tax hikes

Illinois Millionaire Tax Halted For Now

Remember that “millionaire tax” Illinois House Speaker Michael Madigan (D-Chicago) had been pushing which would have affected an estimated 13,000 or so millionaires residing in the state?

It’s toast for now.

Doug Finke reported on The State Journal-Register (Springfield) website yesterday afternoon:

House Speaker Michael Madigan has pulled the plug on his proposed constitutional amendment to impose a surcharge on incomes over $1 million a year.

The Chicago Democrat made the move Wednesday after it became obvious the amendment couldn’t muster the 71 votes it needed in the House to pass.

Although Democrats hold 71 seats in the House, not all of them were on board with the amendment…

(Editor’s note: Bold added for emphasis)

Despite the setback, many Illinois Democrats in office will tell their supporters that they at least tried to “spread the wealth around” more in moving the legislation this far.

As the economic climate deteriorates nationally, I expect to see even more of these targeted income tax hikes being proposed- along with its reintroduction in “Madiganistan.”

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Finke, Doug. “Madigan dropping plan to tax Illinois millionaires.” The State Journal-Register. 9 Apr. 2014. (http://www.sj-r.com/article/20140409/NEWS/140409326/-1/json). 10 Apr. 2014.

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Cook County Residents To Get Hit With Tax Hikes Soon?

For a while now (last time being earlier this week), I told my girlfriend we were lucky to have escaped the fiscal debacle and revenue grab going on in the city of Chicago.

At the same time, I pointed out that as Cook County residents we’re still on the hook for the same type of nonsense.

Brian Slodysko reported on the Chicago Sun-Times website yesterday afternoon:

Hoping to ward off another credit rating downgrade, Cook County Board President Toni Preckwinkle said Wednesday that she will soon present a plan to reform the county’s underfunded pension system.

And she’s leaving the door open to hiking property, sales and other taxes.

When asked repeatedly about the possibility of tax increases, Preckwinkle responded: “We’re looking at all the options. Everything is on the table.”

(Editor’s note: Bold added for emphasis)

Slodysko added later in the piece:

Preckwinkle declined to discuss specifics, but she did say that any plan that goes before the Legislature will not have property tax increase language written into the bill

(Editor’s note: Bold added for emphasis)

Okaaay… so that means Preckwinkle’s not “leaving the door open” to hiking property taxes?

Regardless, based on what I see coming down the line for us, it’s only a matter of time.

Last summer, Cook County saw its bond rating lowered by one of the major credit rating agencies supposedly due to its public pension liabilities. I blogged on August 20, 2013:

In the wake of significantly downgrading the City of Chicago’s credit rating, bond credit rating giant Moody’s Investor Service lowered Cook County’s bond rating a notch last Friday. In a news release from the Moody’s website right before the weekend:

New York, August 16, 2013 — Moody’s Investors Service has downgraded the rating on Cook County’s (IL) general obligation (GO) debt to A1 from Aa3, affecting $3.7 billion of general obligation debt. The outlook remains negative.

SUMMARY RATING RATIONALE

The downgrade of the GO rating reflects Cook County’s growing pension liabilities…

(Editor’s note: Bold added for emphasis)

Stay tuned…

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Slodysko, Brian. “Preckwinkle won’t rule out tax increase to strike pension deal.” Chicago Sun-Times. 9 Apr. 2014. (http://politics.suntimes.com/article/chicago/preckwinkle-wont-rule-out-tax-increase-strike-pension-deal/wed-04092014-523pm). 10 Apr. 2014.

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Chicago Public Pension Crisis Latest

Last Tuesday, I blogged about Chicago Mayor Rahm Emanuel’s attempt to address some of the City’s public pension woes via larger contributions by City employees and $50 million tax increases for five straight years- beginning next year and continuing through 2019- for Chicago property owners.

There’s been a lot of chatter regarding this proposal and other pension “reform” activity today. Karen Pierog reported on the Reuters website:

Legislation to ease funding shortfalls in two of Chicago’s four retirement systems is a modestly positive credit step but not a permanent fix, Moody’s Investors Service said on Monday

Moody’s said that if enacted into law, the measure would immediately reduce the unfunded liabilities in the two funds.

“However, we expect that the (liability) would then escalate for a number of years before declining. Accrued liabilities would exceed plan assets for years to come, and if annual investment returns fall short of the assumed 7.5 percent, the risk of plan insolvency may well reappear,” the credit rating agency said in a report…

After breezing through an Illinois House committee on April 2, the bill has stalled. Moody’s said that even if the bill makes it out of the legislature, Governor Pat Quinn must sign it. The law would then face potential challenges to its legality under the Illinois constitution, which prohibits the impairment of retirement benefits for public sector workers…

(Editor’s note: Bold added for emphasis)

So will the Illinois Governor and fellow Chicago Democrat sign off on Mayor Emanuel’s proposed legislation?

John Byrne and Monique Garcia reported on the Chicago Tribune website this afternoon:

Gov. Pat Quinn today came out against Mayor Rahm Emanuel’s plan to raise Chicago property taxes and cut retirement benefits as a way to shore up some of Chicago’s government worker pension systems.

The re-election seeking Democratic governor called the bill floating around Springfield “a sketch” that “kept changing by the hour” and blasted the property tax as a “lousy tax” because it is not based on the ability to pay…

“I don’t think that’s a good way to go,” Quinn said of hiking property taxes. “And I say it today and I’ll say it tomorrow, they’ve got to come up with a much better comprehensive approach to deal with this issue. But if they just think they are going to gouge property tax owners, no can do. We’re not going to go that way.”

(Editor’s note: Bold added for emphasis)

Now, as I pointed out in last week’s post about Chicago’s public pension crisis:

There’s still a state-required $600 million contribution due next year from the City to stabilize police and fire pension funds that this proposed property tax hike doesn’t address and has to be dealt with…

(Editor’s note: Bold added for emphasis)

Plus, I read the following this morning by Chacour Koop on the website of The State Journal-Register (Springfield):

After addressing Illinois’ own employee pension crisis, lawmakers now face an equally challenging task with the state’s cities, as mayors demand help with underfunded police and firefighter pensions before the growing cost “chokes” budgets and forces local tax increases.

The nine largest cities in Illinois after Chicago have a combined $1.5 billion in unfunded debt to public safety workers’ pension systems. Police and fire retirement funds for cities statewide have an average of just 55 percent of the money needed to meet current obligations to workers and retirees…

The problems — a history of underfunding, the expansion of job benefits and the prospect of crushing future payments — mirror those that Chicago Mayor Rahm Emanuel warned about when he asked the legislature for relief last week.

In 2016, state law requires cities to make required contribution increases — in some cases, more than an additional $1 million annually — so they’ll reach 90 percent funding by 2040. If they don’t, the state will begin doing it for them, diverting grant money now used by cities elsewhere directly into the pension funds…

(Editor’s note: Bold added for emphasis)

Just like the Illinois General Assembly- dominated by Democrats- barely passed legislation on December 3, 2013, that was touted as a “fix” for the state’s $100 billion public pension crisis (it isn’t), something tells me an accommodation may be reached with fellow Democrats running the City of Chicago so they don’t have to pay the full amount of the state-required $600 million contribution due next year to stabilize police and fire pension funds.

That goes for those large Illinois communities as well.

Watch all the back-patting go on should that “fix” materialize as well.

And the inevitable “blowback” down the road.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

UPDATE: From Fran Spielman over on the Chicago Sun-Times website early Tuesday morning:

Mayor Rahm Emanuel and House Speaker Michael Madigan Monday stripped out controversial language from city pension legislation that had authorized the City Council to impose a property-tax hike, putting the stalled measure back on the fast-track at the state Capitol.

Madigan, D-Chicago, filed an amendment to Senate Bill 1922 after the House adjourned Monday without taking any action on the stalled legislation. Sources now expect the legislation to be voted upon as early as Tuesday.

(Editor’s note: Bold added for emphasis)

Sources:

Pierog, Karen. “UPDATE 1-Proposed Chicago pension changes positive step but no fix -Moody’s.” Reuters. 7 Apr. 2014. (http://www.reuters.com/article/2014/04/07/usa-chicago-moodys-idUSL2N0MZ1AP20140407). 7 Apr. 2014.

Byrne, John and Garcia, Monique. “Quinn blasts Emanuel’s property tax hike for pensions.” Chicago Tribune. 7 Apr. 2014. (http://www.chicagotribune.com/news/politics/clout/chi-quinn-blasts-emanuels-property-tax-hike-for-pensions-20140407,0,5432729.story). 7 Apr. 2014.

Koop, Chacour. “Illinois’ next pension issue: Police, firefighter funds.” Associated Press. 6 Apr. 2014. (http://www.sj-r.com/article/20140406/NEWS/140409562/-1/json/?tag=1). 7 Apr. 2014.

Spielman, Fran. “Analysis: Rahm’s pension bill revisions solve—and create—problems.” Chicago Sun-Times. 8 Apr. 2014. (http://politics.suntimes.com/article/chicago/analysis-rahm%E2%80%99s-pension-bill-revisions-solve%E2%80%94and-create%E2%80%94problems/mon-04072014-728pm). 8 Apr. 2014.

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Chicago Wakes To Proposed Property Tax Hike On April Fool’s Day

Many Chicagoans probably wish what’s being widely-reported in the local news this morning about a proposed property tax hike is just a silly April Fool’s joke.

It’s not.

Fran Spielman wrote on the Chicago Sun-Times website last night:

Chicago property owners will face $250 million in property tax increases over five years while city employees make increased pension contributions that will cost them at least $300 more a year, under landmark reforms unveiled Monday…

The new revenue the mayor had promised only after pension reform will come in the form of $50 million property tax increases for five straight years, beginning next year and continuing through 2019.

Top mayoral aides estimate that would cost the owner of a home valued at $250,000 with an annual property tax bill of $4,000 roughly $58 more or $290 over the five-year period. That’s on top of expected increases for the Chicago Board of Education and Chicago Park District…

(Editor’s note: Bold added for emphasis)

A couple of thoughts here:

First off, is anyone really surprised this is happening?

Regular readers of this blog shouldn’t be.

Higher fees, fines, and taxes. Less government services.

I’ve been squawking this for quite some time now.


“Black Dynamite- Who saw that coming?”
YouTube Video

Second, a $250,000 home? When discussing a Chicago Board of Education property tax hike last August, I blogged:

$230,000? You’d be hard-pressed to find a home for that little money in my former stomping grounds on the Northwest Side.

The same holds true for a $250,000 one (especially if it’s a property big enough for a family and doesn’t require a ton of work).

Which means many of my old neighbors will be coughing up significantly more than just $58 annually/$290 over five years as a result of this proposed hike.

And they already pay a big chunk of change to the City’s coffers.

Third, Spielman added last night:

The bottom line, according to Emanuel, is a plan that spreads the burden between employees, retirees and homeowners without raising property taxes so high that it triggers a mass exodus to the suburbs…

“Mass” being the key word here, because an exodus has already started. Former Chicago residents who have awakened to the “writing on the wall” are moving to the suburbs (yours truly included), leaving Cook County, and departing the state.

The push to make “temporary” personal and corporate income tax hikes permanent and the pursuit of class warfare in the form of a proposed millionaire tax hike by the ruling political party in the city, county, and state certainly don’t help the situation either.

Fourth, I can’t stand when tax hikes are proposed despite the lack of significant belt-tightening. Think the City of Chicago is as lean-and-mean as it possibly can be with its operations and set-up?

As long as 50 aldermanic wards exist, I’d argue no.

Fifth, as it stands right now, there’s still a state-required $600 million contribution due next year from the City to stabilize police and fire pension funds that this proposed property tax hike doesn’t address and has to be dealt with. Hal Dardick an Bill Ruthhart reported on the Chicago Tribune website this morning:

But the proposal the mayor and his top aides outlined late Monday would not address huge pension shortfalls for Chicago police, firefighters and teachers. Nor would it deal with the city’s most immediate, pressing financial problem: a state requirement to pay a whopping $600 million more toward police and fire pensions next year, a provision that could lead to a combination of tax increases, service cuts and borrowing

(Editor’s note: Bold added for emphasis)

You read right. Possibly more “tax increases, service cuts and borrowing” coming down the line shortly for Chicago residents.

Stay tuned…

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Spielman, Fran. “Pension deal pinches city workers and taxpayers.” Chicago Sun-Times. 31 Mar. 2014. (http://politics.suntimes.com/article/chicago/exclusive-pension-deal-pinches-city-workers-and-taxpayers/mon-03312014-821pm). 1 Apr. 2014.

Dardick, Hal and Ruthhart, Bill. “Emanuel’s pension fix: Shrink benefits, raise taxes.” Chicago Tribune. 1 Apr. 2014. (http://www.chicagotribune.com/news/local/ct-rahm-emanuel-pension-property-tax-increase-met–20140401,0,1662095,full.story). 1 Apr. 2014.

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Illinois Millionaire Tax Moves Out Of Committee, Goes To House For Vote

This Monday, I blogged about Illinois House Speaker Michael Madigan (D-Chicago) pushing for an income tax hike on the estimated 13,000 or so millionaires residing in the state.

The proposed legislation is making progress in the Democrat-controlled Illinois General Assembly. Doug Finke reported on The State Journal-Register (Springfield) website last night:

An Illinois House committee Thursday signed off on a measure that would allow voters to decide if millionaires should pay more in state income taxes…

The committee voted along party lines to approve the proposed constitutional amendment by House Speaker Michael Madigan, D-Chicago, that would impose a 3 percent surtax on incomes above $1 million. Income up to $1 million would continue to be taxed at the state’s personal income tax rate, currently set at 5 percent…

The proposed amendment now goes to the full House, which must approve it by a three-fifths vote. The Senate will then have to approve it by the same margin for the issue to appear on the November ballot

(Editor’s note: Bold added for emphasis)

Opponents of the tax hike claim it not only unfairly penalizes successful residents of the state, but hurts everyone else in that it may drive away wealth from Illinois.

Speaker Madigan’s response? He was quoted by the Chicago Tribune last Friday as saying:

Well, if they’re in Illinois today, they’re probably so much in love with Illinois that they’re not going to leave.

Eye-roll please…

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Finke, Doug. “Millionaire tax amendment advances to House; progressive income tax rejected.” The State Journal-Register. 27 Mar. 2014. (http://www.sj-r.com/article/20140327/NEWS/140329457/-1/json/?tag=2). 28 Mar. 2014.

Garcia, Monique, Long, Ray, and Zurich, Maura. “Illinois Democrats go all-in on class warfare theme.” Chicago Tribune. 21 Mar. 2014. (http://articles.chicagotribune.com/2014-03-21/news/chi-speaker-madigan-proposes-asking-voters-to-raise-taxes-on-wealthy-20140320_1_tax-hike-bruce-rauner-income). 24 Mar. 2014.

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Misled: Illinois Governor Pat Quinn Wants 2011 ‘Temporary’ Income Tax Hikes Made Permanent

“He said he would, and now that the election is over, Governor Quinn is ready to raise the state income tax.

The governor says he intends to propose increasing the state income tax by 33 percent

The governor said he views his defeat of Republican Bill Brady, who opposed a tax hike as a vote to deal with the state budget and raise taxes.”

-FOX 32 (Chicago) website, November 8, 2010

“Gov. Pat Quinn said today he will sign a major income tax increase as soon as it hits his desk and rejected criticism that he had misled taxpayers by saying during his campaign he would only sign a smaller increase…

Quinn said ‘no’ when asked if he had been dishonest with taxpayers for campaigning during the 2010 election on a 1 percentage point increase in the income tax rate but now agreeing to sign the 2 percentage point hike.

The governor sought to justify the larger increase in part by saying fiscal experts had told leaders the state’s financial problems were escalating in the last two months.

‘Our house was burning,’ Quinn said. ‘Our fiscal house was burning.’”

-Chicago Tribune website, January 12, 2011

“Gov. Pat Quinn today signed a major income tax increase the Legislature passed earlier this week.

The Democratic governor’s signature on the legislation means the 67 percent increase in the personal income tax increase takes effect immediately. Corporate income taxes also rose 46 percent…”

-Chicago Tribune website, January 13, 2011

“The legislation that was pushed through by Democratic lawmakers, who have controlled Illinois state government since 2003, hikes the 3 percent personal income tax rate to 5 percent until 2015, when the rate is supposed to drop to 3.75 percent. However, the last time income tax rates in the ‘Land of Lincoln’ went up in 1989, politicians also claimed it was as a temporary increase to combat a financial ‘rough patch.’ But the rates never came down and by 1993 were designated permanent. Until now, that is…”

-Survival And Prosperity post, January 13, 2011

“In his election-year budget speech Wednesday, Gov. Pat Quinn called on lawmakers to make permanent the 67 percent temporary income tax increase they approved in 2011

Quinn’s budget speech was the first time he directly addressed what should be done about the pending expiration of much of the temporary tax increase. When lawmakers approved raising the state’s personal income tax rate from 3 percent to 5 percent, they stipulated that the rate should drop to 3.75 percent on Jan. 1, 2015…”

-The State Journal-Register (Springfield), March 26, 2014

(Editor’s note: Italics added for emphasis)

Let me guess. “Our fiscal house is burning.”

Something’s burning alright. And Governor Quinn’s wearing them below his waist.

“Facts are stubborn things, and it’s time to set the record straight…”

-Illinois Governor Pat Quinn, Chicago Tribune opinion piece, January 19, 2011

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

“Pat Quinn Plans Income Tax Increase After Elected Governor.” FOX 32. 8 Nov. 2010. (http://www.myfoxchicago.com/story/17817497/pat-quinn-plans-income-tax-increase-after-elected-governor). 26 Mar. 2014.

Long, Ray and Pearson, Rick. “How Democrats wrangled the tax votes in
Springfield.” Chicago Tribune. 12 Jan. 2011. (http://articles.chicagotribune.com/2011-01-12/news/ct-met-tax-hike-how-did-it-pass-20110112_1_income-tax-tax-votes-senate-president-john-cullerton). 13 Jan. 2011.

Long, Ray. “Governor signs income tax increase.” Chicago Tribune. 13 Jan. 2011. (http://newsblogs.chicagotribune.com/clout_st/2011/01/governor-signs-income-tax-increase.html). 13 Jan. 2011.

Finke, Doug. “Quinn makes case to leave state income tax increase in place.” The State Journal-Register. 26 Mar. 2014. (http://www.sj-r.com/article/20140326/NEWS/140329542). 26 Mar. 2014.

Quinn, Pat. “Border Wars.” Chicago Tribune. 19 Jan. 2011. (http://articles.chicagotribune.com/2011-01-19/opinion/ct-oped-0119-illinois-20110119_1_world-class-universities-and-research-budget-reforms-border-wars). 26 Mar. 2014.

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Thursday, March 27th, 2014 Government, Income, Political Parties, Taxes No Comments

Wisconsin Cuts Taxes While Illinois Looks To Make 2011 ‘Temporary’ Tax Hikes Permanent

Throughout the years, I’ve known/met a number of Illinois residents who can’t stand Wisconsin. Mostly from the Chicago area, they equate Wisconsin and its residents as being unsophisticated clowns.

I wonder if they haven’t noticed by now that the only circus around is in the “Land of Lincoln.”

While Illinois falls deeper into an economic abyss (public pension fix my butt), Wisconsin seems to have gotten their finances under control and look to be on the path to prosperity.

So much so they’re cutting taxes. Again.

Patrick Marley and Jason Stein reported on the Milwaukee Journal Sentinel website Monday afternoon:

Lowering taxes for the third time in less than a year, Gov. Scott Walker signed his $541 million tax cut bill in a ceremony Monday at a farm in Cecil as he travels through central and northern Wisconsin touting it.

Speaking at Horsens Homestead Farms, about 35 miles northwest of Green Bay, Walker called it a great day for Wisconsin taxpayers and a sign of the state’s shifting financial fortunes in recent years.

“Now, instead of billion dollar budget deficits, we have a surplus — and today that money is on its way to the workers, parents, seniors, property owners, veterans, job creators and others. You deserve to keep as much of your hard-earned money as possible — because after all, it is your money,” Walker said.

With growing tax collections now expected to give the state a $1 billion budget surplus in June 2015, Walker’s tax proposal will cut property and income taxes for families and businesses, and zero out all income taxes for manufacturers in the state.

Though the state’s tax revenue is increasing, GOP lawmakers and Walker are trimming state spending slightly for the next three years rather than increasing it

(Editor’s note: Italics added for emphasis)

Meanwhile, across the Cheddar Curtain in Illinois there’s this on the website of The State Journal-Register (Springfield). Doug Finke reported Friday:

Hundreds of employees would be laid off, state facilities would be closed and thousands of prison inmates released without supervision, state agency directors told senators Friday during a hearing to gauge the effect of possibly severe spending cuts next year.

During a more than three-hour joint hearing of the two Senate Appropriations committees, agency after agency warned of drastic consequences should they be forced to cut their current budgets by 20 percent.

“There would be extreme consequences for the economy across Illinois,” warned Ben Winick of Gov. Pat Quinn’s budget office. “Over a dozen state facilities would have to close. Thousands of state employees would have to be laid off.”

The hearing occurred just days before Quinn is scheduled to finally deliver his budget outline for the fiscal year that starts July 1…

Translated? Illinois residents, this is what will happen if you don’t support making the Democrat-led temporary 67 percent personal income tax hike and 46 percent corporate income tax hike implemented in January 2011 permanent next year.

I hear Governor Quinn will be delivering his budget plan tomorrow.

Instead of ridiculing Wisconsin, us FIBs (F***ing Illinois Bastards as we’re known by up there) might want to start emulating our neighbors to the north in certain respects before we completely destroy Illinois.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Marley, Patrick and Stein, Jacob. “Scott Walker signs tax cut legislation.” Milwaukee Journal Sentinel. 24 Mar. 2014. (http://www.jsonline.com/news/statepolitics/scott-walker-set-to-sign-tax-cut-legislation-b99231851z1-251936261.html). 24 Mar. 2014.

Finke, Doug. “State agencies outline cuts if forced to make 20% reductions.” The State Journal-Register. 21 Mar. 2014. (http://www.sj-r.com/article/20140321/NEWS/140329821). 24 Mar. 2014.

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Illinois Millionaire Tax Hike Could Pass As Part Of Class Warfare Push By Democrats

While I’ve been putting a lot of time lately into my offshore Web projects, Illinois Democrats have been grabbing the local headlines as they replicate President Obama’s class warfare strategy to win votes in November. Monique Garcia, Ray Long, and Maura Zurick reported on the Chicago Tribune website last Friday:

Illinois Democrats went all-in Thursday with their election-year class warfare theme as Speaker Michael Madigan pitched the idea of asking voters to raise taxes on millionaires, Senate President John Cullerton advanced a minimum-wage increase and Gov. Pat Quinn compared wealthy opponent Bruce Rauner to TV villain Mr. Burns…

The newest front in the campaign battle came as Madigan held a rare news conference to announce he wants lawmakers to put a question on the Nov. 4 ballot asking voters whether the state should raise the income tax by 3 percentage points on those who make more than $1 million a year.

The powerful Democratic speaker said the tax hike on millionaires is a way to generate more than $1 billion for elementary and high schools. Madigan based his calculations on what he said are roughly 13,675 millionaires that lived in Illinois in 2011, brushing aside a question about whether such a tax hike might drive them out of the state.

“Well, if they’re in Illinois today, they’re probably so much in love with Illinois that they’re not going to leave,” Madigan said

(Editor’s note: Italics added for emphasis)

I’m not as optimistic as the 71-year-old Speaker of the House is about Illinois millionaires sticking around if they’re targeted with a tax hike.

After all, money typically gravitates to where it’s being treated the best.

And recent demographic data suggests Chicagoland and Illinois residents may not be “so much in love” with the area as Mr. Madigan claims.

That includes the rich as well.

“Cook County’s population grew by 17,000 people in 2012, about .3 percent- but much of that gain came from immigrants, according to Census Bureau estimates released Thursday.

The figures showed that about 32,000 more domestic residents moved out of Cook County than moved in. But a net increase of 17,000 immigrants, along with a high ratio of births over deaths, contributed to an overall gain for the county…”

-Chicago Sun-Times website, March 13, 2013

Moving Out
The top outbound states for 2013 were:

1. New Jersey
2. Illinois
3. New York
4. West Virginia
5. Connecticut
6. Utah
7. Kentucky
8. Massachusetts
9. New Mexico”

-United Van Lines press release, January 2, 2014

“As the Great Recession churned job prospects for many, Cook County lost about 13,000 residents with six-figure household incomes to other places, despite the widely hyped revival of downtown housing and jobs…”

-Crain’s Chicago Business website, February 14, 2014

“Roughly 13,675 millionaires that lived in Illinois in 2011”

Should Illinois Democrats jack up their income taxes, I suspect the number of Illinois millionaires right before the tax hike is implemented will plummet. Revenue will follow. Out-of-state vacation homes in Indiana and Wisconsin will be declared as primary residences.

“A way to generate more than $1 billion for elementary and high schools”

I highly doubt that.

So does the proposed millionaire tax hike have a chance of becoming reality?

Consider what Greg Hinz blogged on the Crain’s Chicago Business website Friday:

Springfield Democrats have such big legislative majorities that they won’t need any Republican votes to pass the measure if they hang together. And Springfield insiders are saying that odds are much better that Democrats will unify behind the speaker’s proposal- which, after all, would affect only millionaires like Bruce Rauner- than behind another plan being pushed by Senate Democrats to implement a graduated income tax, which would affect far more voters.

Stay tuned. If you can stomach it.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Garcia, Monique, Long, Ray, and Zurich, Maura. “Illinois Democrats go all-in on class warfare theme.” Chicago Tribune. 21 Mar. 2014. (http://articles.chicagotribune.com/2014-03-21/news/chi-speaker-madigan-proposes-asking-voters-to-raise-taxes-on-wealthy-20140320_1_tax-hike-bruce-rauner-income). 24 Mar. 2014.

Hinz, Greg. “GOP leaders blast Madigan’s millionaires tax, but idea likely has legs.” Greg Hinz On Politics.” Crain’s Chicago Business. 21 Mar. 2014. (http://www.chicagobusiness.com/article/20140321/BLOGS02/140329950/gop-leaders-blast-madigans-millionaires-tax-but-idea-likely-has-legs). 24 Mar. 2014.

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BIS: Global Debt Markets Grow To Estimated $100 Trillion In 2013, Up From $70 Trillion In 2007

Last night, I read about global debt markets hitting the $100 trillion-mark.

One word came to my mind at that moment:

Unsustainable.

Branimir Gruić and Andreas Schrimpf wrote “Cross-border investments in global debt markets since the crisis” in the latest BIS Quarterly Review- a report from the Bank of International Settlements (the central bank of central banks). From the publication released Sunday:

Global debt markets have grown to an estimated $100 trillion (in amounts outstanding) in mid-2013 (Graph C, left-hand panel), up from $70 trillion in mid-2007. Growth has been uneven across the main market segments. Active issuance by governments and non-financial corporations has lifted the share of domestically issued bonds, whereas more restrained activity by financial institutions has held back international issuance (Graph C, left-hand panel).

Not surprisingly, given the significant expansion in government spending in recent years, governments (including central, state and local governments) have been the largest debt issuers (Graph C, left-hand panel). They mostly issue debt in domestic markets, where amounts outstanding reached $43 trillion in June 2013, about 80% higher than in mid-2007 (as indicated by the yellow area in Graph C, left-hand panel)…

(Editor’s note: Italics added for emphasis)

“Not surprisingly, given the significant expansion in government spending in recent years, governments (including central, state and local governments) have been the largest debt issuers”

Gruić and Schrimpf are correct- I’m not surprised.

And regular Survival And Prosperity readers shouldn’t be either, as warnings about reduced government services and new/higher taxes and fees (to deal with all this new debt) have been issued time and time again.

You can read the entire BIS report here (page 22 of the .pdf file/page 18 of the publication contains Gruić and Schrimpf’s findings).

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Chicago Residents Hit With Fee, Fine, And Tax Hikes In 2014

Chicagoans- get ready for a bunch of new fee, fine, and tax hikes starting January 1.

Fees for certain parking and speeding infractions, impounded vehicle storage, and construction permit filings are going up.

“Amusement” taxes on cable television will jump 50 percent.

Beginning January 10, yet another cigarette tax hike of 50 cents per pack takes effect. Adding federal, state, and county taxes will leave Chicago with the highest taxes ($7.17) on cigarettes in the country.

None of this applicable to you? There’s more. I read an article by Hal Dardick in my Sunday paper (Chicago Tribune) this morning which warned:

The widest-felt effects will stem from the property tax increase enacted in August by the Chicago Board of Education and higher water and sewer fees set in motion during Emanuel’s first year in office as a way to pay for the replacement of aging mains.

The owner of a home valued at $213,000 can expect to pay about $51 more in school property taxes next year. It’s the third year in a row that Chicago property owners will get hit with higher school taxes.

City property owners and suburban governments that buy city water face a 15 percent increase in water rates. In some cases, suburban utilities will pass the increases on to people who buy their water. Sewer charges, added to city property owners’ bimonthly bills, will be 96 percent of their water tab, an increase of 4 percentage points…

“The owner of a home valued at $213,000.”

Not many decent houses down around that price level in my old neighborhood on the Northwest Side. Even in adjacent neighborhoods.

$51 would be just the starting point in that part of Chicago.

Dardick added later:

All of the new city fines and fees are expected to pump about $32.4 million into city coffers next year…

“$32.4 million.” Yeah, we’ll see.

Why such a “Doubting Thomas”? If anything, smokers who aren’t already doing it might be even more motivated in the new year to purchase their cigarettes outside of the Chicago city limits, depriving the City of Chicago of much needed and anticipated revenue.

Then there’s the possibility that a significant number of Chicagoans might become extra-wary going forward about being slapped with the well-publicized and more expensive parking and moving violations. More anticipated money gone.

And down the road, there’s already talk among certain suburbs of bypassing Lake Michigan water collected and distributed by the City of Chicago.

Regardless, Chicago residents- should they choose to remain in the “Windy City”- should keep on expecting higher fees, fines, and taxes in the years to come.

Then again, the same might be said for a lot of places across the United States.

But to the degree that I expect Chicagoans to get hit with? Not really.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Dardick, Hal. “Higher Chicago taxes, fines and fees for 2014.” Chicago Tribune. 20 Dec. 2013. (http://www.chicagotribune.com/news/local/ct-chicago-new-taxes-fees-met-20131222,0,6847986.story). 22 Dec. 2013.

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Repeal Of Illinois ‘Temporary’ Income Tax Hikes Questioned

Short of some other revenue-generating scheme replacing it, the “temporary” 67 percent personal income tax hike and 46 perent corporate tax hike pushed through by Illinois Democrats and signed off by Governor Pat Quinn (D-Chicago) in January 2011 are starting to look permanent.

Big shock there.

Back at the beginning of 2011, the State of Illinois was on the hook for an estimated $8 billion in unpaid bills. “Temporary” increases in personal and corporate income taxes were passed- as I understood it- to help pay down the massive amount owed.

But as I blogged less than two weeks ago on November 25:

This morning, I read that the backlog is now approaching $9 billion.

Big fail there.

No wonder there’s increased chatter then about Illinois Democrats- who’ve controlled state government since 2003- making those “temporary” tax hikes permanent. Ray Long reported on the Chicago Tribune website Saturday:

The harshest Republican critics of a new law to wipe out the state’s $100 billion government worker pension debt argued that the plan should have saved more money or Illinois’ temporary income-tax increase that’s set to expire will never go away.

A look at the state’s finances, however, shows it’s a good bet the tax hike will stick around whether or not lawmakers approved last week’s major overhaul of the retirement systems. If lawmakers allow the tax increase to expire as scheduled at the end of 2014, the state will lose about $5 billion a year. That’s one-seventh of the state’s $35 billion operating budget.

(Editor’s note: Italics added for emphasis)

This wouldn’t be the first time supposedly temporary taxes would be made permanent by Illinois lawmakers. As I noted back on January 13, 2011:

The last time income tax rates in the “Land of Lincoln” went up in 1989, politicians also claimed it was as a temporary increase to combat a financial “rough patch.” But the rates never came down and by 1993 were designated permanent. Until now, that is.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Long, Ray. “State income tax hike doesn’t look so temporary now.” Chicago Tribune. 7 Dec. 2013. (http://www.chicagotribune.com/news/local/ct-illinois-pensions-met-1208-20131207,0,7554970.story). 8 Dec. 2013.

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WSJ Calls Proposed ‘Fix’ To Illinois Public Pension Crisis ‘Fake’

Today’s the day Illinois lawmakers may vote on SB0001 to “fix” the state’s $100 billion public pension crisis.

But according to the Wall Street Journal last night, the whole thing’s a “fake.”

From the WSJ website Monday evening:

Illinois’s Fake Pension Fix

Democrats in Illinois have dug a $100 billion pension hole, and now they want Republicans to rescue them by voting for a plan that would merely delay the fiscal reckoning while helping to re-elect Governor Pat Quinn. The cuckolded GOP seems happy to oblige on this quarter-baked reform.

Legislative leaders plan to vote Tuesday on a bill that Mr. Quinn hails as a great achievement. But the plan merely tinkers around the edges to save a fanciful $155 billion over 30 years, shaves the state’s unfunded liability by at most 20%, and does nothing for Chicago’s $20 billion pension hole.

Most of the putative savings would come from trimming benefits for younger workers. The retirement age for current workers would increase on a graduated scale by four months for 45-year-olds to five years for those 30 and under. Teachers now in their 20s would have to wait until the ripe, old age of 60 to retire, but they’d still draw pensions worth 75% of their final salary.

Salaries for calculating pensions would also be capped at $109,971, which would increase over time with inflation. Yet Democrats cracked this ceiling by grandfathering in pensions for workers whose salaries currently top or will exceed the cap due to raises in collective-bargaining agreements.

Democrats are also offering defined-contribution plans as a sop to Republicans who are desperate to dress up this turkey of a deal. These plans would only be available to 5% of workers hired before 2011. Why only 5%? Because if too many workers opt out of the traditional pension, there might not be enough new workers to fund the overpromises Democrats have made to current pensioners.

At private companies, such 401(k)-style plans are private property that workers keep if they move to a new job. But the Illinois version gives the state control over the new defined-contribution plans and lets the legislature raid the individual accounts at anytime. That’s a scam, not a reform.

Even under the most optimistic forecasts, these nips and tucks would only slim the state’s pension liability down to $80 billion— which is where it was after Governor Quinn signed de minimis fixes in spring 2010 to get him past that year’s election…

(Editor’s note: Italics added for emphasis)

“Would only slim the state’s pension liability down to $80 billion.”

Sounds like this legislation would only “kick the can down the road” as the public pension crisis is concerned- once again.

I shouldn’t be surprised to read any of this.

After all, it’s what Illinois state legislators have been doing for quite some time now on this issue.

At the end of the day- including today, if a pension “fix” is signed into law- it looks as if public sector retirees participating in these particular pensions are the ones who will be most screwed.

Illinois taxpayers won’t be far behind.

Consider what Kenneth Griffin, the richest Chicagoan and Illinoisan who’s also CEO of the global financial institution Citadel Group, had to say in a Chicago Tribune piece on November 29:

The bitter truth is that our politicians have sold government employees a fraudulent bill of goods. Absent extraordinary economic growth, our state is going to collapse under the weight of generous pension promises made by union leaders and politicians. And with each passing day, the $100 billion gap between what has been promised and what is provided for grows by roughly $5 million.

Here is where this story will inevitably end: Our state is going to be forced to break its promises to our government employees and retirees. They will receive less than they bargained for. Our state’s taxpayers will see the 67 percent “temporary” tax increase converted into a permanent tax increase. And soon we will hear that even further tax increases are needed to meet our obligations. This is the price we are all going to pay for sending the wrong leaders to Springfield for too many years.

I don’t think shaving $20 billion off that total will change Griffin’s prognosis much.

An $80 billion public pension funding gap.

Wonder if that will fake out the credit rating agencies?

Something tells me it won’t, and rewinding the clock only three-and-a-half years will still leave us with an ongoing public pension crisis.

The Wall Street Journal did a nice job picking apart the proposed “fix.” You can read the entire article on the WSJ website here or on the Illinois Policy Institute’s website here.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Griffin, Kenneth. “Guaranteeing financial ruin in Illinois.” Chicago Tribune. 29 Nov. 2013. (http://articles.chicagotribune.com/2013-11-29/site/ct-illinois-pension-reform-financia-ruin-1129-20131129_1_tax-increase-state-income-tax-bill). 3 Dec. 2013.

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State Of Illinois Unpaid Bills Could Reach $9 Billion By End Of December

More bad news for the State of Illinois on the financial front.

In January 2011, the state government was on the hook for an estimated $8 billion in unpaid bills. That month, massive personal and corporate income tax hikes went into effect in the “Land of Lincoln.”

This morning, I read that the backlog is now approaching $9 billion.

Doug Finke reported on The State Journal-Register (Springfield, Illinois) website Sunday:

According to Comptroller Judy Baar Topinka’s office… payment delays are once again getting longer. The backlog of bills waiting to be paid in the comptroller’s office has grown by $3 billion since the spring, when the state was flush with tax revenue…

[Topinka spokesman Brad] Hahn said the office believes the total will hit $9 billion by the end of December, exactly where Topinka predicted it would be last summer. It is the second year in a row the backlog will sit at about $9 billion at the end of the calendar year.

(Editor’s note: Italics added for emphasis)

Any other Illinois readers starting to think those January 2011 “temporary” tax hikes won’t be so temporary after all?

I blogged back on January 13, 2011:

The legislation that was pushed through by Democratic lawmakers, who have controlled Illinois state government since 2003, hikes the 3 percent personal income tax rate to 5 percent until 2015, when the rate is supposed to drop to 3.75 percent. However, the last time income tax rates in the “Land of Lincoln” went up in 1989, politicians also claimed it was as a temporary increase to combat a financial “rough patch.” But the rates never came down and by 1993 were designated permanent. Until now, that is.

In an attempt to gain more support among Democrats (no Republicans in the Illinois House or Senate backed the legislation), the measure calls for lowering the personal income tax rate in 2025 to 3.25 percent.

For businesses, the 4.8 percent corporate income tax jumps to 7 percent until 2015, when it would drop to 5.25 percent. In 2025, the corporate rate is then supposed to fall back down to 4.8 percent.

If those “temporary” tax hikes in Illinois are indeed repealed in 2015, look for the State of Illinois to find some other way(s) to make up for that lost revenue.

Source:

Finke, Doug. “Bill backlog growing again and so are payment delays.” The State Journal-Register. 24 Nov. 2013. (http://www.sj-r.com/top-stories/x450320106/Bill-backlog-growing-again-and-so-are-payment-delays?zc_p=0). 25 Nov. 2013.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Farewell, Illinois Businesses And Jobs

One topic I particularly “harp on” in Survival And Prosperity is the continued erosion of business-friendly conditions in the state of Illinois.

Whether it be a misguided anti-Constitution, anti-Bill of Rights crusade that drives off gun manufacturers and their workers or a 46 percent corporate income tax hike that was implemented at the beginning of 2011, parochial-minded politicians in control of the state are scaring away prospective and existing businesses and jobs.

Thankfully, it’s not just me that recognizes the nonsense that’s going on. From my Sunday paper this morning:

Scott Stantis
Chicago Tribune
Oct 19, 2013
ANY CHARACTER HERE

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

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Back To Blogging

It’s back to work over here at Survival And Prosperity this dreary Wednesday morning in the Chicagoland area. I had planned on publishing new material Monday, but decided to extend my “vacation” out a little bit longer. I apologize if you were checking for new posts earlier this week.

During my time away from the blog, I was able to attend to a number of tasks that needed my immediate attention. But it wasn’t “all work and no play.” I got the chance to spend a couple of days at my family’s place in southeast Wisconsin near the end of the break. The weather was terrific, the locally-brewed beer plentiful, and the Northern Pike and Largemouth Bass were biting. My cousin and I managed to haul in some really nice-sized fish. Which is why I extended my stay longer than originally planned.

Two things come to mind now when thinking about that long weekend in Wisconsin:

First, I noticed the gun section at the local hardware store had a lot more ammunition on the shelves from the last time I was there. Another sign the ammo shortage is easing up?

Second, it was nice to “Escape to Wisconsin” and breathe in some “freedom.” In my opinion, Wisconsin is heading in the right direction. Illinois… not so much. As each day goes by, the “Land of Lincoln” continues to be transformed into a Big Government Nanny State, highlighted by more/higher taxes, more/higher fees, and increasing controls forced upon the populace. Sadly enough, many of my neighbors seem to be okay with this. Especially here in the Chicago area.

Coupled with the huge financial woes facing the City of Chicago, Cook County, and State of Illinois- an ugly ending looks to be in store for us. At the very least, Illinoisans will be busting their wallets out en masse to deal with the debt debacle.

And while our nice new house in the Chicago suburbs that I worked on quite a bit the last two weeks is fine and all, I continue to warn my girlfriend that our future permanent residence looks to be outside of the state.

It’s a real shame it might have to come to that.

Back to our regularly-scheduled blogging. And wondering if incompetency trumps political theater in causing a national debt default in the coming hours.

Christopher E. Hill
Editor

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