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I had the pleasure of being on CNBC last Friday with Rick Santelli. It was the third time we discussed the sorry state of Chicago and Illinois finances. The focus for this interview was legacy issues.
Public Debt, Taxation, Legacy Costs
Who wants to move to Illinois, with its high taxes, when the vast majority of those taxes are just to support legacy issues like pensions?
Chicago mayor Rahm Emanuel recently mentioned hiking Chicago's already obscene property tax structure. Moreover, Emanuel who claims to want to make Chicago a technology hub, just imposed a 9% data streaming tax, effectively nickel and diming businesses and residents alike when pension issues for Chicago alone are close to $30 billion.
At the state level, "progressives" in the Illinois legislature have their eyes on your pocketbook as well. They seek to hike Illinois income taxes.
It is impossible to say everything that needs to said in a 3 minute time window, but that is all the studio allows. So we focus on one key item, and the central theme this time was taxation solely to support legacy issues.
What Needs to Be Done
To spare the citizens of Illinois massive tax hikes, the only reasonable course of actions are as follows:
- Halt defined benefit pension plans for new employees
- Eliminate collective bargaining of public unions
- Scrap Davis Bacon and all prevailing wage laws so that cities do not have to overpay for services
- Enact right-to-work legislation
- Pass bankruptcy legislation allowing cities, municipalities, and other taxing bodies the right to declare bankruptcy
Had options 1-4 been done a decade ago, Illinois would not be as bad off as it is today. Now, even those measures cannot and will not fix the problems.
- Beware, the Tax Man Has Eyes on You: Potential Hike for Illinoisans is Staggering
- Emanuel Fiddles While Chicago Burns; Public Schools Over the Edge; 9% Cloud Tax on Data Streaming; Emanuel Eyes Property Tax Hikes
Instead of tackling the underlying problems, Emanuel nickels and dimes businesses to death, further makes Chicago an uncompetitive place to do business, and threatens massive property tax hikes. Emanuel also expects $500 million from the state even though the state budget (which Governor Bruce Rauner correctly refuses to sign) is $4 billion in the hole.
Mike "Mish" Shedlock