Friday, January 20, 2012

Here's how not to balance a state budget; Illinois raises taxes 67% and ends up with an $8 billion deficit

Read here about the Illinois experience. 

States facing massive budget deficits had one of two choices several years ago: cut spending or raise taxes.  States like Ohio under John Kasich began to implement long-needed reforms in state spending.  Others like Illinois decided to solve their budget problems with massive tax hikes.  The result: Ohio's budget is balanced and Illinois' budget is collapsing under its own weight.

You see, as COAST has been saying for more than a decade, if you don't take steps to cut spending, seriously and structurally, tax increases will not solve the problem. 

This is so for two reasons: first, the bureaucrat's costs will always devour the new tax dollars, and, second, the higher taxes discourage residents from statying int he state and discourage economic activity in the state.

The result: deficits as we see clearly in Illinois. 

Read it and weep. 

Tol' ya so!

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