Illinois – 4th Worst Legal Climate for Business

Illinois, along with California, Louisiana, Mississippi and West Virginia, are among the worst states in the country for businesses because of their legal climates, according to survey of corporate attorneys released Monday.

Two Illinois counties did not fare well in the survey by the U.S. Chamber of Commerce’s institute for legal reform, either. Cook County was named the most unfair and unreasonable jurisdiction, and Madison County was named the sixth most unfair county.  …

Illinois’ ranking this year, 46th among the 50 states in terms of the fairness of its litigation environment, compares with previous rankings of the 45th worst state in 2010 and the 46th worst in 2008.via Chicago Tribune.

So we’ve been terrible; no one’s done anything about it so we’re still terrible.  I see.  Hey Gov. Quinn, Anybody home down there?

We have the worst pensions in the country and and a unfair and unreasonable legal environment.  It’s no wonder that businesses don’t want to be here.

Add to that mess that fact that:

Chicago, the city that brought us deep-dish pizza, Oprah and “da Bears,” is also home to the nation’s highest tax burden for travelers.

via Chicago Tribune.

So if you’re a business here you know that it hard to do business with other businesses because it’s expensive to travel here.  This is also a huge burden on tourists… who used to come here in droves until downtown wildlings become common-place.

Rahm has a full plate.  Maybe he should get busy trying to solve a few of these problems instead of non-stop fundraising for Obama.

Who Pays What Income Taxes?

At the DNC there was a lot of talk about “Everyone has to pay their fair share.”  That seems to be at introduction into a philosophical discussion about what a particular group should pay.  What is everyone’s “fair share?”

In Tax Year 2009:

Top 1%   paid 36.73% of the total tax bill;
Top 5%   paid 58.66%;
Top 10% paid 70.47%;
Top 25% paid 87.30%;
Top 50% paid 97.75%;
Bottom 50% paid 2.25%.

Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service

via National Taxpayers Union.

We live in a country where the top 5% of earners pay over 1/2 of the bill.  How much more should we, as a people, ask them to pay?  What are the appropriate numbers for this summary?  If you asked a progressive, or a liberal, what percentage of the tab should the top 1% pay?  How about the top 25%?

And if we’re going to have a philosophical discussion about who pays what, should we not consider the role of payment of taxes plays in simply being a good citizen?  Can you be a good citizen, and feel a connection to your country, when you pay nothing?  Do free rider’s feel like they are part of the greater community at large?

When Obama says that everyone has to pay their fair share does he mean that anyone’s fair share is zero?

Eat the Rich vs. Obama

I was reading this story:

President Barack Obama will officially launch the battle over the impending fiscal cliff this morning, announcing a plan to extend the Bush-era tax cuts for people earning under $250,000, while letting the rest of the tax cuts expire.

via Business Insider.

This got me thinking about how much money will really flow into the Treasury from “the rich”?  I remember this from awhile back.

If you have not seen… it’s just plain excellent.
[youtube http://www.youtube.com/watch?v=661pi6K-8WQ?rel=0]

Google and the Merchandise Mart

Good News!!

Crain’s Chicago Business reports: Google is in talks to lease some 500,000 square feet in the Merchandise Mart, sources say.  The deal would include a rooftop deck.  The Internet search giant, looking to move employees from the Libertyville headquarters of its recently acquired Motorola Mobility, has an office for tech workers near the Mart.

via Chicago Tribune.com.

Chicago is ripe for a tech explosion.  Of course we have a serious debt problem in this city, and state.  That will make some companies too scarred to move/expand here.  But if we can get that under control Chicago can become a major player in the tech space.

If Rahm and Quinn can get our pension issues under control companies will relocate here from California.  Our taxes in Illinois are way too high and complicated — a/k/a suck — but the situation is far worse in California.  It’s freakishly expensive to do business there.

This could just be the beginning of hope.  Now we just need to fix race relations, balance the budget, improve our schools, hire more police, find a State’s Attorney who will actually ask that criminals be placed in prison, find an Attorney General who’s not related to the most corrupt politician in the state, and fix an aging infrastructure.

Drivers Get Creative to Avoid High Toll Fees

Drivers fed up with New York City’s expensive toll roads are carpooling to save a few dollars on the George Washington Bridge, according to the Wall Street Journal.

Bridge commuters can save $6 a vehicle by using the “carpooling” lane. Because of this, some rogue drivers have started picking up hitchhikers determined to save money (and help others save money, too).

According to the WSJ, the George Washington Bridge’s toll booths bring in $625 million for the city. Toll cheats like this cost the city $7 million.

Port Authority police have caught on to the carpooling scheme. Officers patrolling the bridge have started issuing citations to drivers who pick up passengers near the toll booths. Picking up a hitchhiker isn’t illegal, so the police nab these drivers through tickets for an illegal lane change or stopping at a bus stop (a bus stop near the bridge is popular place for these drivers to pick up passengers).

via Business Insider.

Before I took a little break, I wrote about Cook County raising cigarette taxes and have revenue plummet.  This is just another fine example of people changing their behavior in order to avoid taxes.

The more you tax something the less you get of it.

Raise Taxes — Lose Revenue

The current taxes on a pack of cigarettes in Chicago include $2 from Cook County, 98 cents from Illinois and 68 cents from the city. If Quinn signs the latest increase, the taxes in Chicago will be $4.66 per pack, compared with 99 cents in East Chicago.

On Monday, a pack of Marlboros at a 7-Eleven on North Wells Street in downtown Chicago ran $9.69, before the state tax increase. At a 7-Eleven on Hohman Avenue in Hammond, the same smokes went for $6.20.  …

“The cigarette tax increase passed the Senate last week. Quinn has said the hike is necessary to generate about $350 million for the Medicaid program.  …

In 2006, the Cook County tax doubled to $2 per pack.  …

But even as taxes on cigarettes climbed, the revenue in Cook County dropped. In 2006, the county garnered more than $200 million in cigarette taxes. That number plummeted to $131 million in 2010, according to annual reports.

Let’s stop here for a second and think about that.  In 2006 the Cook County Government DOUBLED the cigarette tax in order to RAISE REVENUE.  What was the result?  Revenue fell by a third!!

Legislators and experts agree some drop-off can be expected as tax increases price people out of the market or alter smoker behavior. The percentage of U.S. adults who smoke declined from nearly 21 percent to 19.3 percent between 2005 and 2010, according to the Centers for Disease Control and Prevention.  …

So during roughly the same period smokers (albeit nationally) kicked the habit to the tune of 8%.  But Cook County revenue off by 34.5%.

Cook County Sheriff Tom Dart has said he thought most of the revenue dip was due to fraud.

Dart and County Board President Toni Preckwinkle joined forces in September to add more staff to the county’s Revenue Department to investigate fraud claims. Within three weeks, investigators seized more than $353,000 in unstamped cigarettes and imposed more than $400,000 in fines, Dart said.  …

Well Mr. Dart, if your own statement is true then you completely suck at your job.  Your missing $69 million and you find $400,000.  You’ve located 0.58% of the missing money.  Less that one percent.

So what’s really happening here?  We know that the double the tax, yet revenues off by a third, only 8% quit, and Tom Dart can’t find the missing money.  So where’s the money?

Larry DeBoer, professor of agricultural economics at Purdue University, noted that Indiana benefits as taxes spike in neighboring states.”There’s no doubt that commerce goes back and forth across the borders,” DeBoer said. “If Illinois increases its tax by $1, we’ll realize about $10 million more in cigarette tax revenue.”

via Chicago Tribune.

Aaaah.  There’s the money!

In Illinois we’re governed by complete morons.  The Laffer Curve is a real thing.  People will change their behavior to engage in tax avoidance.  In this case is primarily involves not buying cigarettes in the City and County but in the collar counties and in Indiana.

More to the point, wouldn’t you think that when you double the tax and see revenue falling and falling and falling that someone would have stood-up and said, “Maybe we should roll-back that tax before we lose any more money?”  But not in this county.

Stupid Quinn and his ilk are going to keep raising taxes until there’s no one left to tax.

Wealthy Flee France (Shhh, don’t tell the U.S. Media)

For those that don’t know, France recently had an election and voted for the most socialist guy on the ballot.  The guy who’s promising to raise taxes on the rich and increase the transfer payments to the poor.  The result?  The rich are leaving…  in droves.

France’s high earners feel increasingly unwelcome in a country now led by a man who has admitted: “I don’t like the rich.” So where are they looking? London. It comes as no surprise – while Hollande prepares to raise taxes, over here David Cameron is cutting the 50pc tax rate for income above £150,000 to 45pc. “I have already worked in London and lived in South Kensington,” said one French banker who expects to return to the UK over the next three months. “The question is how much of Hollande’s rhetoric will materialise into policy.”

Few are keen to find out. Private equity firms and American banks in Paris have already begun making arrangements for their top executives to set up office in London, amid widespread concern about changes to the French income tax regime.

via Telegraph.

This story is told over and over again in the European press, particularly earlier this week (I realize I’m late to the story.)  But the U.S. press is just getting to the story; mostly in the business press.  Neither the Chicago Tribune nor the sun-Times has not written a single word about it.

While it can be shown that the rich are generally willing to pay their fair share, i.e. remain in places with high taxes, it is only when they feel that the quality of life issues make paying the high taxes worthwhile.  There can be no doubt that ever higher and higher taxes will drive the wealthy away; the Laffer Curve is real.

The net result of this is that higher taxes impose a disproportionate burden on the middle class and the poor.  States like Illinois need to move to a more progressive tax structure; however they must do so very carefully in order to assure that the rich are not incentivized to relocate to Indiana.

lllinois Moves Toward Insolvency

We’re now making national news:

After trying to tax Illinois to governmental solvency and economic dynamism, Pat Quinn, a Democrat who has been governor since 2009, now says “our rendezvous with reality has arrived.”  …

Illinois was more heavily taxed than the five contiguous states (Indiana, Kentucky, Missouri, Iowa, Wisconsin) even before January 2011, when Quinn got a lame duck Legislature (its successor has fewer Democrats) to raise corporate taxes 30 percent (from 7.3 percent to 9.5 percent), giving Illinois one of the highest state corporate taxes, and the fourth highest combination of national and local corporate taxation in the industrialized world. Since 2009, Quinn has spent more than $500 million in corporate welfare to bribe companies not to flee the tax environment he has created.

Quinn raised personal income taxes 67 percent (from 3 percent to 5 percent), adding about $1,040 to the tax burden of a family of four earning $60,000. Illinois’ unemployment rate increased faster than any other state’s in 2011. Its pension system is the nation’s most underfunded, and the state has floated bond issues to finance pension contributions. Quinn’s recent flirtation with realism — a plan to raise the retirement age to 67 and cap pension cost-of-living adjustments — is less significant than the continuing unrealistic expectation that some Illinois’ pension investments will grow 8.5 percent annually. Although the state Constitution mandates balancing the budget, this is almost meaningless while the state sells bonds to pay for operating expenses (in just 10 years the state’s bonded debt has increased from $9.4 billion to $30 billion), underfunds pensions and other liabilities, and makes vendors wait (they are owed $5.6 billion).

Peterson, a professor of government at Harvard, and Nadler, a doctoral candidate also at Harvard, say collective bargaining rights for government employees pose “a dramatically new challenge to the viability” of American federalism. They cite studies demonstrating that investors’ perceptions of risk of default are correlated with the rate of unionization among government employees. Higher percentages of government employees who are unionized, and larger Democratic shares of state legislative seats, correlate with increases in state borrowing costs.At least 12 percent of Americans change their residences each year, often moving to more hospitable economic environments. In a system of competitive federalism, Peterson and Nadler write, “If states and localities attempt in a serious way to tax the rich and give to the poor, the rich will depart while the poor will be attracted.” And government revenues and expenditures vary inversely.

via Boston Herald.

Illinois may fail before California.  Businesses are fleeing.  Residents are fleeing.  Illinois is shrinking, dying.

For all of the Democrats efforts to “help” the poor, how will the poor be helped when Illinois becomes nothing more than one big Detroit?  The rich will all leave — they have the means to do so.  Those left I guess will feed on each other.

I need to make sure history get written correctly.  The suffering of the poor that is coming is blood on the hands of Richie Daley, Michael Madigan, Lisa Madigan, Rod Blagojevich, George Ryan, Pat Quinn, Rahm Emanual, Jesse White, Danny Davis, Jesse Jackson, Todd Stroger, John Daley, and the rest of the Illinois combine… the Machine.

Food Stamps & Taxes Suggest We’re Nearing the End

A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world’s greatest civilizations has been 200 years.

Great nations rise and fall. The people go from bondage to spiritual truth, to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency, from complacency to apathy, from apathy to dependence, from dependence back again to bondage.

attributed to Alexander Fraser Tytler.

I first published that quote nearly two years ago.  I thought it was true then… perhaps even truer now.

The Congressional Budget Office said Thursday that 45 million people in 2011 received Supplemental Nutrition Assistance Program benefits, a 70% increase from 2007. It said the number of people receiving the benefits, commonly known as food stamps, would continue growing until 2014.

via WSJ.

And there is this:

Out of the 143 million tax returns that were filed with the IRS in 2010, 58 million – or 41 percent – of those filers were non-payers.

In other words, only 85 million actually paid taxes.

via CNSNews.com.

We cannot — and will not — survive when ‘net givers’ are outnumbered by ‘net takers’.  Two days ago I wrote that a record number of Americans have renounced their citizenship.  The U.S. is dealing with intellectual flight of massive proportions.  We are facing a perfect storm of breakdowns in both the economy and society.  The poor rarely have the ability, the means, to leave.  The rich however can easily move to wherever they like.

We are only a few bad decisions away from the wheels falling completely off the bus.

Record Number of Americans Renounce Citizenship

Last year, almost 1,800 people … renounc[ed] their U.S. citizenship or handing in their Green Cards.  That’s a record number since the Internal Revenue Service began publishing a list of those who renounced in 1998.  It’s also almost eight times more than the number of citizens who renounced in 2008, and more than the total for 2007, 2008 and 2009 combined.

via Reuters.

This is not good any way you twist it.

Go read the story.  It’s not the tired, poor,  huddled masses yearning to breathe free that are leaving.  It’s the well educated, the well off, the well healed who are heading for the door.  Tired of our unfair tax policies people the rich are saying enough.

Who’s going to pay the bills when these people go?