Bruce Rauner’s fiscal plan: Part III

Republican gubernatorial candidate Bruce Rauner wants to expand the Illinois sales tax, reduce the income tax gradually to 3 percent and make the state’s economic development agency a public-private venture under a plan issued July 17.

The third installment of Rauner’s “Bring Back Blueprint” outlined the candidate’s “Jobs and Growth Agenda” and followed up on previous sections that focused on cutting waste and reforming the system for granting tax breaks to large corporations.

The complete document is below but we’ve boiled it down to 10 essentials.

1) End the 2011 temporary tax hike

Rauner plans to reduce Illinois income tax rates over four years to 3 percent for individuals and  4.8% for businesses — the levels of both taxes before the 2011 tax increase raised them to 5 and 7 percent, respectively. They are scheduled to drop to 3.75 percent and 5.25 percent on Jan. 1.

 

2) Reform the sales tax

To compensate for the state revenue that would be lost by lowering income taxes, Rauner plans to “modernize” the sales tax to include certain non-medical and non-professional services, such as storage, travel agencies, lawyers, and janitorial services, among others.

 

3) Freeze local property taxes
Noting that Illinois has the second highest property tax rates in the country,  Rauner proposes freezing property taxes statewide unless local voters approve an increase through by referendum.

 

 

Illinois imposes a heavy property tax burden on homeowners.

Illinois imposes a heavy property tax burden on homeowners.

 

4) Increase the minimum wage
Despite claims earlier in 2014 that he would lower minimum wage by $1, Rauner’s plan proposes a phased-in increase in minimum wage. The report does not state what the increase would entail but Rauner said at the press conference announcing his plan that he considered $10 “reasonable.”

 

5) Turn DCEO into a private-public partnership
Rauner plans to reform the Department of Commerce and Economic Opportunity (DCEO), responsible for promoting business growth in Illinois, into a private-public partnership. “Because a public-private organization combines privately raised money with state funds, it can be more flexible in how it spends its budget,” the report says.

 

6) Reform EDGE
The Economic Development for a Growing Economy (EDGE) program offers tax break incentives for companies based on tax revenue generated by jobs created or retained. Rauner sharply criticized the EDGE program as corporate welfare in an earlier press conference. “Moving forward, Illinois should implement a limited refundable income tax credit based on the income tax generated from created or retained jobs,” the report says.

 

7) Lower business registration fees
The current fee for starting a limited liability company (LLC) in Illinois is $500, one of the highest in the country. Rauner proposes lowering the LLC fee to make it the same as starting a corporation, to $150.

Illinois has one of the highest LLC registration fees in the country.

Illinois has one of the highest LLC registration fees in the country.

 

8) Expand Illinois’ export market
According to the U.S. Department of Commerce, every billion dollars of exported goods supports roughly 6,000 jobs. Rauner says he will be “salesman-in-chief” of Illinois. From the report: “He will travel on his own dime to high-growth markets to sell our state in support of Illinois jobs — boosting exports and attracting foreign capital.”

 

9) Reform the Worker’s Compensation system
To cut worker’s compensation costs, Rauner proposes amending injury costs, arguing employers should only be responsible for injuries that occur on the job, not in transit. Additionally, Rauner hopes to eliminate “doctor shopping” for those workers injured.

 

10) Improve vocational and technology training
Rauner hopes to improve Illinois’ workforce through by expanding public-private partnerships between schools and employers and increasing funding for apprentice programs and other programs that directly link training and employment.

Here is the full plan followed by reaction from the Quinn campaign:

Bring Back Blueprint Jobs and Growth

Rauner had been criticized ever since winning the Republican nomination in March for failing to offer details of how he would allow the state income tax to fall by 25 percent without making heavy cuts to essential services.

The Quinn campaign issued this response to his jobs plan:

CHICAGO – After 500 days of slumber without a plan to deal with the massive structural problems facing Illinois, Republican billionaire Bruce Rauner took his latest swing, issuing a pamphlet with policies that would slash funding for education and core services, introduce the regressive new Rauner Tax, and create new opportunities for corruption by turning the Commerce Department into a piggy bank for his billionaire pals. Here’s the scoop:

RAUNER PAMPHLET BY THE NUMBERS

  • Total services hit by the all-new Rauner Tax: 32
  • Mentions of low-wage earners: 1
  • Photos of Rauner: 1
  • Difference in number of pages between Rauner Tax Budget & Quinn’s actual budget: 492

Meanwhile, to his latest “policies.”

 

A. Republican Doomsaying

 

Rauner Claim: Illinois is in an “economic death spiral.”

 

Fact: Just today, unemployment fell to 7.1% – its lowest point since October 2008 – and more people are working today than when Governor Quinn took office. In fact, the drop in unemployment from March to June is the sharpest three-month decline ever recorded in Illinois. (U.S. Bureau of Labor Statistics)

 

B. Budget Smashing

 

Rauner Claim: Roll back the income tax to 3% and the corporate rate to 4.8%.

 

Fact: This would blow an estimated $9.5 billion hole in the budget, and his estimated $577 million from the new Rauner Tax would be a drop in the bucket. Based on current budget figures this would mean:

  • Tens of thousands of teachers laid off
  • Tens of thousands fewer seniors receiving the help they need from in-home caretakers
  • Tens of thousands fewer people with mental illness receiving the assistance they need
  • Tens of thousands fewer children in child care
  • Tens of thousands fewer students receiving MAP college scholarships
  • Tens of thousands victims of domestic abuse not receiving shelter and assistance
  • Thousands victims of rape left without proper care

 

C.  The Sham Property Tax “Freeze” That Would Mean Cuts to Education

 

Rauner Claim: “Freeze” property taxes.

 

Fact: Huh? The only power the state has to impact local property taxes is to invest more in education — which allows local governments to lower property taxes; or to cut state funding for education, which forces local governments to raise property taxes. Reading between the lines, this thing looks like a clear vow to raise property taxes across Illinois by slashing state funding for education. By contrast, the Governor wants to reduce the property tax burden in Illinois and properly fund public education.

 

D. Privatizing Commerce? Been Done. And It’s a Crony-Corruption Disaster.

 

Rauner Claim: Privatize the Commerce Department and turn it over to his rich pals.

 

Fact: Privatizing the functions of the Commerce Department has been tried by other states – states that Rauner even cites in his pamphlet – and it’s been a disaster that’s led to cronyism, corruption, lost money - and even loans that ship jobs out-of-state and overseas. States like Indiana, Wisconsin and Florida have tried this, and failed. For example, since Iowa privatized its Commerce Department in 2011, the new Economic Development Authority (IEDA) has awarded 26% of its incentives to insiders with representatives on the privatized IEDA board.

 

E. Hopes Public Will Forget History of Dodging Social Security & Medicare Taxes with New Pledge

 

Rauner Claim: Now says he doesn’t want to tax retirement income.

 

Fact: Forget the fact that he managed to dodge Social Security and Medicare taxes himself and that a few months ago he was open to taxing retirement income. It must not have polled well.

In a separate statement, Communications Director for Quinn’s election campaign, Brooke Anderson said, “Only someone who uses elite accounting methods to avoid taxes himself would propose a tax hike on services that hurts small businesses, hits working families the hardest and doesn’t solve the problem at the same time. Only someone with nine homes would propose taxing trailer parks.”

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