Last week the Chamber sent out a message:
Early next month Governor Blagojevich will propose a new health care program that will be extraordinarily expensive. The Illinois Chamber has received very good information - and the media has reported - that the ENTIRE cost of this program will be funded by new taxes on businesses exclusively. The price tag is reportedly at least $2.5 billion. To put that in perspective, the entire corporate income tax in Illinois generated $1.7 billion last year.
What is more, the $2.5 billion tax increase may be just the first installment of business tax increases as we await an anticipated education funding plan that holds the possibility of raising additional billions from our employers.
I have reluctantly accepted that universal healthcare is coming to Illinois one way or another. What really bothers me are the costly smoke and mirror tactics that will likely be employed to sell and implement the idea. The governor wants to tax businesses exclusively. No surprise, but does anyone believe the citizens do not ultimately bear the burden of the tax increase?
Let’s put this into some more perspective - The State of Illinois anticipates $7.75B from sales tax in FY07 by taxes sales at a 6.25% rate. In order to generate $2.5B on the same sales volumes, the sales tax rate would have to increase +/- 2%.
Another perspective – The State of Illinois expects to collect $8.88B in personal income tax. The income tax rate would have to increase +/- .5% to collect another $2.5B to cover the proposal.
In an effort to hide the tax burden from the voter, politicians are willing to make careless business decisions. If the citizens want universal health care, is it necessary to make them believe they are not paying for it? I think both sides can agree that we should minimize the costs of any such program and increase transparency of the costs. Why would we risk business investment and job growth when it isn’t necessary? Let's just keep the cost at an (estimated) $2.5B!
The real hidden cost is that the government will be siphoning off its share, and the whole thing will grow without bound.
Now, I'm all for taking care of those who can't care for themselves, who can't work. But why should people work when the government will take care of them?
What the government supports, it gets more of, and what it taxes goes away.
Hopefully most people will see the illogic in raising taxes of business and get back to the business of overhauling the Illinois property and income structure so we can adequately fund education.
There will be many real hidden costs. My example particularly upsets me. I agree that the $2.5B estimate will just be the tip of the iceberg.