Tuesday, September 20, 2011

Higher Illinois Taxes Hurting Poor, Homeless

September 20, 2011 - The numbers are disturbing: "The latest census figures show a state poverty rate of 14.1 percent — about 1.8 million of Illinois’ 12.8 million residents. It’s the highest rate since 1992, when it was 15.6 percent, and has been climbing steadily for three years. Poverty is defined as a family that survives on around $22,000 annually. Extreme poverty is half that amount."

That's from a report by the Chicago Sun-Times this week about deep budgetary cuts in Illinois and their tragic impact on those who need help the most.

"But on any given night," the Sun-Times report says, "more than 14,000 people in Illinois are homeless, according to a January report by the National Alliance to End Homelessness. Advocates say more than half are in Chicago."

The poor and the homeless are hit the hardest. Why? Illinois lawmakers cut the state's Department of Human Services budget "by hundreds of millions of dollars," reports the Sun-Times, "including $4.7 million for homeless services." The DHS cuts total "$669.3 million, a full 17 percent drop. Services feeling the pinch include addiction treatment, which was slashed from $63.5 million to $46.6 million, and the budget for the Department of Children and Family Services, which was cut by $24.5 million, or about 12.5 percent."

There is no doubt that the Illinois state budget needs to be trimmed sharply. The state has spent itself into a fiscal mess that is rivaled only by California and Greece. However, with so much wasteful spending continuing in Illinois - not just by the state but by counties and municipalities statewide - it would seem that the already-stretched DHS might have been spared.

Let's go back a few steps to understand this. People are hurting in Illinois (and, sadly, across the U.S. for similar reasons) in large part because of two simple things: Excessive government spending and increasing taxes. While the exact numbers can never be known, there is no doubt that many of the people who are in poverty and even homeless found themselves in such a condition because of taxation. How's that?

To fuel their high spending and wasteful ways, Illinois needs to maintain a certain level of taxation. So, anyway, goes the conventional thinking. In reality, however, higher taxes hurt everyone. Ironically, those hurt most by high taxes are those who the politicians say will benefit by way of funding for social programs. We see now how well that Democrat modus operandus works: The state has higher taxes than most of its neighboring states, yet poverty is rising and social programs are slashed.

Employers and jobs are leaving Illinois for states with lower taxes. This creates more unemployment. When there are fewer businesses in the state, that lowers the number of taxable entities. When people become unemployed, that means fewer taxpayers. Unemployed people spend less, which means a ripple effect: Other businesses see a drop in their sales, which means less income, which means that they will pay less taxes.

All that causes the state to actually take in LESS tax money even though it has a HIGHER tax rate. It's counterintuitive, but not hard to understand if you give it a moment's thought. The Democrats in Springfield are either so blinded by ideology that they are incapable of seeing this simple truth, or they're purposely trying to do their part to destroy the economy of the United States. I am not certain which it is.

So, the irony: Democrats everywhere have told us for years that higher taxes will help the poor. Make the rich pay up and the wheels will keep turning. Well, the rich are still rich (most of them anyway, and I do not begrudge them that). Meanwhile, higher taxation has served to drive away jobs, lower the intake of tax revenue, and badly hurt the most vulnerable. Sadly, many of the poor being hurt so deeply will again vote for Democrats next time around because they will again fall for the tired old lies.

ALSO SEE:
Illinois Loses Most Jobs in Nation Following Tax Hikes - Illinois Policy Institute
Illinois Employment Plunges After Tax Hikes - Business Insider
The Abusive Nature of Illinois Taxes - Chicago News Bench
Taxburgers and Fee Fries - Chicago News Bench

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