I've just been reading up on Blago's Gross Reciepts Tax plan - http://www.illinois.gov/taxfairness/plan.htm
I'm confused. The second bullet point states the tax is fairly spread across the businesses in Illinois, then the third bullet states there are two rates. This is later explained as a way to avoid the pyramiding that happens with durable goods. Let's see the numbers that prove it will do so... And how will the rates be adjusted as these two rates go out of sync due to increased/decreased economic activity?
Also, businesses that make less than a million dollars in sales are exempt. What percentage of businesses in Illinois fit into this category? How does this not create a loophole whereby I divide my business into several subsidiaries that work together to avoid the tax? Why not buy my stuff from a bunch of small companies and avoid the tax? Perhaps this is an advantage for small businesses, as long as they stay small?
The fifth bullet states that the CIT will be phased out, I'm guessing this is the current tax structure? Then the ninth bullet states that the GRT will be phased out and local gov'ts will receive CIT taxes? How does that work?
I'm all for a new tax structure that provides money for the budget problems and adds to education and healthcare. But did anyone think this through? Did anyone actually read this page before posting it?
This research took me a total of .5 hours and I'm not an economist.. Somebody please tell me I've got this wrong, at first I thought the idea might have some merit, now I'm not so sure.
FWIW, there's an interview with UIUC prof Fred Giertz about GRT at www.uiuc.edu/minutewith/fredgiertz2.html .
Thanks wayward, so this could solve the budget problems, but I wonder if an extra 2-3 billion is a bit too much rope...
I'm a bit uneasy about the whole thing - having that kind of tax at that rate is very unusual, and I wonder if it will drive businesses out of Illinois. I think it'd be smarter to look at approaches that were more in line with what other states were doing.
It seems to me that the problem is the tax being applied at the point of sale. If the tax was applied at the end of the year and the producer was made to pay the tax on their transactions, then there would be a natural incentive to lower the price for transactions in order to avoid a heavy tax burden at the end of the year. Why couldn't it work this way?
Perhaps the thing most overlooked is that any tax added to a transaction is drawn out of the consumers income. It is recesionary in that it reduces the amount of individual spendable income as if a person has any left over to spend. We are currently contributing nearly 30 to 40% now by the time we get through with wage tax, ssi, medicare, excise, sales, civic center tax, real estate, property tax, city tax and so on.
What we need is to restrain this runaway spending. Enough with the taxes, high gas prices, high utility costs, political wage increases, govermental giveaways. It's time for the goverment to be a government of the people, by the people and for the people and not the other way around.
What do you mean by "runaway spending"? Are there improper priorities, or is there waste through people not doing their job correctly. One thing that comes to mind is the mold problem at the county nursing home. Are there other situations locally like this that demonstrate these taxes are not being spent correctly?