A “Fair Tax” for a Poorly Run and Corrupt State

Illinois Governor J.B. Pritzker has an idea to solve Illinois’s financial problems: a progressive income tax.¹  Illinois currently has a flat-rate income tax, but in November, voters will be able to vote on an amendment to the Illinois constitution allowing a graduated income tax.  In pushing for the change, Governor Pritzker assures us that only 3% of us would pay more under his plan. (I would say that, if you believe this, you probably also believe in the Easter Bunny and the Tooth Fairy, but that would be unfair to the Easter Bunny and Tooth Fairy.  They’re real compared to the chance that, within five to ten years, only 3% of us would be paying more under the Fair Tax.)

Illinois’s main problem is not its unpaid bills or huge unfunded pension liability.  It is, rather, that it is so poorly run and so corrupt.  So much of the money that Illinois government gets is wasted, and there is no reason to think this would change just because Illinois gets more money.  More money would just mean more money to waste.²

There are countries and states that have their budgets and spending under control.  In looking at them, there seems to be two primary factors involved.  One is that they have a political class that is committed to fiscal responsibility.  The other is that they have a public that is committed to fiscal responsibility.  It is possible, I suppose, for a country or a state to be in fairly decent financial shape if it has only one of these two factors.  However, those that are in the best shape have both of them: both the political class and the public are committed to fiscal responsibility.³

Illinois, unfortunately, has neither.  Neither the political class nor the public cares about fiscal responsibility.  Of course, there are some legislators who care and some members of the public who care, but there aren’t enough.  And the problem is, once you get into a situation where neither the political class nor the public cares, it is hard to get out of it.  Nobody wants to go first.  Politicians who try would worry about getting reelected.  Any part of the public that tries to practice fiscal responsibility will be looked at like fools.

As to which came first in terms of not caring about fiscal responsibility in Illinois, the political class or the public, I don’t know.  Maybe the politicians saw that the people didn’t care, so they decided there was no reason for them to do the hard work of being fiscally responsible.  Or maybe the public saw that they couldn’t stop the politicians who didn’t care about fiscal responsibility from getting re-elected, so they gave up.

It actually doesn’t matter which came first.  Both are locked in now.  And there doesn’t seem to be a way to change things.  In such a situation, the idea of a progressive income tax seems silly because any additional money will just be wasted.

I don’t care what Governor Pritzker says about why Illinois needs the Fair Tax.  Giving more money to Illinois government the way it's run now would be like giving money to somebody asking for money on the street.  They say they need it for food, but you know they’ll just use it for something to drink.⁴ 
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¹ He calls it a “Fair Tax,” which I think means it gets it paid by somebody else.
² As for corruption, the theory in Illinois is that, if it is not illegal, it’s not wrong.  In fact, it’s not illegal, it’s perfectly fine.  The idea of something not being seemly, of something just not being right even if it’s not illegal, doesn’t exist in Illinois, except for a few individuals here and there.  Maybe it disappeared that night in April of 1865 in Ford’s Theater – or maybe after John Peter Altgeld.
³ See, for example Germany and New Zealand. 
⁴ I apologize for comparing people asking for money on the street to Illinois government.  It’s an insult – to the former.

Comments

[Bob]

Amen brother!