taxes – Chicago Newstips by Community Media Workshop http://www.newstips.org Chicago Community Stories Mon, 14 Jul 2014 17:31:05 +0000 en-US hourly 1 https://wordpress.org/?v=4.4.12 Corporate taxes and the state’s fiscal crisis http://www.newstips.org/2013/09/corporate-taxes-and-the-states-fiscal-crisis/ Thu, 26 Sep 2013 20:23:20 +0000 http://www.newstips.org/?p=7720 A coalition of community, labor and religious groups will hold a press conference at 9 a.m., on Friday, September 27 at the Thompson Center press room and march over to the Bilandic Building, 160 N. LaSalle, to a House Revenue Committee hearing on the Illinois Corporate Responsibility and Tax Disclosure Act.

 

Illinois is in fiscal free-fall, but our political leaders seem incapable of addressing a structural deficit created by our regressive tax system.

The state’s crisis threaten to swamp the budgets of cities and school districts as well as funding for human services and health care, but “the only solutions that are ever discussed are deeper and deeper cuts,” said Kristi Sanford of Northside POWER, part of a statewide coalition pushing for corporate tax accountability.  “But these cuts just hurt Illinois families and the state’s economy — and no amount of cuts can solve the problem.”

Meanwhile Springfield is leaving serious money on the table:  two-thirds of corporations operating in Illinois paid no state income tax in 2010, according to the Illinois Department of Revenue.

According to the Governor’s Office of Management and Budget, 80 percent of state revenues come from individual income tax and sales tax receipts; only 9 percent comes from corporate income taxes.

Corporations reporting billions in profits are estimated to have paid no state income tax.

We don’t know what individual corporations are paying, but major Illinois-based corporations — with massive profits — paid no federal income tax from 2008 to 2010 (in some cases receiving huge tax subsidies instead), according to Citizens for Tax Justice.

Who’s not paying?

And since state taxes track federal taxes, advocates say we can probably assume no Illinois income taxes were paid over those years by Boeing, with $14 billion in profits; Baxter International, with $1.3 billion in profits; Integrys Energy Group, with nearly $1.18 billion in profits; and Navistar International, with $1.1 billion in profits.

The problem is that for too long, corporations have entirely dominated tax policy debates, according to Dan Bucks, former director of revenue Montana, who advocates for corporate tax accountability measures.  He backs a measure now under consideration here to encourage greater public participation by requiring large publicly-traded corporations operating in Illinois to disclose their state income tax payments.

F”The citizens of Illinois ultimately own the tax system of the state,” said Bucks.  “They have a right to sufficient information to ensure that their tax system matches their values and is effective in achieving their goals.”

Fair Economy Illinois, a coalition of grassroots community organization from Chicago and downstate, is planning to pack Friday’s revenue committee hearing to demand passage of HB 3627.

Stalled in House

The State Senate passed a companion bill last year, but the House Revenue Committee voted it down.  Two Democrats on the panel, Rep. Frank Mautino (76th District) and Rep. Michael Zalewski (23rd District), helped defeat the measure.

Both are allies of House Speaker Michael Madigan, whom many hold responsible for Springfield’s inability to address the fiscal crisis in a balanced manner.

Sanford said a poll by Public Policy Polling showed nearly 80 percent of Illinois voters back legislation requiring publicly-traded corporations to disclose Illinois income tax payments.

Fair Economy Illinois also advocates closing several major corporate tax loopholes, including following the lead of other states by decoupling from the federal accelerated depreciation deduction, which would generate over $400 million a year. and eliminating a sales tax break for big box retailers, which could raise $115 million a year.

 

For more on those tax breaks, see last year’s Newstip, What corporate loopholes cost Illinois.

Also related:

In Springfield, no solutions

To fix state budget deficit, flip the tax burden

]]>
Alternatives to school cuts http://www.newstips.org/2013/06/alternatives-to-school-cuts/ http://www.newstips.org/2013/06/alternatives-to-school-cuts/#comments Wed, 19 Jun 2013 22:32:17 +0000 http://www.newstips.org/?p=7539 Just a month ago — when they were intent on closing 50 schools — the watchword at CPS was “quality education.”

“What we must do is ensure that the resources that some kids get, all kids get,” said Barbara Byrd-Bennett in an internet ad funded by the right-wing Walton Family Foundation.  “And these resources include libraries and access to technology and science labs and art classrooms….

“And with our consolidations we’re able to guarantee that our children will get what they need and what they deserve.”

That was then.

Raise Your Hand has released a very partial list of budget cuts faced by schools under the district’s new per-pupil funding system, and it’s impressive:

Goethe, Jamieson, Kozmisky, Sutherland, each will lose between $250,000 and $300,000.  Audobon, Belden, Gale, Grimes Fleming, and Ray, between $400,000 and $500,000.  Bell, Darwin Mitchell, Murphy, Suder, Sullivan High, betweeen $700,000 and $800,000.  Gage Park High, Lincoln Park High, Mather Elementary, Roosevelt High, $1 million or thereabouts.  Foreman High, $1.7 million.

CTU reports that Taft High School faces a $3 million cut.

According to Wendy Katten of RYH, every school they’ve contacted faces budget cuts.  So far they have figures from about 10 percent of CPS schools, and the cuts total about $45 million, she said.  (CTU budget analyst Kurt Hilgendorf said the union has requested district-wide figures on cuts but CPS has declined to supply them.)

“It’s horrific,” she said.  “There are terrible losses.”

It also clearly contravene’s Byrd-Bennett’s promise about what school consolidations would accomplish.

Losing library access

Two high schools,Von Steuben and Lincoln Park,  are reported to be considering laying off librarians — at Von Steuben it would mean no open-access library; at Lincoln Park, the library would remain open part of the school day but not after school — but many more principals are being forced to choose between staffing their libraries and having enough teachers.

At many schools it will mean  eliminating art or music.  At Katten’s son’s school, it looks like art will be eliminated and physical education will be staffed by a part-time teacher — which means gym just twice a week, far below the state requirement.

Funding for enrichment programming as part of the longer school day trumpeted by Emanuel last year is being eliminated.  At many schools, “the longer day is not going to be very enriching,” Katten said.

And many schools will be forced to lay off teachers and increase class sizes.  Audubon Elementary, losing $400,000, is considering laying off as many as six teachers, which will raise class sizes to 37 to 45, according to DNA Info.  Sullivan High is considering laying off seven teachers; Kelly High could lose ten or fifteen.

CPS’s per-pupil funding system, touted as a boon to principal autonomy, has turned out to be yet another way to remove resources from neighborhood schools.

It’s as if Emanuel thought he could cut his way to better schools.

TIF squads

And while the city’s elite clearly prefers budget cuts and layoffs to deal with CPS’s financial troubles, parents and teachers see another way.

Raise Your Hand is organizing “TIF squads” in every ward to compile the details of how schools are being affected.  They’ll use the information to impress individual aldermen with the necessity of declaring a TIF surplus and returning funds to CPS.

“We need a long-term sustainable solution at the state level, but parents refuse to accept these cuts now while the city is simultaneously handing out property tax money for projects like a $55-million DePaul stadium,” Katten said.

The group is holding an All South Side Schools meeting Thursday, June 20 at 7 p.m. at Augustana Lutheran Church, 5500 S. Woodlawn, to continue organizing.  Friday, June 21 at 10 a.m., they’re holding a parent rally against cuts at the State of Illinois buildling, Randolph and Clark.

In the next year they’re among many groups planning a serious drive to fix Illinois’s regressive tax structure — a desperately needed reform to address school funding as well as the state’s fiscal crisis.  Will Emanuel and the school board join in?

Where the money is

In her City Club address Tuesday, CTU president Karen Lewis outlined a series of revenue measures that would tap into the vast wealth generated by the financial sector and restore a measure of balance to the tax system — and financial stability to governing bodies.

“The CTU wants to work with our leaders in City Hall, Springfield and at the board to solve these sorts of problems,” she said. “We can’t work together on these issues because they keep creating new problems.”

Instead of sharply dividing the city with his campaign of school closings — which had virtually no impact on CPS’s fiscal problems — Emanuel could “take a holistic approach” and work with all stakeholders for basic changes that would really make a difference, Hilgendorf said.

One example:  CTU backed legislation in the spring session that would close three corporate tax loopholes that bring no economic benefit and cost the state $445 million a year.  It died in committee.

And while everyone’s attention and energy was absorbed by school closings, nothing got done on CPS’s pension crisis.

But at least we’re seeing progress on building a new stadium for DePaul.

***

At the Campaign for America’s Future, Richard Eskow promotes the new Education Declaration — which spells out what might be called real education reform — and provides an apt rundown of the modus operandus of “Michelle Rhee and Rahm Emanuel and the rest of their ilk, using the same playbook that’s been deployed against Social Security, Medicare and other vital government services. It goes like this:

1. Pretend that “budgets” are the real crisis – but never mention that corporations and the wealthy are paying less in taxes than ever before in modern history.

2. Make scapegoats of innocent people to draw attention away from yourselves. For Social Security they’ve attacked “greedy geezers,” but it’s hard to come up with a catchy equivalent for kids. (“Insatiable imps”? “Avaricious anklebiters”?) So they vilify teachers instead.

3. Sell a fantasy which says that the private sector can do more, with less money, than government can.  (Never, never mention that private insurance provides far less healthcare than public insurance, at much higher cost. And don’t bring up the mess privatization’s made of prisons and other government services.)

4. Find a name that doesn’t use words like “money-making.” How about “charter schools”?

5. Describe yourselves as “reformers” – rather than, say, “demolishers.” That’s why “entitlement reform” is used as a euphemism for cutting Social Security and Medicare. (Michelle Rhee even called her autobiography “Radical.” Apparently “Shameless” was taken.)

6. Employ the political and media elite’s fascination with (and poor understanding of) numbers. Suggest that “standardized” and “data-driven” programs will solve everything – without ever mentioning that the truly ideological decisions are made when you decide what it is you’re measuring.

7. Co-opt the elite media into supporting your artificial description of the problem, as well as your entirely self-serving solution.

8. Use your money to co-opt politicians from both parties so you can present your agenda as “bipartisan” – a word which means you can “buy” a few “partisans” from both sides.

“It shouldn’t be surprising that all these attacks share a common playbook. The money’s coming from the same pockets, and for the same reasons: so they can keep their own taxes low – and make money from the privatization schemes.”

 

Updated: A sentence with an inaccurate statement regarding the impact on selective enrollment schools was removed.

]]>
http://www.newstips.org/2013/06/alternatives-to-school-cuts/feed/ 1
Violence prevention: Corporate charity or citizenship? http://www.newstips.org/2013/02/violence-prevention-corporate-charity-or-citizenship/ Thu, 21 Feb 2013 22:41:21 +0000 http://www.newstips.org/?p=6978 Last year, community groups called on Mayor Emanuel and the business community to match the fundraising they did for the NATO Summit to fund youth programs in the neighborhoods.

Now, under the glare of national publicity for Chicago’s ongoing epidemic of violence, Emanuel has decided to deploy his famous fundraising skills to gather $50 million in corporate donations for violence prevention programs over the next five years.

Certainly, every effort to bring resources to desperate communities is welcome.  (And it’s churlish to point out that these folks raised nearly $50 million for NATO in a few weeks.) But is charity a substitute for good citizenship?

The Grassroots Collaborative is pointing out that Emanuel’s choice to co-chair the campaign heads a company that is profiting from controversial interest rate swaps that cost the city and the schools tens of millions of dollars a year.

Jim Reynolds is CEO of Loop Capital, which according to GC, has made $100 million in five interest rate swap deals with the city and CPS since 2005.

Interest rate swaps — also called “toxic rate swaps” by critics — are one of the wonderfully innovative financial products developed in the run-up to the financial crash a few years ago.  They provide set interest rates to cover variable returns on public bond deals.

Cost Chicago $72 million a year

But since the crash, the Fed has kept interest rates near zero, while local governments are locked into interest rates of 3 to 6 percent.  That costs Chicago $72 million a year; CPS loses $35 million a year on the deals, according to GC. (CTU has protested this arrangement.)

While applauding their “charity work,” GC notes, “Chicago business leader must address their role in creating the lack of resources for youth and communities in the first place.  They must stop gouging taxpayers and renegotiate these toxic deals.”

“The solution doesn’t end with short-term donations,” notes GC.  It requires “renegotiating our local governments’ relationship with Wall Street, and getting our economy back on track.”

The toxic rate swaps are just the tip of the iceberg.  The millions of dollars of TIF subsidies going to the corporations that will be donating to the mayor’s fund should be considered too.

If Emanuel wants the business community to step up, he could reverse his phaseout of the head tax, which brought the city $40 million a year.  (It was called a “job killler,” but there’s no evidence for that — the $4 per employee per month amounted to about 25 cents an hour.  And it was one of the only revenue measures that captured a smidgeon of the estimated $30 billion earned in Chicago by residents of the suburbs each year.)

Corporate tax avoidance

Emanuel is expanding summer youth employment, though the number of jobs available will still be a fraction of what it was in previous decades.  He points out that federal funding has dropped precipitously, and the state has been unable to fund a summer youth jobs program established by the legislature.  Maybe the fact that half the state’s corporations don’t pay any income tax — and that Illinois leads the nation in a number of economically pointless business deductions — needs to be looked at.

Instead of paying the taxes they should, Emanuel’s corporate donors will most likely get a tax deduction.

There’s a steady shifting of public functions to the private sector taking place under Emanuel. Economic development is being outsourced to World Business Chicago, public finance to the Infrastructure Trust, public education to charter operators. Now the corporate sector has to step up to provide funding for youth services because the city can’t.

Behind the austerity agenda that Emanuel has enthusiastically embraced lies the contention that the city is broke, the state is broke.  But of course, the money is out there.  We’re in the middle of an economic recovery with soaring corporate profits and intractable unemployment. But with our regressive revenue system, we’re taxing the people at the bottom — the people who are losing ground — twice as heavily as those at the top.

It’s perfectly encapsulated in the story Ben Joravsky tells of the fireman who responds to Emanuel’s teasing about pension cuts by asking the mayor why he doesn’t support a financial transaction tax.   (In response, Emanuel sputters.)

Money for friends

The shift from the public sector, of course, involves a shift away from transparency and accountability.  When Emanuel was disbursing leftover NATO funds to neighborhood programs, trotting from press conference to press conference, “there wasn’t much transparency in how the programs were chosen,” said Eric Tellez of GC.  And it looked like a lot of the money was spent in ways that helped the mayor’s allies, including charter schools, he said.

The communities where Chicago’s young people are being shot down have been devastated by the loss of manufacturing jobs, devastated by foreclosures, devastated by “lock-em-up” policies that offer few avenues of hope for ex-offenders.  They’ve been devastated by racism and inequality.

As Salim Muwakkil says, what they need is nothing short of a Marshall Plan, the kind of massive investment program with which the U.S. revived Europe after World War II.

That’s hard to imagine in this day and age.  Politicians like Emanuel are products of the era of the “taxpayer revolt” and reflect all of its assumptions.

But there are signs that era is drawing to a close.  In California — which launched the era in 1978 with Proposition 13, capping sales taxes and requiring two-thirds legislative majorities to raise taxes — voters in November approved a measure hiking the sales tax and raising income taxes on the wealthy.  The alternative, quite simply, was fiscal disaster.  Tea Party-backed anti-tax measures went down to defeat in Florida and Michigan.

What Chicago and Illinois desperately need — what Chicago’s young people desperately need — is a turn back in the direction of fairness and broad-based, inclusive prosperity.

]]>
Protest to target River Point, LaSalle Central TIF http://www.newstips.org/2012/08/protest-to-target-river-point-lasalle-central-tif/ http://www.newstips.org/2012/08/protest-to-target-river-point-lasalle-central-tif/#comments Mon, 06 Aug 2012 22:52:28 +0000 http://www.newstips.org/?p=6523 The news that the LaSalle Central TIF district took in no new revenue last year adds urgency to the demand of community groups that the TIF be shut down, said Eric Tellez of the Grassroots Collaborative.

On Tuesday, community activists will protest the newest LaSalle Central TIF subsidy, $30 million going to finance a plaza inside the planned River Point office development at Lake and Canal.

Starting at 11 a.m. (Tuesday, August 7), they’ll march from Merchandise Mart to the LaSalle Street district for a press conference and rally, and they’ll leaflet at a business owned by one of River Point’s developers.

They say “giving property tax dollars to wealthy developers to build in prosperous areas is not an effective strategy” for economic development – especially when basic services are being cut in the city’s neighborhoods.

In July, the annual TIF report from County Clerk David Orr revealed that annual TIF revenue in Cook County has declined 18 percent since the housing crash in 2007, and that LaSalle Central was among nine TIF districts with no revenue last year.

If that trend were to continue, the city could be forced to transfer funds from other TIF districts to pay for existing commitments downtown.  LaSalle Central TIF agreements involve multimillion-dollar subsidies to corporations including Miller-Coors, Ziegler Co., Accretive Health Inc., NAVTEQ, and United Airlines, which is collecting a $24 million handout.

Grassroots Collaborative is calling for shutting down the LaSalle Central TIF.  That would mean approving no new subsidies, and once current obligations were met, returning new property tax revenue to the city, schools, and other taxing bodies from which it is being diverted, Tellez said.

Earlier this year, the group successfully pressured CME to return $15 million to the LaSalle Central TIF and sponsored a budget amendment to capture TIF surplus that may have helped persuade Mayor Emanuel to declare a $60 million TIF surplus.

In July, Grassroots Collaborative delivered a letter to Emanuel asking him to withdraw the River Point subsidy and wind down the LaSalle Central TIF.

Emanuel has so far failed to implement the proposals of his TIF reform task force, Tellez said.  (Illinois PIRG recently reported that the city is still failing to track TIF-related job creation promises).  And, he adds, Emanuel has completely ignored his campaign pledge to stop spending TIF money in wealthy areas, Tellez said.

“These deals are not worth it,” he said. “On the one hand we are giving this money to corporations that don’t need it, and then we’re putting Chicago taxpayers on the hook for it” should TIF revenues continue to falter.

They’re hoping their protests will ultimately save taxpayers money by raising the political costs for corporations receiving TIF subsidies.

“We want to discourage corporations that don’t really need this help at all to not be greedy and not go after the money,” Tellez said.

]]>
http://www.newstips.org/2012/08/protest-to-target-river-point-lasalle-central-tif/feed/ 3
In Springfield, no solutions http://www.newstips.org/2012/06/in-springfield-no-solutions/ http://www.newstips.org/2012/06/in-springfield-no-solutions/#comments Sun, 03 Jun 2012 20:26:24 +0000 http://www.newstips.org/?p=6321 Sad to say, nothing they’re doing or talking about in the General Assembly will have a significant impact on the state’s chronic budget crisis.

Not draconian Medicaid cuts, not possible pension cuts or casino expansions.  The legislature is barking up the wrong trees, and doing it over and over.

That’s because the state doesn’t have a spending problem.  In real terms, Illinois has been steadily cutting spending on education, human services, health care, and public safety for the past decade.  Medicaid is not the problem: general revenue funds going to Medicaid are down over the past five years.

According to Ron Baiman of the Center for Tax and Budget Accountability, Illinois is one of the nation’s wealthier states, looking at the state’s gross domestic product per capita.  But it has been one of the nation’s lowest-spending states, looking at state spending as a percentage of GDP.

So the problem isn’t overspending, and cutting doesn’t get us closer to a solution. The problem is a regressive tax system that doesn’t tax where the money is.

Regressive

Illinois has one of the most regressive tax structures in the nation.  As noted here last year, the bottom 20 percent of households pays twice as much of their income in state and local taxes as the top 20 percent does.

Even the flat income tax is regressive, since it imports all the federal tax code’s loopholes; of the current nominal rate of 5 percent, households earning over $1 million a year pay an effective tax rate of just 2.1 percent – the same as households earning over $10,000.  The squeeze is on the middle.

And especially with the surge of income inequality in recent decades, that means the state asks more and more from people who are doing less and less well, and fails to capture the gains of economic growth, which are increasingly found at the top.

It can’t go on forever.  At some point Illinois leaders are going to realize there’s no alternative to a progressive income tax.  The constitution, which mandates a flat tax, will have to be amended.

All our neighboring states have progressive systems – and that’s the reason their budget problems are so much less than ours.  If we took Iowa’s income tax rates and applied them to Illinois’s tax base, we’d raise $6 billion more a year – and 54 percent of taxpayers would get a tax cut averaging 24 percent, according to CTBA.  If we took Wisconsin’s we’d raise $3.6 billion more a year and cut taxes for more than half our residents.

Tax cut

The Illinois constitutional amendment will have a straightforward appeal: nearly all taxpayers’ rates will go down.

CTBA has fashioned a proposal for a progressive tax system for Illinois that raises an additional $2.4 billion yearly (even after allowing for increased tax avoidance by wealthy taxpayers) and reduces the tax rate for 94 percent of taxpayers.

Everyone earning under $150,000 would get a tax cut.  Starting to sound good?

It’s not even very tough on the wealthy; CTBA figures the effective tax rate (after deductions, credits and offsets) would top out at 6.3 percent for those earning over a half million a year.

There’s other money the legislature is leaving on the table, as it cuts public services to the bone.  A restructuring of the corporate income tax in 2001 – an unsuccessful attempt to encourage job growth — means most Illinois corporations pay no income taxes.

And an antiquated sales tax which applies to goods but not services – so if you buy a lawnmower and gas to mow your own lawn, you pay a sales tax, but if you hire a lawn service you don’t – costs the state between $500 million and $1 billion a year.

Corporate welfare

Then there’s corporate welfare – an area in which Illinois is a leader.  The Responsible Budget Coalition identified six corporate tax loopholes which don’t make economic sense — and where Illinois departs from federal policies and practices in other states — costing Illinois nearly $700 million a year.

These include a deduction for dividends paid by foreign corporations to parent corporations here ($386 million a year) and a domestic production credit, which reduces corporate tax bills here for production in other states ($200 million).

Then there’s a $75 million tax break for oil companies because, unlike the federal government, Illinois defines the outer continental shelf as outside the national boundaries.

On top of RBC’s proposals, CTBA and others have highlighted the accelerated depreciation allowance, a federal provision that other states have decoupled from.  It costs over Illinois $300 million a year (more here).

Altogether that’s well over a billion dollars, maybe two billion, maybe more, that the  General Assembly has left untouched, apparently preferring to throw sick children out into the street.

“Everybody’s talking about how this was such a hard, courageous vote,” said Lynda DeLaforgue of Citizen Action Illinois after the $1.6 billion Medicaid cut was passed.  “Wouldn’t it have been more courageous if they had taken on the oil companies?”

Medicaid

That $1.6 billion isn’t the final figure, since kids from 26,000 families thrown off Family Care – and thousands of individuals to be thrown off Medicaid — will cost more when they end up in emergency rooms.

And the $17 million cut from home health care will cost the state more when people with disabilities are forced into nursing homes.

“You’re going to end up spending any money you save,” said Gary Arnold of Access Living.  “It’s very shortsighted.”

The elimination of Illinois Cares RX drops prescription coverage for 160,000 low-income seniors and people with disabilities. “This sudden and extreme elimination of benefits for a very vulnerable population will most surely put peoples’ lives and health at risk,” according to Citizen Action Illinois.

The group is among several asking Governor Quinn to restore the funding – or at least to postpone elimination of the program, now set for July 1, until next January to allow providers to help identify options and potentially save lives.

Pensions

There was no pension deal, to the chagrin of many mainstream commentators.  Here, too, there are legal obstacles.  The deal under consideration – which would require public workers who’ve paid for their pensions to bear the burden of politicians’ profligacy — would seem on its face to violate constitutional protections of state employees’ pension rights.

Quinn wants to push on, but the matter is more likely to be addressed in the veto session, after the November election.

Through extensive grassroots pressure, public workers succeeded in countering some of the biggest myths around the pension crisis, said Anders Lindall of AFSCME Council 31.  Chief among these is the notion that exorbitant public employee pensions are driving the budget crisis.

In fact most public workers’ pensions are modest – they average $32,000 a year, and 80 percent of state workers don’t get Social Security.  That’s after contributing 8 to 10 percent of each paycheck to their pension.

“You don’t hear anything about ‘gold-plated pensions’ anymore,” said Lindall.  “More and more people understand it was the politicians who caused the problem.”  They caused it by using pension funds as a credit card to paper over an inadequate revenue system, he said.

It turns out the revenue crisis — the regressive tax system — is driving the pension shortfall.

Public worker unions in the We Are One Illinois coalition have worked with legislators, offering ideas toward a solution “that’s fair to workers who have paid their share and puts the retirement system on a strong footing in a sustainable way,” said Lindall.

Public workers “recognize the scale of the shortfall and are willing to be part of a solution,” he said.  “No one has a greater stake in securing the future of the retirement system.”

One of their demands is “an ironclad guarantee that pension fund contributions can’t be skipped or shorted,” he said.

Governor Quinn said he’ll meet with legislative leaders to keep pressing for a resolution.  Public workers unions hope they’ll be included in the process, Lindall said.

That might save on lawyers’ bills down the road.

Casinos

The GA passed a casino expansion bill, but it contains features (including slots at racetracks and gaps in oversight) that led Governor Quinn to veto a similar bill a year ago.  It could end up part of the horse-trading in the fall veto session.

If it does come to pass, expect the benefits in terms of jobs and public revenues to fall short of what’s being promised now, said Doug Dobmeyer of the Task Force to Oppose Gambling in Chicago.  “Proponents always lie about the benefits,” he said.

What we do know is that gambling takes money out of the consumer economy.  A Chicago casino with 4,000 slot machines, each taking in $100,000 a year, would remove $400 million from the consumer economy, U. of I. Professor John W. Kindt explained last year (see Slot Machines Kill Jobs for more).  That’s a heavy blow to a struggling economy – and a lot of lost sales tax revenue.

And the money the state takes in comes, by and large, from moderate-income people.  Like the new cigarette tax, like the speed cameras and higher water bills, it’s just one more grab for revenue from people who are struggling, by politicians who can’t see past the next election.

]]>
http://www.newstips.org/2012/06/in-springfield-no-solutions/feed/ 3
Austerity in Chicago http://www.newstips.org/2012/05/austerity-in-chicago/ Thu, 17 May 2012 23:19:55 +0000 http://www.newstips.org/?p=6209 As European voters increasingly reject the austerity program, community leaders here are proposing alternatives to Mayor Emanuel’s agenda of spending cuts and privatization– an approach they say hurts working families and stifles economic recovery.

“We are saying there are ways of looking at budget- and policy-making other than just cut, cut, cut,” said Michael Bennett, a sociology professor at DePaul University, one of the coordinators of a group of local activists and scholars meeting this weekend to develop a local public policy agenda “that gives priority to social justice, balanced community development, and responsible fiscal management.”

The Chicago Equity and Fiscal Policy Initiative will release working papers on the city budget, schools, community and the environment, and economic development and jobs, at a gathering with the theme Act Locally Chicago this Saturday, May 19, 10 a.m. to 1 p.m. at Erie Neighborhood House, 1347 W. Erie.

“We have to focus just as much on neighborhoods as we do on downtown,” Bennett said. “It has not been balanced.”

The working papers and policy recommendations are aimed at starting a conversation, he said. One of their goals is to maintain public services that are threatened by privatization. They’ll talk about reallocating existing resources more fairly, and about longer-term solutions to raise revenues more sustainably.

Devastating

Their initiative reflects concerns that are widespread among community organizations.

“What’s happening under Mayor Emanuel is a microcosm of what’s happening around the world,” said Amisha Patel of the Grassroots Collaborative, a citywide coalition of labor and community organizations.

“Politicians are pushing austerity, saying the government has to cut spending, but it’s really devastating to the local economy and to people’s lives,” she said. “It’s the worst thing we can do in economically challenging times. For the economy to have a chance we have to invest in the public sector and public services.

“When you cut resources going to low-income families, you hurt the people who put money back into the economy most directly, she said. “And you end up paying through the back end: when you cut mental health services, it costs you more in hospitalizations, in incarceration.”

The city continues to “move resources out of the neighborhoods and into downtown,” she said, pointing to a $29-million city subsidy for a new office building in the West Loop announced this week.

Regressive

Emanuel has cut taxes on corporations (where profit levels are at record highs) while “focusing on revenue generation that saps working families – quadrupling water fees, installing speed cameras, higher fees and fines,” she said. “We’ve got to have revenue solutions that don’t hurt working families.”

Chicago’s fiscal crisis is compounded by several factors, said Ron Baiman of the Center for Tax and Budget Accountability. Locked in political stalemate, the federal government is cutting domestic spending, and the state’s budget crisis is exacerbated by a constitutional provision mandating a flat-rate income tax. (On top of that, Illinois is one of the top states for corporate subsidies.)

The basic problem is that the tax burden is concentrated on the people who have been hurt most badly in the recession, he said.

In addition, the majority of income earned in the city goes to people who pay taxes in the suburbs – an estimated 620,000 commuters earn $30 billion a year. Emanuel is phasing out the corporate head tax, a modest per-employee charge for large companies, which was the only mechanism the city had for capturing some of that. Baiman said a city income tax would be the most efficient approach.

On top of that dynamic, city workforce reductions have hit black and Latino communities hardest, while city subsidies to downtown developments have mostly created jobs for suburban residents.

Baiman points out that Chicago has the Chicago Mercantile Exchange, the Chicago Board of Trade, and the Chicago Options Exchange – and that a tiny financial transaction tax could raise huge amounts of money for the city.

“The only real answer is taxing the wealthy and the financial sector,” he said.

]]>
North Side voters back financial tax http://www.newstips.org/2012/03/north-side-voters-back-financial-tax/ Wed, 21 Mar 2012 22:04:43 +0000 http://www.newstips.org/?p=6024 By a wide margin, North Side residents backed a referendum calling for a sales tax on financial transactions Tuesday.

Voters in 17 precincts in the 46th Ward voted 3-to-1 in favor of “policies to tax speculative financial transactions including, but not limited to, derivatives and futures contracts.”

A one dollar per contract sales tax on trades on the Chicago Mercantile Exchange, which have an average value of $230,000, could generate $6 billion dollars a year for the state or city, according to Northside Action for Justice, which backed the referendum.

The group sponsored the referendum because “politicians have not been taking this seriously,” said Kelate Gaim of Northside Action in a release.

“Why do I pay more sales tax when I buy a pair of shoes than these traders do placing speculative bets?” asked Francis Tobin, the group’s chair. The financial transaction tax would be borne by individual traders, not by exchanges.

By a similar margin, voters in those precincts also backed a TIF reform proposal calling for returning surpluses to schools and other taxing bodies, and restricting future TIF spending to affordable housing, living wage jobs and businesses, and youth and senior services.

]]>
What corporate tax loopholes cost Illinois http://www.newstips.org/2012/02/what-corporate-tax-loopholes-cost-illinois/ http://www.newstips.org/2012/02/what-corporate-tax-loopholes-cost-illinois/#comments Tue, 21 Feb 2012 23:18:41 +0000 http://www.newstips.org/?p=5690 With Governor Quinn set to call for major Medicaid cuts Wednesday, a new report says Illinois is losing hundreds of millions of dollars a year through corporate tax loopholes that other states have closed.

Indeed, Illinois leads the nation in revenue lost through several of the tax breaks, according to a report from Good Jobs First and Make Wall Street Pay Illinois.

The biggest loophole is the accelerated depreciation deduction, which costs the state more than $1 billion over three years – far more than any other state, according to the report.

The Illinois deduction is based on a tax break granted by the federal government, designed to encourage capital investment by allowing companies to write off new equipment immediately rather than over its expected lifespan.  Most states have “decoupled” from the federal measure.

“Forgoing revenue in the short term to help stimulate the economy is possible for the federal government because it is allowed to run a deficit,” according to the report.  “But for the states, with their balanced-budget requirements, such revenue loss during a recession would only force deeper budget cuts.”

Small businesses are covered by a separate deduction and wouldn’t be affected by decoupling, the groups say.  Decoupling from the accelerated depreciation deduction has been advocated by the Center for Tax and Budget Accountability (see Newstips from 2008 and 2011).

A break for Wal-Mart

Illinois could bring in $115 million a year by eliminating the sales tax “vendor discount,” a relic of the pre-computer age that gives retailers a portion of sales tax revenues to cover handling costs.  The groups estimate that Wal-Mart took in nearly $10 million from sales taxes paid by Illinois shoppers last year.

The state loses at least $63 million a year by using the single sales factor, which eliminates corporations’ taxable property and payroll share as factors in figuring income tax bills, instead using only their in-state sales.  Large manufacturers lobbied for the loophole, arguing it would create manufacturing jobs.  It hasn’t.

The formula can reduce the tax rate of Illinois-based corporations with significant production, payrolls, and property holdings here  but mostly out-of-state sales by 80 or 90 percent.

“We expect that the governor and general assembly will adopt a budget that protects revenue sources and provides for the educational, health care and infrastructure needs of the people of Illinois,” said Rev. Maggie Pagan-Banks of A Just Harvest, part of Make Wall Street Pay. “While the state is struggling to meet critical obligations to its citizens, it cannot afford to simultaneously subsidize corporate profits.”

At Clawback,Greg LeRoy of Good Jobs First, the report’s co-author, highlights recent layoffs at Sears’ Hoffman Estate headquarters – announced weeks after a $275 million property and income tax break designed to keep Sears here – calling it “the latest evidence that unaccountable tax breaks fail to promote investment for job creation.”

]]>
http://www.newstips.org/2012/02/what-corporate-tax-loopholes-cost-illinois/feed/ 5