Thursday, April 26, 2007

Games With Numbers

One of the wonderful things about numbers is the games you can play with them. They can be presented in so many different ways that you can tell just about any story you want to and find numbers to back it up.

This is particularly true about percentages. Going from 2 to 4 is a 100% increase. Going from 2 to 6 is a 200% increase. Going from 4 to 6 is only a 50% increase. And going from 6 back to 4 is a 33% decrease. The game is simple. If you want a large percentage to make your point, find a low number to start your comparison. If you want a small percentage to make your point, find a high number. And you don’t have to make up any numbers.

Which brings us to the gross receipts tax that has been called the largest percentage tax increase in any state in the last 10 years.

That is probably true, but true because Illinois starts from a base that is lower than 46 of the other 49 states.

Illinois is a low state when it comes to public expenditures. The latest available data from the Census and the Bureau of Economic Analysis (FY 2004) shows that total state and local government “general revenue from own sources” (which includes taxes, fees and interest, etc.,) in Illinois comes to $14.20 per $100 of personal income, well below $16.08 the mid point of all the states.

If the gross receipts tax is passed, total taxes will increase approximately $1.41 per $100 of personal income, bringing Illinois to $15.71, still in the bottom half of all the states, and below all of our neighboring states except Missouri.

If one is looking at “tax burdens” it is the total in taxes and fees that are paid that makes Illinois more or less competitive with other states. It will be the total that is factored into costs, not just one tax, or two taxes. When all taxes and fees are taken into consideration, even with adoption of the gross receipts tax, Illinois will be competitive.

And what the money will be spent on, an improved education system and universal health care coverage, will make Illinois more attractive as a place to live, to work, and to run a business.

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