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Letters to the Editor and Commentary

SENATE WEEK IN REVIEW: May 9-13

After a week full of Committee meetings, Senate Democrat lawmakers waited until Friday afternoon to skip the Committee process and rush through budget proposals that would increase state spending, lock the state into a permanent 67 percent tax increase and very likely force higher tax increases in the future.

State Sen. Tim Bivins (R-Dixon) said the budget measures were passed even though lawmakers from both parties, as well as Illinois citizens, were denied the opportunity to review the fiscal proposals in any meaningful fashion.

Also during the week, Caterpillar’s CEO spoke out about the importance of workers’ compensation reform to Illinois’ jobs creators, and the Civic Federation cautioned that Gov. Pat Quinn’s budget plan would make the state’s financial condition worse.

On May 13, the Senate began voting on budget amendments a mere 45 minutes after the bills were filed. Republican lawmakers questioned the rush to pass the measures, noting that they had no opportunity to review the bills, and commenting that many Democrat legislators likely hadn’t either.

Meanwhile, Republican lawmakers continued to push for realistic spending caps needed to assure that the 67 percent tax increase adopted in January will actually be temporary. The spending cap legislation (SB 1405) would roll back the excessive spending limits adopted in the tax hike measure to a level needed to allow the state to pay off old bills, balance its budgets and roll back the tax hikes.

No Republicans supported the tax increase in January and Senate Republicans pushed for spending reductions in a detailed “Reality Check” plan to restore the state’s financial integrity. After first scheduling a hearing on the spending caps, majority Democrats cancelled the May 13 meeting of the Executive Committee, thereby avoiding a vote on the spending limits.

Bivins said the package advanced by Senate Democrats May 13 proposes no long-range planning and fails to make the reductions needed to eliminate their 67 percent income tax increase, as promised when they passed the hike in January. GOP senators noted that the budget proposals continue the failed practice of short-sighted budgeting, and rely on borrowing to pay the state’s bills.

Though Senate Republicans supported specific measures that reduced state spending, they want a comprehensive, long-range plan that would enable the state to roll back the 67 percent tax increase, and which creates an environment that will foster job growth and improve the state economy for all Illinois citizens. Republican senators have offered such a plan includes specific budget-cutting ideas, and which includes background, explanation and justification for the proposals. Many of the initiatives advanced by the Senate Republicans have been suggested by the Civic Committee, the Civic Federation and the Governor’s own Taxpayer Action Board.

Senate GOP lawmakers have introduced several bills associated with the plan, including meaningful workers’ compensation reform and legislation to reduce the spending caps included in the tax hike legislation, which would ensure the recent income tax increase sunsets as promised. Both measures have stalled, clearly indicating that the Senate Democrats are not supportive of the Republicans’ approach.

In the Illinois House, lawmakers have begun sending their budget recommendations to the floor for debate, aiming for a budget document that is approximately $1 billion less than proposals being floated by Quinn and Senate Democrats. On May 12, House legislators approved reductions to education spending, while a number of other cuts were made to smaller state agencies.

Notably, House legislators confirmed that no budget dollars have been allocated for union raises negotiated by Quinn and union leaders. The American Federation of State, County and Municipal Employees (AFSCME) labor union is being urged to either forego wage increases or cut jobs, sacrifices that many others in state government have been forced to make.

Meanwhile, workers’ compensation continues to draw attention in Illinois. The momentum to pass reform has prompted the CEO of Caterpillar to call on his fellow business leaders to put pressure on their local legislators.

Quoted in a story in Crain’s Chicago Business, Doug Oberhelman, head of Peoria-based Caterpillar, pointed out that “workman’s compensation is being discussed right now, today and tomorrow night.” According to the article, Oberhelman indicated workers’ compensation rates in Illinois are seven times as high as rates in neighboring Indiana.

In order to be meaningful, key components of workers’ compensation reforms should include requirements that injuries are actually the result of the job and the state should adopt clear medical standards for injuries, Oberhelman told the Tooling and Manufacturing Association in a meeting May 9 in Hoffman Estates. Those and other reforms were included in major legislation that came before the Senate last month. That measure (SB 1349) failed when most Senate Democrats voted “present” rather than take a stand on the issue.

Viewing reforms as critical to improving the state’s jobs climate, Senate Republicans have made workers’ compensation a top priority this session. Senate Republican Leader Christine Radogno has been personally involved in negotiations with the Governor and other legislative leaders. Senate GOP lawmakers urge employers to keep up the pressure for reform, asking job creators to continue communicating with state lawmakers and Gov. Quinn to take advantage of the opportunity for reform.

In other news, overestimated revenues and a $1.45 billion budget gap add up to a state budget plan that the Civic Federation’s Institute for Illinois’ Fiscal Sustainability says is unbalanced by $2.4 billion.

The Federation report released May 9 asserts that Quinn’s budget proposal erroneously includes $976 million that is already dedicated to refund state income taxes. The Governor’s overestimation, coupled with his $1.45 billion in recommended spending increases, result in what the Civic Federation says would be a $2.4 billion shortfall.

Laurence Msall, president of the Civic Federation, was quoted in a statement saying, “Alarmingly, even though the State raised income taxes significantly this year, the new revenues would not be enough to support the Governor’s budget.”

The Civic Federation also criticized Quinn’s proposal to borrow almost $9 billion, noting that the Governor’s borrowing plan would cost taxpayers up to $4 billion in interest over 15 years. Rejecting increased spending and borrowing to pay the state’s bills, the report emphasized that “the state must stop pushing its current financial problems into the future” and “rely on budgetary restraint to honor its commitments to vendors, local governments and taxpayers.”

Finally, as the deadline approaches for lawmakers to redraw the state’s congressional and legislative districts, advocacy groups, think-tanks and editorial writers are speaking out and making recommendations.

Several organizations representing minority voters have offered proposals, and recently the Institute for Government and Public Affairs at the University of Illinois unveiled redistricting maps generated entirely by computer. The Institute indicated it produced the maps to demonstrate the sophistication of existing computer technology and to explore alternatives that could provide a more transparent and equitable map.

According to the Institute, “The resulting computer-generated map shows that district boundaries can be more compact while increasing representation of minority populations in the state” and “fulfills the rules of redistricting without political gerrymandering.”

Some of the legislation advanced by Senate committees this week includes:

“Bath Salts” Drug (HB 2089): Makes it illegal to possess methylenedioxypyrovalerone (MDPV), a synthetic designer drug that is sold as bath salts or plant food, but can be snorted for a cocaine-like high.

Bus Driver Drug Test (HB 147): Requires that when a test for drugs or alcohol performed on a school bus driver finds that the driver has alcohol or illegal drugs in his/her system, the results must be reported to the Secretary of State within 48 hours.

Cancer Treatment (HB 1825): Requires insurance plans that provide coverage for oral cancer medications and intravenous cancer medications to cover oral medications at the same benefit cost as intravenous medications.

Charter Schools (HB 190): Designates at least five of Chicago’s charter schools must be devoted exclusively to students from low-performing or overcrowded schools in the City, and gives them permissions to restrict admission for this purpose.

Child Pornography (HB 3283): Enhances the penalty for making or possessing child pornography films and video.

Education Changes (HB 3022): Makes a number of substantive and technical changes in the school code, including establishing that state interventions for failing schools be subject to appropriation; requires student teachers to be fingerprinted and checked on the statewide sex offender database before teaching in a nonpublic school; requires criminal background checks on school employees also include checking the statewide Child Murder and Violent Offender Against Youth database; mandates student teachers in public schools must submit to a state and FBI fingerprint-based criminal background check; and deletes several of the Illinois State Board of Education’s reports to the General Assembly.

EPA Permit Streamline (HB 1297): Requires the Environmental Protection Agency to make all permit applications available online within two years, to streamline the application process and reduce the permit backlog.

Expelled Students (HB 2086): States that an expelled or suspended pupil may be immediately transferred to an alternative program, unless there is a threat to the safety of students or staff in the alternative program, and stipulates that a pupil must not be denied transfer because of the expulsion.

Legislative Scholarship (HB 1353): Prohibits relatives of a legislator from eligibility from receiving a General Assembly Tuition Waiver from that lawmaker.

Nurse Licensure Compact (SB 1305): Adopts the Nurse Licensure Compact in Illinois to allow Illinois to participate in a comprehensive, national database that is intended to facilitate the sharing of nursing licensure, investigative and disciplinary action information.

Military Fee Exemption (HB 3172): Eliminates the fees registration fee, for U.S. Marine Corps, Paratrooper, Korean Service, Iraq Campaign, Afghanistan Campaign, U.S. Navy, Distinguished Flying Cross, Operation Iraqi Freedom, and Women Veteran special license plates.

Murder Database (HB 263): Creates a Statewide First Degree Murderer Database for persons convicted of first degree murder who have been released from a penal institution or other facility after the completion of their sentence. Offenders must register for a period of 10 years following release.

Open Meetings (HB 3131): Requires a public body that is holding a meeting to make a public notice available for the entire 48 hours preceding the meeting and also provide a sufficiently descriptive meeting agenda.

Public Private Partnership for Transportation (HB 1091): Authorizes a transportation agency to enter into a public private partnership with one or more private entities to develop, finance, and operate any part of one or more transportation projects.

Student Athlete (HB 1197):  Requires that a student athlete with a suspected concussion must receive clearance from a physician, advanced nurse, or physician’s assistant before returning to play.

University Reporting (HB 1079):  Requires each state university to report annually to Illinois Board of Higher Education information about programs that have been terminated or changed; instruction, programs that are costly and do not boost enrollments and degree completions; tuition increases for the upcoming academic year; and cost-saving measures taken during the previous fiscal year.

Vaccinations (HB 1707):  Requires the Department of Children and Family Services to publish on its Web site information about the benefits of immunization against diseases like influenza and pertussis.

Capitol Fax

Rich Miller’s commentary on State Government

With the economy the way it is, just about every state in the country is frantically scrambling to keep their local corporations from leaving or attracting new jobs by doling out huge government incentives.

Illinois, of course, is a special case, which means it’ll probably cost us lots more to keep and attract jobs than just about any other state.

Our years-long political civil war between former Gov. Rod Blagojevich and House Speaker Mike Madigan during the worst international economic crisis since the Great Depression saddled the state with migraines for years to come. No problems were solved or even addressed while everything was collapsing around them during their fight to the death. By the time Blagojevich was finally arrested, impeached and removed from office, the state found itself with a $9 billion hole in its budget.

Blagojevich’s criminal reputation and our horrific financial problems have made us a national laughingstock. The recent income tax hike passed by the General Assembly and signed into law by Gov. Pat Quinn prompted other governors to openly deride us and publicly (and privately) goad our employers into leaving.

Our extremely high workers’ compensation costs (2nd in the nation) were treated to a nasty media spotlight with the uncovering of a workers’ compensation scandal at a state prison. Hundreds of state workers filed for and received big workers’ comp checks because, they claimed, turning heavy cell-door keys gave them carpal tunnel syndrome. Even worse, the state didn’t attempt to find out if most of those workers had filed valid complaints. The howls of derisive laughter could be heard far and wide.

We’re such a popular punching bag that Missouri actually appealed a lawsuit all the way up to the United States Supreme Court to insist that protecting some of its farmland in a federally designated Mississippi River flood zone was infinitely more important than the 80-year-old Army Corps of Engineers plan to save Illinois towns along the river from drowning. The delay caused by that lawsuit may have resulted in the severe flooding of at least one southern Illinois town.

So, when Motorola Mobility said it might move away, it got $100 million in state tax credits. Gov. Pat Quinn claimed afterward that the company had to pledge to invest $500 million in research and development, but that investment was apparently the company’s plan all along, no matter where it went.

Groupon, the fastest growing company in America last year, barely had to glance at other states and got $3.5 million in pledged tax credits from Gov. Quinn.

Caterpillar’s CEO sent a letter to the governor revealing that the company was being recruited to move to another state. That caused the entire establishment to suffer a collective nervous breakdown, and the media, of course, had a field day. Never mind that the CEO later said he had no intention of moving and wanted to work to make his state a better place to do business. The media’s theme was firmly established, so it was just too easy to just write stories and columns about Illinois’ impending doom.

The latest threat to move elsewhere is from Sears.

Twenty-one years ago the company was loaded up with millions in state and local tax incentives to stay in Illinois. But those incentives are expiring next year and the struggling, aging behemoth has its hand out yet again.

If Illinois doesn’t pay up, Sears could move its headquarters away, taking 6,000 direct jobs with it and costing us thousands more jobs via suppliers, contractors and businesses which rely on Sears employees for their livelihoods. The economic and tax implications would be huge. So, since it would cost far more to let Sears leave than to keep it around, expect a juicy deal to be put on the table.

Face it, we’ve made our own bed here and now we’re being held hostage and there’s almost nothing we can do about it except to try and cut the best deals possible.

It’s distasteful as all get-out, but we’re basically left with no good choices. And the more deals we cut, the more deals we’ll have to cut. Until we can overcome our serious, long-standing problems, we’re at their mercy - and corporate CEOs are not generally known to have an abundance of that human quality.

Rich Miller also publishes Capitol Fax, a daily political newsletter, and thecapitolfaxblog.com.

Thank You, Gerald

I recently read of Mr. Gerald Bork’s decision to resign from the Carroll County Board. That is regretful, having served with Mr. Bork on the County Board I came to know him as a very thoughtful, honest, and knowledgeable man. Mr. Bork has served our community for quite a few years including also as Democratic Party County Chairman. He also ran for State Representative years back.

Mr. Bork brought civility, hard work ethic, and a real regard for all of us with his service. His connections and influence with the Democrat Party members in Springfield helped Carroll County in many ways.

Gerald has been a good friend and neighbor to each of us and I want to sincerely thank him for all the years of service that he has provided Carroll County. I trust that he will rebound and be positively involved in our community for years to come.

John H McConnel Jr

Mount Carroll, IL

The Truth About Illinois’ Pension Liability

“I want the truth.”

“You can’t handle the truth.”

-- A Few Good Men, 1992

The Illinois pension liability truth- it’s not $80 billion but more like $210 billion.

According to Professors Joshua Rauh of Northwestern University and Robert Novy-Marx of the University of Rochester, the state’s pension liability is $85 billion only if current workers are fired today. Otherwise, current contracted benefits for state workers will put Illinois an additional $70 billion in the hole. Furthermore, Illinois inflates pension asset growth by an unheard of “risk free” 8.25% per year. Using a more reasonable 4% rate of return adds another $60 billion of taxpayer liability.

Here’s the pension truth: total taxpayer liability of $210 billion. Please read the recent op-ed by Marc Levine in Crain’s.*

There are only 13 million residents of Illinois. Every man, woman and child owes $16,000 in public pension debt. Have a family of four? Your family owes $64,000. You own a private company with 200 employees? For the government pensions, your company employees collectively owe $3.2 million.

Illinois Pension truths:

1. Illinois pension liability tops the 50 states for the worst funded.

2. The entire 67% income tax hike went to fund the pensions. It wasn’t enough.

3. The system is unsustainable and getting worse. Benefit payouts to retirees have nearly doubled since 2002.

We can do something about it.

Pension reform is being pushed by House Republican leadership with the help of the Civic Committee of the Commercial Club of Chicago. House Bill 149 is needed now more than ever:

- Giving current state workers three options: They could stay in the current system and pay higher premiums to cover the true costs of their benefits. They could go into a new system of more financially manageable benefits. Or they could go into a defined contribution system, similar to a 401(k) plan.

- Giving new state workers two options: They could go into the new system of more financially manageable benefits or go into the 401(k)-style plan.

- Gradually pays off the huge unfunded liability with a set, reasonable yearly payoff amount through 2045.

But it won’t be easy to pass in the final few weeks of session. Lawmakers will be under extreme pressure from unions and other vested interests in Springfield to oppose it and embrace the status quo. That’s why Illinois needs your help.

Can your member of the General Assembly handle Illinois’ “pension truth”? Ask them.

Call your state representative - Look up their name and phone number.** Explain your strong support for House Bill 149. Get your family and friends to do the same. We are a strong grassroots voice. This is real reform that matters in Illinois.

Together, we will bring a new day to Illinois. House Bill 149 is part of that mission.

Sincerely,

Adam Andrzejewski

Founder | CEO

For the Good of Illinois

*Read the article at this link: http://www.chicagobusiness.com/article/20110423/ISSUE07/304239995/oped-illinois-needs-a-solution-to-pension-crisis-not-more-taxes-or

**Find your state representative at this link: http://www.elections.il.gov/DistrictLocator/DistrictOfficialSearchByAddress.aspx

Response to Rusmisel

Dear Sir,

I wanted to comment on the letter by Dan Rusmisel in the May 11, 2011 issue. He is right that killing Osama Bin Laden will not end violent extremism. The thing it will do is stop any further violent extremism from Osama Bin Laden.

One should remember that Osama Bin Laden is responsible for the death of a number of people at the Embassy bombings in Africa. Many were American citizens but there were also many other nationalities among the victims. It isn’t just suspected, he took the credit. It is also possible that he influenced other extreme acts of violence.

The operation to get Bin Laden is not a failure of the justice system because Bin Laden was beyond the reach of our justice system. The operation to kill Bin Laden was a military operation carried out by warriors who will risk their lives so that people like Mr. Rusmisel and I have the freedom to write letters to the editor.

Bob Stretton,

Savanna

Prescription Drug Advertising

Where is the Outrage?

Many legislators in Congress still do not get it! The largest contributing factor in the outrageous cost of prescription drugs is advertising and promotion, estimated to be about 37% of the price we pay for those drugs. More money is spent on lobbying, advertising and promotion by the pharmaceutical industry than is spent on research and development.

The incredible waste of valuable prescription drug resources is appalling. Here’s but one example of such waste: There are hundreds of thousands of pharmaceutical company ads that appear in many thousands of magazines and newspapers each year. Most of the major pharmaceutical company ads in magazines usually contain a couple of pages of ‘stats’ describing the product and its contraindications. These pages are often set in type so small that they cannot be easily read. And if one were to take the time to read it, the technical language is incomprehensible to most readers. Since only a physician may prescribe prescription drugs, such advertising properly belongs only in medical and professional journals.

Billions of dollars are spent each year on television and print media ads. These enormous costs are reflected in the price of the product. Direct to Consumer (DTC) advertising of prescription drugs should be banned. The United States and New Zealand are the only countries that permit DTC advertising of prescription drugs -- and prescription drugs in New Zealand are heavily subsidized by the government (and, as an indirect result of DTC advertising, so are pharmaceutical companies). Drug prices in most other countries are about half those in the United States.

But the most damnable outrage is the Medicare Modernization and Improvement Act prescription drug language which prohibits our government from negotiating prescription drug prices! You can bet that it was the drug companies that wrote that provision into the bill. Representative Billy Tauzin, former Republican chairman of the House Commerce Committee, was one of the major architects of that Act. That provision alone has cost taxpayers untold billions of dollars. Shortly after passage of the bill, Rep. Tauzin resigned from the House of Representatives and took a position as President of the Pharmaceutical Research and Manufacturers Association -- at a salary of $2,000,000 a year (plus perks).

The pharmaceutical industry does not need any more protection -- it needs less! It is the drug consumer who needs protection from drug companies. It’s time to rein in the pharmaceutical industry drug cartel and their congressional co-conspirators.

Paul G. Jaehnert

Vadnais Hts., MN

What Kind of Family is Safest For Children?

The Fourth National Incidence Study of Child Abuse and Neglect, presented to Congress last year, deserves more publicity and attention than it has received so far.

Covering the years 2005-6, it showed that children living with two married biological parents had the lowest rate of overall harm, at 6.8 per 1,000. This rate differs significantly from all other family structure and living arrangements. Children living with only one parent in the household had the highest incidence of Harm Standard Maltreatment at 57.2 per 1,000. That’s eight times higher than the traditional family!

For “All Abuse,” the figures are 2.9 v. 33.6 (eleven times higher!)

For “All Neglect,” the figures are 4.2 v. 27 (6.4 higher!)

Previous reports, which are issued about every decade, had never included data on family structure and living arrangement circumstances. We can thank Dr. Patrick Fagin, a member of the Research Advisory Group as well as the Director of Marriage and Religion Research at the Family Research Council, for insisting on this additional and significant information. Too often, when people talk about child abuse, one hears only the “party line” that most abuse happens “in the home,” “in “families,” as if all families were the same.

This report proves that families in which two natural parents are living with their own children are comparatively safe environments and that marriage is a protective factor in and of itself. Conversely, the most dangerous environment in terms of child abuse was found in homes where a single parent was living with a partner who was not the father of the child(ren).

A similar study, entitled “Broken Homes and Battered Children,” was conducted in England recently by Family and Youth Concern with similar results.

Richard O’Connor

Pearl City IL

Morrison City Council Notes

May 9, 2011 the Morrison City Council met at city hall. Seven city council members were present (Connelly-absent). Mayor Drey and all department heads were at hand.

Many minutes for many meetings were approved.

Public comments were taken. Harvey Zuidema stated that he was at a ball game at the Sport Complex that evening. He said a small child was hit with a foul ball from a diamond behind him. Also, a woman was hit really hard in a similar incident. He thought they should be taking preventative measures to correct this dangerous situation.

I stated the 6 new bike racks that were purchased in October are ready to be installed. They each hold 2 bikes, are decorative and will be installed on main street. No bikes can be ridden on main street sidewalks, so ride on the street and park in the new bike racks.

Newly elected officers were installed. They are Ron Kallermyn, Mike Blean, Leo Sullivan and, myself, Marti Wood. The outgoing council members were thanked and left the meeting. The new council members took their seats.

Sitting in the council seat, one of the items we voted on was a revision of the 2011-12 budget. The council had just passed the budget 2 weeks ago and decided not to put money in a fund for engraving the Veterans wall and discussed asking for donations for this. I am proud of our Veterans who fought for our freedom, but I didn’t think we are on solid ground yet with the budget. When Gary Tresenriter suggested we move $2,000 from the $40,000 budgeted for Harkness to a fund for engraving the wall in honor of our Veterans, I voted against it. The motion passed.

Several other items were up for discussion and vote. The United Methodist Church will be putting up new signage.

There will be another Building Code Informational meeting at the Library on May 17 at 7:00 pm to 8:30 pm.

Sitting on the council is a new challenge. I will do my best to represent the Morrison residents.

The next City Council Meeting is May 23, 2011 at City Hall. Hope to see a “full house”. We need all of you there.

A Morrison Taxpayer

Marti Wood

COMMENTARY

Defusing the Time Bomb in Springfield

By Larry Plachno

Recent national concerns have included pollution, the real estate market and unemployment. However, the latest new concern is over public employee pensions and it is affecting states and taxpayers all across the nation.

In past years our elected officials and legislators granted pensions to public employees that in many cases were well beyond what was available in the private sector. While well intentioned in many cases, these officials and legislators failed to realize that these costs would escalate in subsequent years and become a major financial burden on taxpayers and on the state budget. Those officials and legislators are now gone but their largesse remains and is now both a burden on taxpayers as well as a budget crisis for the State of Illinois.

This same crisis has cropped up in several states recently. The governor of Wisconsin made headlines when he met the problem head on. Massachusetts also recently had to deal with the same problem, although they made fewer headlines. So far, the Illinois answer to this budget crisis has been to ignore the problem and raise taxes in the recent lame duck session to put off making a decision.

The situation in Illinois is different because it is more severe than in most other states. Illinois currently has an $86 billion unfunded pension liability. This amounts to approximately $20,000 in debt for every Illinois household. A recent study by the Pew Center ranks Illinois’ pensions as the worst funded in the nation.

Illinois is in terrible shape. For years it has had a reputation for being anti-business and anti-jobs. It is rated 48 out of 50 states in job creation. Not only has business and jobs left Illinois but a recent report indicates that an Illinois resident moves out of the state every 10 seconds to live elsewhere.

A pension reform bill known as HB149 is now being debated in Springfield. It protects the vested plans of current retirees but helps the Illinois budget crisis by putting future public sector pensions in line with private industry. It is a major step forward in reducing the burden on Illinois taxpayers, treating public and private workers equally, and a major step forward towards reducing the economic problems of Illinois. It will hopefully help turn around the budget problems and the economic death spiral of our state.

Failure to take action can only mean higher taxes, less funding for essential government services and more businesses and people leaving Illinois.

Contact your Illinois legislators and encourage them to vote for HB149, to take a step towards pension reform, and to get our state back on the path to prosperity.

Tax Hikes are Coming … If Obama Gets His Way

By Dr. John A. Sparks

President Obama is now openly proposing tax increases on at least two important fronts as part of his “solution” to the growing debt crisis.

The president’s favorite approach is to talk about the “wealthiest Americans.” In his speech on April 13, he proclaimed that he will do away with the “Bush tax cuts” for the rich as soon as he has the opportunity. Just a week later, April 21, he said that wealthier taxpayers like him should be willing to pay “a little bit more” to prevent various social programs for the elderly and the young from being cut. Of course, this is his way of preparing high-earning Americans for a jump in their federal income tax rates. Apparently, he believes that they are not currently doing their part or paying their fair share.

Listening to President Obama talk, one would think that the present federal income tax system is a flat-rate system where everyone, no matter what their income, pays at the same rate. Of course, the current system is, and has been for a long time, a steeply graduated tax system where the highest earners pay at the rate of 35 percent on the topmost portion of their earnings while low earners pay at the rate of 10 percent. Now, Mr. Obama wants to push the highest rates even higher, to near 40 percent. President Obama believes, perhaps rightly, that soaking the rich will not hurt him politically.

But the president is targeting more than the wealthiest. In fact, in his desperation, he is apparently now prepared to impose heavier tax burdens on middle-income Americans as well. How? In a recent speech he stated that he wants to raise the “cap” on Social Security. The cap on Social Security taxes works this way: If an employee earns more than the cap (currently, $106,800) in a given tax year, Social Security taxes are not deducted from the amount of earnings over the cap. So, for example, if an employee earned $126,800 in 2010, he would pay 6.2 percent in Social Security taxes on the first $106,800, or $6,621.60. The employer would also pay 6.2 percent. On the overage—the $20,000 of income beyond the cap—neither the employee nor the employer would pay any Social Security tax.

However, if President Obama has his way and the cap is raised by, let us say, $20,000, to $126,800, the employee would shell out an extra $1,240 in Social Security taxes (6.2 percent of $20,000) and the employer would have to do the same. That is actually an increase, percentage-wise, of over 18 percent ($1,240 divided by $6,621.60) in Social Security taxes. Moreover, since earners in the $100,000 to $125,000 range are properly classified as middle income or high-middle income Americans, Obama would be breaking yet another of his “promises” not to tax the middle class.

Both these proposals ignore the fact that federal income taxes and Social Security taxes are only part of the total tax burden placed on productive Americans. Most have to pay state and local income taxes besides, and in addition to local real estate taxes.

Here is what we and our representatives should say to our president: no more tax increases in any shape, form or size! No more! No more!

— Dr. John A. Sparks is dean of the Calderwood School of Arts & Letters at Grove City College, Grove City, PA, where he teaches business law and U.S. constitutional history, and writes on a variety of economic and public policy questions. He is a fellow for educational policy with The Center for Vision & Values.

 

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