Analysis of GOP gubernatorial candidate Bruce Rauner’s ‘Bring Back Blueprint’

Illinois GOP gubernatorial candidate Bruce Rauner released yesterday another portion of his “Bring Back Blueprint,” acknowledging Illinois’ jobs crisis and identifying many of the pain points that make Illinois the lowest performing state in the Midwest, economically. The Illinois Policy Institute has reviewed Rauner’s proposal, and while the plan is not perfect, it addresses many...

Illinois GOP gubernatorial candidate Bruce Rauner released yesterday another portion of his “Bring Back Blueprint,” acknowledging Illinois’ jobs crisis and identifying many of the pain points that make Illinois the lowest performing state in the Midwest, economically. The Illinois Policy Institute has reviewed Rauner’s proposal, and while the plan is not perfect, it addresses many problems and provides solutions to Illinois’ high unemployment rate and failing business climate.

Here’s our take on the Rauner campaign’s ideas:

Income taxes: The Rauner plan proposes rolling back the 2011 tax hikes that did so much damage to job creation in Illinois. Illinoisans were promised that their income tax rate would drop to 3.75 percent from 5 percent in 2015. Rauner appears to keep that promise in this plan, even taking it a step further by pledging that the state income tax rate will drop to 3 percent – the rate in 2010 – within four years, a policy we have long supported. The document stops short of specifically promising the rate will drop to 3.75 percent in 2015 as promised, likely because of the possibility that a lame-duck Illinois General Assembly could make the 2011 tax increase permanent before Rauner takes office. Keeping the promised tax-hike rollback for all Illinoisans is key.

Property taxes: The Rauner plan proposes freezing property taxes. This policy would provide some certainty and security to Illinois families who pay the second-highest property taxes in the U.S. And it’s not just homeowners; the single largest tax Illinois businesses pay is the property tax. Rauner’s proposed property tax freeze would help struggling families and job creators in Illinois. Beyond a freeze, the state should urge local government to start lowering property tax levies.

Workers’ compensation and lawsuit reform: Rauner’s proposals on workers’ compensation and tort liability reform would materially change the state’s competitive position. Illinois is the fourth-worst state for workers’ compensation and fifth worst state for tort liabilities. Both of these liabilities are huge business costs that are significantly out of line with the rest of the U.S., especially compared to neighboring Indiana. It’s good economic policy to provide fair protection for small businesses and their workers, rather than providing a revenue stream for trial lawyers.

Regulatory reform: The Rauner plan acknowledges that Illinois smothers small businesses with red tape. Illinois could start by mandating that bureaucrats become immediately responsive to business permit and licensing requests. Following the example of Phoenix, all levels of government should strive to respond to permit and license requests within one day. The Rauner plan should take another step to include repealing licensing requirements for low-income occupations. These requirements effectively prevent poor Illinoisans from going into business for themselves.

Cutting startup fees: The plan proposes cutting Limited Liability Company startup fees to be in line with corporate fees. That step would make it easier to start a business. The Illinois Policy Institute recommends the startup fee be reduced to $50 from $500, and the annual fee be reduced to $25 from $250.

Minimum wage increase: Rauner’s plan supports raising the minimum wage. The Institute has long opposed increasing the minimum wage. Illinois teens and unskilled workers are suffering under catastrophic levels of joblessness. Raising the minimum wage benefits the strong at the expense of the weak. When the minimum wage goes up, stronger workers get a pay raise. Less-skilled workers get laid off. Sadly, this issue is disingenuously, but effectively, used by progressives to mislead the very people they claim to want to help, thus making it a politically difficult issue in an election year.

Partial broadening of the sales tax base: Replacing taxes on work (income taxes) with taxes on consumption is a positive trend in state governance and a policy the Institute has long supported. Our position has been, and remains, that any increase in sales tax revenues resulting from broadening the tax base must be offset by a reduction in income taxes. Our ultimate goal is to eventually eliminate the income tax altogether. The nine states without an income tax far outperform the nine states with the highest income taxes. The Rauner plan calls for reducing the income tax rate back to 3 percent over four years. So long as a broadening of the sales tax only offsets this reduction from current law of 3.75 percent in 2015, then this is a step in the right direction. Should it be net revenue positive, then it would be a step in the wrong direction. The problem in Illinois government has never been a lack of revenue – it’s overspending.

Illinois Department of Commerce and Economic Opportunity (DCEO): The mission of the DCEO is to advance economic prosperity in Illinois, but the state has one of the highest unemployment rates in the nation and job recovery has been dismal, at best. Clearly, the DCEO is failing. The Illinois Policy Institute’s solution: stop throwing good money after bad and eliminate the DCEO.

The Rauner plan proposes shifting the DCEO toward a public-private partnership. It’s a positive trend being adopted by other states. However, our position remains that the government should get out of the venture capital business altogether. Public-private partnerships funded by private dollars can work, but Illinois tax dollars should not be allocated to any such effort when the state continues to operate at a deficit. One reason we remain skeptical is that the DCEO has historically been a conduit for crony deals and absurd handouts that have made the department the subject of the Illinois Policy Institute’s Piglet Book, which highlights millions of dollars in wasteful spending.