About Me & This Website
My Positions
On Facebook
Contact Me

  DougCo School Board Loss
  Pro-Caucus Chairman
  Free the Delegates
  Clinton Surplus Myth
  Taxes, Rich & Poor
  Clinton Surplus Myth, Pt. 2
  Financial Crisis
  Obama's Economy
  More articles...

Reducing a Tax Increase Is Not A Government Subsidy   June 10th, 2011
Maybe someone can explain this one to me...       


More observations...

The company that owns Chicago's two leading futures exchanges is weighing whether to move some operations from Illinois, citing the state's corporate tax rate increase...

The state in January raised the corporate income tax rate temporarily to 7 percent from 4.8. Corporations also pay a 2.5 percent tax on income, called the personal property replacement tax, which is collected by the state and flows to local governments. The two rates taken together come to 9.5 percent, the third-highest rate in the U.S., according to the Tax Foundation, a non-partisan Washington-based research group...

[IL Gov.] Quinn said he is willing to discuss incentives to keep the company here, but warned that it must be a "two way street."

"The taxpayers of Illinois are just not going to subsidize private companies unless they give something back to the people of Illinois," Quinn said. "Jobs and economic growth (are) very important. A commitment to new investments and doing new things...it really is a negotiation where companies agree that they will do things for the people of Illinois."

So, summarizing...

There is an important company located in Illinois that is employing citizens of Illinois. The state government has a massive spending problem so instead of addressing its spending problem, it raises taxes on its citizens by way of an increase in corporate taxes. The Illinois company realizes it's subsidizing the government's fiscal mismanagement and floats the idea of relocating at least part of its operation out of the state to reduce its cost of doing business.

The governor of the state then turns around and makes a counteroffer: He'll talk about incentives to keep the company in-state, but the people of Illinois (the government) won't "subsidize" the company, and they need the company to give something in return... like jobs and new investment in the state.

Wow! Where does one even begin with such circular logic?

Backwards Logic of Government-First Politicians

First the most obvious point: If the company is already paying taxes--and is thinking of moving to another state because of an increase in those taxes--the state is not subsidizing the company. The company is subsidizing the state. For the governor to suggest otherwise is downright insulting.

Second, here's what the company can do in exchange for some "incentives": It can decide to stay. End of negotiation. It's already employing citizens of Illinois and, when needed, investing in the state. But Illinois has made taxes too expensive for the company to ignore the potential advantages of leaving. Perhaps if Illinois reduces its taxes enough, it will no longer make sense for it to move out of state. But for the governor to act like he's doing the company a favor, and that the state expects the company to "give something back" for the privilege of staying in a high-tax state is ridiculous. The company is doing the state a favor by even considering remaining in that high-tax-burden state.

Very Telling

The linked article is very instructive regarding the mindset of some people. They think that all money belongs to the government and it's a matter of generosity or sacrifice that they allow the individual or the corporation to keep some of what they've earned.

But money does not belong to the government. Money belongs to the individual or the corporation that earns it.

The governor's statement that "the taxpayers of Illinois are just not going to subsidize private companies unless they give something back" isn't just insulting. It's indicative of a mindset that truly believes that all money belongs to the government.

And, with these people in charge, we wonder why our economy isn't recovering?

 Go to the article list