3,982.4 million above last year and
$145.6 million above the current forecast.
Individual income tax receipts are
$9,013.5 million. The total is
$3,546.8 million above last year and
$20.9 million below the current forecast.
Corporate income tax receipts are
$1,212.8 million. The total is $196.5 million
above last year (an amnesty year) and
$26.7 million above the current forecast.

Sales tax receipts are $4,312.2 million.
The total is $239.1 million above last year
and $139.8 million above the current
forecast.

Any questions?
http://tax.illinois....venueReport.pdf

If you say there were no tax receipt increases after the tax rate increase you are very obviously full of BS.

You may argue that tax increases were not enough to close the deficit holes of growing spending, but you cannot argue that the tax increases did not help cut down the deficits that the state would have had without tax raises.

This post has been edited by AntonToo: 16 March 2012 - 08:50 AM

[Kilmerfan]

Ronald Reagan. "No nation ever taxed itself into prosperity."

[AntonToo]

Kilmerfan, on 16 March 2012 - 08:45 AM, said:

Ronald Reagan. "No nation ever taxed itself into prosperity."

Anton V - "No nation was ever prosperous without the taxes in place to pay for it's public expenses."

[random_stuff]

They obviously need to try more socialism - that'll do the trick.

Maybe if they raise taxes again...



The biggest problem is that they forgot to involve the NLRB to prevent the companies from moving out of state.

[AntonToo]

random_stuff, on 16 March 2012 - 08:58 AM, said:

They obviously need to try more socialism - that'll do the trick.

Maybe if they raise taxes again...



The biggest problem is that they forgot to involve the NLRB to prevent the companies from moving out of state.

Taxation = Socialism?

[Kilmerfan]

AntonToo, on 16 March 2012 - 08:53 AM, said:

Anton V - "No nation was ever prosperous without the taxes in place to pay for it's public expenses."

Let me guess you don't pay taxes do you?

[AntonToo]

Kilmerfan, on 16 March 2012 - 09:17 AM, said:

Let me guess you don't pay taxes do you?

Wrong again - I pay taxes and I understand that those taxes pay for the services I expect government to provide.

This post has been edited by AntonToo: 16 March 2012 - 09:23 AM

[Kilmerfan]

AntonToo, on 16 March 2012 - 09:21 AM, said:

Wrong again - I pay taxes and I understand that those taxes pay for the services I expect government to provide.

Liar.

[AntonToo]

Kilmerfan, on 16 March 2012 - 09:24 AM, said:

Liar.

you fn serious?

[Kilmerfan]

AntonToo, on 16 March 2012 - 09:29 AM, said:

you fn serious?

Very.

[AntonToo]

Kilmerfan, on 16 March 2012 - 09:35 AM, said:

Very.

Well then you are seriously wrong and seriously delusional to the point of believing whatever you want to believe.

I pay taxes, you refusing to believe this and calling me names simply because I happen to disagree with you is pathetic.

This post has been edited by AntonToo: 16 March 2012 - 10:58 AM

[Kilmerfan]

AntonToo, on 16 March 2012 - 10:56 AM, said:

Well then you are seriously wrong and seriously delusional to the point of believing whatever you want to believe.

I pay taxes, you refusing to believe this and calling me names simply because I happen to disagree with you is pathetic.

Look who is talking. Pot calling kettle black.

I call you a liar because I have read your posts.

This post has been edited by Kilmerfan: 16 March 2012 - 11:04 AM

[AntonToo]

Kilmerfan, on 16 March 2012 - 11:02 AM, said:

Look who is talking. Pot calling kettle black.

I call you a liar because I have read your posts.

WHAT???

Where have I asserted something about you personally, based on absolutely nothing, and then proceeded to call you a liar for denying my baseless assertions?

You've got some growing up to do, part of which hopefully includes a realization that some people not only pay taxes, but also understand that taxation is required to pay for things that we want government to do.

This post has been edited by AntonToo: 18 March 2012 - 02:05 AM

[Kilmerfan]

AntonToo, on 18 March 2012 - 01:58 AM, said:

WHAT???

Where have I asserted something about you personally, based on absolutely nothing, and then proceeded to call you a liar for denying my baseless assertions?

You've got some growing up to do, part of which hopefully includes a realization that some people not only pay taxes, but also understand that taxation is required to pay for things that we want government to do.

Still don't get it do you? The Gov. does whatever it wants with our money in fact uses our money to ruin us. We are overtaxed to pay for those who live off the system.

[AntonToo]

Kilmerfan, on 18 March 2012 - 06:42 AM, said:

Still don't get it do you? The Gov. does whatever it wants with our money in fact uses our money to ruin us. We are overtaxed to pay for those who live off the system.

I'm sorry the gobamint ruined you....but what in the world does this rambling have to do with either the topic of this thread or what I've said in it?

Do you disagree that Illinois increased it's receipts since increasing tax rates?
Do you disagree that government needs to perform certain functions and collect the taxes to pay for them?

This post has been edited by AntonToo: 19 March 2012 - 01:13 AM