Will tax cut plan save jobs?
Legislators are laying the groundwork to draw the state deeper in debt.
The tax-cut follies will resume Monday in Springfield now that Democrats and Republicans have reached agreement on the legislative procedure they will follow.
Good for them. But everyone needs to remember that the state is not just broke but deeply in debt.
So legislators need to keep their enthusiasm about tax cuts to a minimum. And Gov. Pat Quinn needs to sober up and drop his insistence that legislators include tax cuts for individuals in the unfortunate but probably necessary plan for corporate tax breaks to keep businesses and the jobs they provide in Illinois.
Readers may recall that it was just last week when the Illinois House and Senate could not agree on the tax cut package. The Senate voted emphatically in favor while the House voted emphatically against.
Here's the situation.
Sears and the CME Group Inc., which owns the Chicago Mercantile Exchange and the Chicago Board of Trade, are being tempted with offers of a better deal in neighboring states. So legislators, fearing the businesses will leave, feel they have no choice but to provide them financial incentives to stay.
That's what this legislation should be about, and that's all it should be about.
But tax cut fever swept Springfield to the point that a $150 million tax cut plan ballooned into an $800 million-plus tax cut plan — this in a state that can't pay its bills.
The bloated package was so ridiculous that it became a target of ridicule. News reports indicate the new package will cost roughly $250 million a year, but Crain's Chicago Business estimates it will cost $344 million a year by 2014.
That's because Gov. Quinn and some Democratic legislators insist the package include an increase in the state's personal income tax exemption as well as an increase in the Earned Income Tax Credit that benefits the working poor.
The plan overwhelmingly passed the Senate. But it garnered just nine votes in the House, where Republicans argued that Illinois can't afford to cut any more taxes than it has to because of the state's disastrous financial condition.
Under the compromise agreement, the tax plan will be divided into two pieces — one bill for the corporate tax cuts and another for the individual tax cuts.
The House will vote on Monday, and the Senate will follow on Tuesday.
Legislators, of course, can vote no on the corporate tax cuts and take the chance that Sears and CME are bluffing. Maybe they really are bluffing. But legislators would be running a big risk.
They certainly must reject the personal tax cuts because the state is in no position to be cutting taxes when it doesn't have enough revenue to pay its bills.
It was just last January that legislators approved a huge state personal and corporate tax increase because they said it was necessary to keep the state afloat.
With Illinois still under water, how can they reasonably consider cutting taxes now?
It is, of course, infuriating that legislators are being bullied to cut the corporate taxes. Indeed, it's reflective of a state where those who have the clout can win concessions that those without clout can never obtain. That's why Illinois, as has been suggested by many, needs a comprehensive re-examination of its tax policies.
But there's no time for that now. Legislators must do what they have no real choice but to do — address the Sears/CME issue. Despite the urging of Gov. Quinn and some legislators, they should not approve additional tax cuts that will put the state even deeper in the hole than it already is.