On January 13th, 2011, the Illinois state legislature passed a 4-year tax-hiking bill, placing all responsibility for its own financial mismanagement onto the diligent workers of Illinois. According to the Wall Street Journal, the bill includes a 67% increase in the state income tax and a 45% increase in the corporate tax, meaning rates of 5% and 7%, respectively. Democrats in the Illinois legislature hope to see this bill close the $13 billion state budget gap that is projected to increase to $17 billion by 2012. Yet is taxing its citizens the only way to repay Illinois’ debts?

The taxes paid by a family of four earning $60,000 will increase by $1,040 with this new tax hike. According to Karen Pierog of Reuters, this legislature will raise $6.8 billion a year and will impose a $36.8 billion budget for the 2012 fiscal year. It may sound promising, but Governor Pat Quinn retains the right to declare a state of fiscal emergency and subsequently raise the budget, which is already 10% higher than 2011 levels. Also, in the first year of the tax hike, more than half of the revenue, or $3.7 billion, will be funding the state pension system. It’s obvious that before citizens and businesses are taxed more heavily, the underlying system of spending in Illinois should be reformed.

According to Julie Schmidt, Illinois today is experiencing an unfunded pension liability of $78 billion. These pensions are paid to government employees after they retire, in addition to their Social Security payments. Schmidt admits that the problem with Illinois’ system is that “[p]ublic employee salaries are too high… and retirement is too early”. Over the past decade, teacher salaries have increased 96%, Social Security allowances have increased 46%, and the overall pension cost has increased 116%. In Illinois, state employees that have a 45-year career making $80,000 yearly will be able to retire and make $84,000 yearly in non-taxed pension. This includes a 75%-of-salary pension and Social Security benefits of $24,000 a year. Not only are state employees making more after retirement than during their employment, but they are also exempt from many taxes because of their retirement, including the Social Security tax, pension contribution tax, and state income tax. In the end, taxpayers are more and more stressed.

This tax hike, arriving during a horrible state recession, could not have been timed worse. Schmidt reports that Illinois lost more than 700 manufacturing companies and 52,000 manufacturing jobs in 2009. Higher income and corporate taxes, even if lowering the government’s debt, cannot possibly help the state prosper. The Wall Street Journal reported that Caterpillar, Inc., headquartered in Peoria, released a statement along these lines; “…such a tax increase will make it more difficult for Caterpillar to compete in today’s global economy from our operations in Illinois.” Caterpillar employs 23,000 people within Illinois, but now faces one of the highest corporate taxes in the nation. Jimmy John’s, another company with headquarters in Illinois, has also considered moving its business out of state. If this does not convince Americans that high taxes have always been damaging to free-market economies, nothing will.

The hard workers of Illinois now face increased taxes, with the government continuing its foolish spending. Concentrated in its out-of-control pension spending, the state of Illinois has dug itself into a hole of debt, and now expects its honorable men and women to bail itself out. The Illinois government should be grateful that many businesses and employees have remained in their state, yet they have only come to reward their people with more taxes. How long must the people and businesses of Illinois pay for the corruption and excess of their state government? In the midst of a recession, the taxpayers of Illinois have the right to keep more of their money. Even with heightened taxes, the government of Illinois will find itself with less tax revenue if its citizens and businesses, faced with recession, continually yield lower profits. Unfortunately, Mr. Pat Quinn fails to realize that the only road to tax revenue lies in economic prosperity.