Bloomberg columnist Barry Ritholtz is a firm believer that government knows better how to spend your money than you do.
Ritholtz is on another tirade now, this time crowing loudly The Kansas Supply-Side Experiment Unravels. Ritholtz’s solution, as always, is more tax hikes.
Let’s take Ritholtz’s observations, complaints, and analysis and apply them to Illinois.
Ritholtz says Governor Sam Brownbacks’s “Tax cuts were supposed to spur growth, boost revenue and create jobs. The results were the exact opposite.”
When did the problems start?
Barry provides the answer “Kansas was one of the highest outbound migration states in 2014, 2015 and 2016. As recently as 2012 and 2011, Kansas didn’t make the lists of states with high migratory outflows.”
Blasting economically illiterate socialists is an easy game so there is not much of a story here so far.
However, Ritholtz made a story with this paragraph.
Have an exit strategy: Because Kansas didn’t focus on specific and measurable benchmarks, it had no way to know when to pull the plug. This is important, as the legislature was forced to wait until things were unequivocally bad and getting worse before taking steps to end the experiment. An exit strategy based on specific goals would have saved a lot of unnecessary austerity-induced pain for the people of Kansas.
Dear Barry, it would behoove to look at this simple chart.
How about a look at the state itself?
Barry notes, “Kansas is badly lagging its neighbors, all of which have similar economies. Even worse, people (especially young people) are fleeing the state.”
I have a simple question: Is there any reason millennials would want to stay in Kansas even if the economy was doing well?
Illinois, the Global Mecca
By Ritholtz’s standards, Illinois should be a global mecca. It has much going for it. Let’s count the ways.
- Highest property taxes in the nation
- High sales taxes and “home rules” that allow local governments to raise taxes even more.
- Cook County sales taxes are 10.25%
- Strong prevailing wage laws protecting unions
- No right-to-work provisions
- Stong workman’s compensation laws that protect injured workers
- Democrats led by Mike Madigan have been in control of Illinois for all but two years since 1983.
- Illinois has more taxing bodies than any state in the nation
Barry Asks, Illinois Delivers
Illinois is doing damn near everything Ritholtz wants. It is even hiking minimum wages. Chicago is collecting over 10% in sales taxes.
Taxes on media, soft drinks, cable are in the works.
Here’s a proposed tax that ought to have Ritholtz screaming the praises of Illinois at the top of his lungs: ILLINOIS HOUSE PROPOSES ‘PRIVILEGE TAX’ ON INVESTMENT MANAGERS
For the “privilege” of living in Illinois, state Rep. Emanuel Chris Welch, D-Hillside proposes House Bill 3393, a “privilege tax” that would hit partnerships and S corporations engaged in investment management services with a 20 percent tax on fees earned from their investment strategies.
And that ain’t all. Tax proposals of all kinds are in the works to protect the right of the downtrodden, just as Ritholtz wants.
Have an Exit Strategy!
Dear Barry, since you chastised Kansas for not having an exit strategy, can we please discuss an exit strategy for Illinois?
Mish Exit Strategy
On May 3, I commented Puerto Rico Placed in Bankruptcy Protection: Illinois Needs Similar Deal.
In the above link, I stated that Illinois desperately needs five things.
Five Desperately Needed Reforms
- Municipal bankruptcy legislation
- Pension reform
- Right-to-Work legislation
- End of prevailing wage laws
- Workers’ compensation reform
Bankruptcy, the ONLY Solution
Number one on my list of Illinois reforms is bankruptcy legislation. It is the only hope for numerous Illinois cities strapped with impossible-to-pay pension liabilities.
As part of any budget package, Rauner must demand municipal bankruptcy legislation. Bankruptcy is the only solution for Illinois that works.
The system is simply too broke to fix.
Illinois pension plans are going bust. Why is that? Did Illinois not tax enough?
For sure, Illinois did not fund the plans, but to fund them, the state would have had to raise taxes even more.
For discussion, please see Illinois Too Broke to Fix: Chicago Police Pension Fund Broke by 2021 at the Latest.
Supporting Evidence of Socialist Tax Hike Madness
- March 25, 2017: Cook County Illinois Suffers Largest Population Drop In Entire US
- July 14, 2016: Welcome to Illinois (Where Every 5 Minutes Someone Moves Out)
- April 4, 2017: Illinois Revenue Freefall: Fiscal Year-to-Date -8.1% and Worsening
- February 7, 2013: Platitudes, Promises, and the Failed Pro-Union Policies of Illinois Governor Pat Quinn
- June 14, 2017: Unable to Pay Bills, Illinois Sends “Dear Contractor” Letter Telling Firms to Halt Road Work on July 1
- May 18, 2016: Illinois State Workers, Highest Paid in Nation, Demand 11.5 to 29% Hikes
- August 31, 2011: Illinois Loses Most Jobs in Nation Following Tax Hikes.
- April 13, 2011: 35% of Illinois State Employees are on Workers’ Comp
- October 28, 2015: Chicago’s Sheep Dogs Approve Mayor’s Tax on Sheep; Quote of the Day “It’s Not a Piece of Art”
- February 13, 2016: “Bond Girl” Blasts Chicago Public School Bonds, Says “CPS Genuinely Insolvent”
- March 25, 2016: US Population Growth +0.79%, Illinois -0.17%, Illinois Second Worst to Coal Plagued West Virginia
- January 20, 2016: “B” Word Hits Chicago: Illinois Governor Proposes Bankruptcy for Chicago Public School System
- January 14, 2016: Illinois Too Big a Risk: GE Moves Corporate Headquarters to Boston, Bypassing Chicago Citing Litany of Issues
- June 23, 2017: Illinois Too Broke to Fix: Chicago Police Pension Fund Broke by 2021 at the Latest
Unlike Kansas, surveys show the number one reason people leave Illinois is high taxes.
Dear Barry, since Illinois is F*d up beyond repair following your tax hike and union utopia social welfare agenda, can we please try my exit strategy?
Mike “Mish” Shedlock