Eye On Illinois: Is it ever possible to simplify dozens of tax streams?


Government is not simple.

That caveat is as much for writer as reader, because something communicated in Springfield this week struck me as needlessly complex.

Capitol News Illinois reported mayors from across the state were in Springfield Tuesday asking lawmakers to increase the Local Government Distributive Fund, the means by which municipalities get a cut of income taxes. (For an explainer, visit tax.illinois.gov/localgovernments/income.html.) Specifically, the mayors want the municipalities’ cut to get back to 10% over the next four fiscal years.

As of last Aug. 1 the share is 6.16% from individual, trust and estate income taxes and 6.85% of net collections of corporate income tax. CNI said each percentage point increase would divert about $250 million into the LGDF.

Scott T. Holland

Scott T. Holland

One way to debate this issue is getting into dollars instead of percentages to compare 6% of 2023 revenues to the last time the rate was 10%, the starting point in 1969. A worthy endeavor, but I’m thinking simpler.

As in: why does this fund exist at all? Why can we not pay property taxes to local governments and income taxes to the state and stop any haggling over the size of the pie slices? There are so many municipalities that breaking up the entire $250 million across all of them, even proportional to population, may not seem as dramatic an impact as the General Assembly having that much less to meet its budget obligations.

Again, government isn’t as simple as “cities win, the state loses,” even when it’s all public money. We all know the drill when it comes to the federal government relative to states. It’s easy to find a color-coded map showing which states pull out more from Capitol Hill than put in, and they make similar maps for Illinois counties as well, but none ever comes close to parsing the details.

Part of the answer is it’s just state government’s job to collect and disburse money. The Department of Revenue remits 24 types of taxes to local governments, from Automobile Renting Occupation and Use to Video Gaming. We’ve got an abundance of government units as it is, imagine the complaints about inefficiency if every city needed its own mini revenue office to process gasoline taxes and E-911 surcharge dollars.

Another is control: when the state allocates funding it attaches strings, adding new clauses every year. Just how feds treat the states.

It’s all our money. Even if we didn’t pay it (like the revenue from marijuana tourists) we elected the folks who established the policies allowing the collection. Multi-jurisdictional bookkeeping will never be simple, but efforts to simplify – especially to stop playing Peter against Paul – could go a long way toward stabilizing faith in government.

Scott T. Holland writes about state government issues for Shaw Media. Follow him on Twitter @sth749. He can be reached at sholland@shawmedia.com.

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April 22, 2023 at 05:12AM

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