Lawrence on the State Deficit
ArchPundit
Pretty brutal takedown on the Repubicans ‘plans’:
Meanwhile, Republicans vow to erase a deficit expected to reach nearly $12 billion next year simply by stimulating employment in the private sector and downsizing state government — a proposed remedy that may entice voters but affronts reality. Not allowing facts to intrude upon fetching phrases, a couple of the GOP gubernatorial candidates tout tax cuts to help spur the economic surge they contend would stabilize finances and allow our government to pay its bills on time.
Appealing? You bet. Doable? Let’s crunch some numbers.
Assume we freeze tax rates and a robust recovery produces revenue growth of 7.79 percent from the sales tax, 13.2 percent from the personal income tax and 41 percent from the corporate income tax — all of which would match spikes over the last quarter century. The yield would be $2.4 billion, only 20 percent of the deficit.
Illinois revenue experts consider even that scenario wildly optimistic. None of those categorical high points occurred in the same year. Moreover, the generally prosperous 1990s produced annual growth of 6.3 percent from the sales tax, 8.1 percent from the personal income tax and 11.1 percent from corporate and business taxes.
He’s critical of Quinn and Hynes as well pointing out they are both trying to claim they can keep the cost from affecting most people and he’s right. That said, while the Democratic plans are inadequate, the Republican plans aren’t based in reality.