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Seiffe argues that ratcheting up the opposition to HB 750 should be one of the first chores for this man, incoming State GOP Chairman Andy McKenna.

Thursday, January 27, 2005

By Ralf Seiffe

OPINION - Like all Republicans, I wish Andy McKenna good luck as he hangs the “Under New Management” sign over the wreck of the Illinois Republican Party next week.

There has been a lot of talk about what kind of chairman Mr. McKenna will make given the schism between moderate and conservative Republicans.

No doubt, he’s getting advice from both sides but there is one thing on which all Republicans should agree and that’s stopping HB750.

Killing this massive tax increase would make a great first step for the new party leader and success could set the stage for a Republican Renaissance.

HB 750 is the governing class’ solution of yet another public crisis. Its chief sponsor is House Speaker Michael Madigan (D-Chicago) and he’s exclusively joined by other Democrat legislators who smell a new method to transfer income from affluent Illinoisans to their constituents. Under the now tired cover of “doing it for the children”, these legislators are proposing to claim a lot more of our incomes.

The rationale behind the bill is a replay of the bargain Democrats have offered for many years--an increase in the income tax in exchange for a reduction in property taxes.

Illinois voters have consistently rejected this “bargain” because they are smart enough to see that the tax relief is temporary while the tax increase will be permanent.

Specifically, the bill would raise income taxes by 67% for individuals and at least 67% for corporations because it raises the rate and eliminates several job-creating credits and deductions.

It would also expand the Illinois sales tax to such economic activities as cable TV, fitness centers, miniature golf courses and performing arts companies. The state will eliminate the exemption on retirement income for those who take in more than $75,000.

Understandably, lawyers escape the new bite but newspapers lose their sales tax exemption on newsprint and printing ink.

Standing behind the lawmakers are the tax- exempt organizations that exist mostly to agitate for tax increases. The Illinois Association of School Board’s web site reports, “The bill was authored by the Center for Tax and Budget Accountability” one of the usual suspects in any tax proposal. Other “non-partisan” groups such as the PTA and the League of Women Voters are also on board advocating the hike despite their 501(c)-3 status.

Arrayed against the tax proposal are all sorts of nominal Republicans. Opponents come from all segments of the party and their opposition creates the opportunity to restore the Republican Party. Mr. McKenna should seize it with both hands.

This is a public relations opportunity as rare as the appearance of Halley’s Comet--there is something in this stinker for everyone to hate. Businesses lose the accelerated depreciation they use to help purchase machinery; retirees come into the taxman’s crosshairs for the first time and just plain folks will pay the state more than 10% of their income through the double taxation of income and consumption.

The Illinois Republican Party should make defeating this bill and the thinking behind it a primary objective. In the short term, the Republican party can certainly tag the Democrats with a nasty tax increase but massive and public opposition’s real value would be to create a rallying point and give dispirited, retired Republicans a reason to believe again. It makes a fine choice of enemies, too.

In the longer term, stopping this bill obligates Republicans to take the lead in improving educational outcomes in Illinois.

For our manufacturing and agricultural economy to prevail over emerging foreign competitors, we need to a bigger supply of smarter, better-prepared young people entering the workforce. Nearly everyone realizes this but, like Social Security, education is an issue Democrats have co-opted despite their evident failure. Even they must realize the current trajectory is a pathway to disaster yet the control the teachers’ unions exert on their party paralyzes them.

This means we can predict what they will do. It leaves everything but tax increases in our court and that is a very Republican place to be.

Principled resistance to HB 750 in conjunction with better, not more expensive, school solutions also aligns the party with suburban taxpayers. They suffer property taxes rising at three times the inflation rate even as they receive diminishing services.

Education is the biggest driver of these tax hikes and voters are tired of them. Suburbanites will reward Republicans (or any one else) who offers real solutions to the tax spiral and claiming credit is the key to rebuilding the party.

Burying HB 750 starts easy but gets tougher as we debate a fix to the disaster of education. It is good politics however because it unites all elements of the party and leads them in the same direction.

Given Illinois Republicans’ recent history, that would be a stunning accomplishment. Making it happen should be your first test, Mr. Chairman. Ready to get started?

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Ralf Seiffe advises business start-ups and product launches from Chicago, Illinois and is a political analyst and columnist for the Illinois Leader.