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Illinois is a lost cause, unless…

…unless the economic, backbreaking trend of out-migration and subsequent revenue loss is turned around and turned around fast. As Michael Lucci of Illinois Policy Institute points out in his illuminating article, the food stamp rate is rising faster than employment in Illinois.

And the Land of Lincoln “lost 1 resident and $50,000 in taxable income every 7 minutes in 2013.”

So, what’s up?

What’s up is that both sides of the aisle and the second floor in Springfield have it all bassackwards. Raising taxes won’t fix anything — it’ll just make things worse.

History does repeat itself.

Slashing governmental expense and taking an axe to tax-supported handouts while vastly improving and increasing the job climate (i.e. tax revenue) is the only answer to reversing the great sucking noise that is the downward spiral of Illinois’ economy.

Here’s an edited version of Lucci’s story:

Illinois lost 1 resident and $50,000 in taxable income every 7 minutes in 2013
By Michael Lucci

Illinois lost 81,000 people and $4.1 billion of annual taxable income during the 2013 tax year on net, by far the worst loss Illinois has ever seen, according to newly released IRS migration data. This amounts to losing one resident and $50,000 worth of annual taxable income every 6.5 minutes. The IRS data compare where taxpayers filed tax returns in spring 2014 with where they filed tax returns in spring 2013.

Illinois is also home to the worst employment recovery in the country since the Great Recession, and is the only state in the region where more people have begun receiving food stamps than have started jobs since the Great Recession ended.

Out-migration from Illinois has spiked as taxes have shot up and job creation has faltered. During the first three years of Illinois’ 2011 income-tax hike, Illinois lost increasing numbers of people and income:

2011: 49,728 taxpayers plus dependents and $2.5 billion of annual income
2012: 66,922 taxpayers plus dependents and $3.8 billion of annual income
2013: 81,117 taxpayers plus dependents and $4.1 billion of annual income
Illinois lost one person and $48,000 of annual income on net every 10 minutes in 2011. By 2013, that rate had accelerated to one person and $50,000 of annual income every 6.5 minutes.

All told, Illinois sustained a net loss of 200,000 people and $10.4 billion of annual taxable income from 2011-2013. That makes the first three years of the record 2011 income-tax hike Illinois’ worst three years ever recorded for loss of taxable income.

The IRS numbers paint a dismal picture for Illinois:

1. Illinois lost a record number of taxpayers, dependents and annual income in 2013.

During the 2013 tax year, Illinois sustained net losses of 38,600 taxpayers, 81,100 taxpayers plus dependents, and $4.1 billion of annual adjusted gross income.

2. The average income of people who left Illinois in 2013 was $13,750 higher than the average income of people who entered Illinois.

Not only is Illinois losing more people than it gains, but the people who move out make a lot more money than the people who move in.

3. Illinois lost state-to-state migration battles with 45 of 50 states, plus Washington, D.C., in tax year 2013.

Texas’ strong jobs growth and lower cost of living attracted more Illinoisans than did any other state – the Lone Star State gained a record of nearly 15,000 Illinoisans on net in 2013. The other states to which large numbers of Illinoisans flocked were primarily warmer states and neighboring states with better jobs growth.

4. Illinois lost migration battles with every neighboring state and every state in the Midwest.

Illinois’ regional migration losses prove that Illinoisans are heading for states with better economic climates and job opportunities, not just warmer weather. Even Rust Belt states like Michigan and Ohio, which have lost people to Illinois in the past, now gain Illinoisans every year.

5. Illinois lost annual income to 43 of 50 states, plus Washington, D.C., in tax year 2013.

Illinois lost annual income to a vast majority of states because its residents are pursuing better economic opportunities elsewhere.

However, higher-income Illinoisans move for a variety of reasons, and therefore, Illinois’ migration of income does not perfectly align with its migration of residents. For example, Texas ranks No. 1 in gaining people from Illinois, but ranks No. 3 in gaining Illinois income.

Illinois’ income-tax hikes would have encouraged higher-income earners to relocate to zero-income-tax states like Florida, Texas and Tennessee. And although states like Florida and Arizona do outpace Illinois in jobs and economic growth, the magnitude of income losses to Florida and Arizona are influenced in part by retirement migration, which is often higher-income migration.

Illinois’ migratory losses to Texas and California provide an interesting comparison. Both Texas and California have experienced a more robust economic recovery than Illinois, with Texas’ energy boom and broad economic growth outpacing California’s tech-driven growth. Texas is attracting Illinoisans through job creation at all income levels, which likely explains why the Lone Star State ranks No. 1 for gaining Illinoisans.

By comparison, one of the great success stories of the post-recession American economy is the growth of technology firms in Silicon Valley, along with related service providers. High-earning engineers and tech-sector workers have likely moved to California from Illinois,, which would explain why Texas gained more people from Illinois, but California gained more income.

The IRS data show that Illinois’ No. 1 budget problem is taxpayers fleeing the state, and that only structural economic reforms that lead to job creation can keep Illinois’ residents working and paying taxes in Illinois. The IRS data also reveal the folly of a state’s trying to tax its way out of its revenue problems. Gov. Bruce Rauner is demanding structural economic reforms because Illinois will never end its annual budget crises without sustained growth.

The alternative to Rauner’s proposal is to repeat the 2011 disaster: more massive tax hikes with no reform. This path leads inevitably to less economic growth, fewer jobs, more out-migration and even worse budget problems down the road.

Taxpayers move to where they can best fulfill their dreams, taking jobs and economic growth with them. Until Illinois implements structural reforms, taxpayers will continue to view the Land of Lincoln in the rearview mirror.

(Note: IRS migration data should not be confused with U.S. Census Bureau migration data. The IRS data are an important input for the Census Bureau’s data, but the census data usually show larger changes in the number of people moving. This is because IRS data capture only taxpayers and their dependents, while the Census Bureau also estimates the movement of people who are not filing taxes, such as new students out of college.)

The Illinois Policy Institute is an independent research and education organization generating public policy solutions aimed at promoting personal freedom and prosperity in Illinois. Its message is similar to that of The Civic Federation.

The problem is, however, no one — including the governor, the legislature and the business community — seems to be listening.

It’s time to rally the troops. Storm the barricades. Enough is enough.

9/11 Fourteen years later. Our flag is still there.

Fourteen years ago today, America was viciously attacked. Thousands lost lives. Thousands of others lost fathers, mothers, sisters, brothers, sons, daughters, grandfathers, grandmothers, countless relatives, dear friends and neighbors.

America could have lost her spirit — but, she didn’t.

Francis Scott Key’s immortal words are as true today as they were one hundred and one years ago when he penned the poem that became our national anthem. Tragedy had struck Fort McHenry in 1814. British terrorists were going to take down the new United Colonies. Throughout the night, the British cannonballs and muskets hammered the fort with its red, white and blue banner that flew above its walls.

In the morning when the smoke had cleared and the shelling stopped, the tattered flag still flew over the battered fort and the bodies of hundreds of brave colonists who were injured or gave their lives to make sure the young country would survivie.

A century after that great anthem was written, our flag is still there. Our enemies today are different from the ones who wore red coats and tricorne hats. Today’s threat comes from radical Islamists who have taken the vow of “death to America.”

The question is — how long will our flag wave over the land of the free and the home of the brave if we continue to bolster an enemy who has vowed to wipe Israel from existence, who wants to kill “all American infidels”?

It’s as though those in power have forgotten the lessons of 1814, ignored the lessons of the Great War, World War II and all of the “conflicts” since. Our flag still flies, but how long will she wave?

What if “Chuy” wins?

What seemed like one heck-of-a long shot a few months ago, now is getting traction. Jesus “Chuy” Garcia no longer is a dark horse to become the next mayor of Chicago. Some say he is locked in a dead heat to possibly upset the one-term incumbent, Rahm Emanuel.

High profilers in Chicago’s African American community are piling on to Garcia’s campaign, smelling the meat-a-cookin’ if their man pulls it off on April 7.

Defeated mayoral candidate Willie Wilson says he holds the cards to swinging the black vote to Chuy.

Wilson barely ran in the money in the general election, coming in third with a trifle under 11 percent of the vote, or a little more than 50,000 votes that represented nearly 22 percent of all votes cast, mostly in black wards. Still, that was impressive.

“I’ve been told whichever way I go, (his supporters will go),” Wilson told vet City Hall watcher Fran Spielman of the Chicago Sun-Times.

Wilson did not shrink from touting his strength in the black community in his interview with Spielman. “They’re waiting on me,” she said he said.

“It will be the tipping point. No doubt about it. This is the first time in history it’s ever happened,” Wilson added, talking about his influence over his supporters and “his churches.”

And I’m sure the Rev. Jesse Jackson is saying his followers are waiting on him as he’s photographed hugging a smiling Chuy along with Westside Congressman Danny Davis and others.

And we know, Jesse and Danny both have their “churches.”

However, other leaders in the black community, including many pastors with substantial congregations, are keeping their powder dry for now. They’re not so easily swayed.

But, wait a minute, Willie. This is Chicago. First time in history? Remember Harold? Remember Eugene? Remember Jane? First time for what?

And, what price did Garcia promise to pay for Willie’s endorsement?

Reopening closed schools, at what price? Getting rid of all red-light cameras, at what price? A guarantee to Wilson on the awarding of lucrative contracts, perhaps like concessions at O’Hare International Airport, at what price? And, again according to Spielman, being told “I have a direct line to him to advise him on some things,”  at what price?

Who knows what else was thrown in for Willie’s tipping point endorsement?

Wilson had vigorously peddled his tipping point power to both Chuy and Rahm. Word on the street says that what Wilson was demanding made Blago’s scheme (former Governor Rod Blagojevich who’s now doing time) look like peanuts. To which, I’ve been told, Rahm flatly said, “No way!”

With a little over three weeks before Chicago voters decide who has “tipping point” power in this city, a lot of questions remain:

  • Which candidate has the best chance of getting Chicago back on solid financial footing and not becoming another “Detroit”?
  • Which candidate can continue attracting international recognition for Chicago as truly a world class city and can play on the big stage?
  • Which candidate has drawing power for new business?
  • Which candidate has the kind of experience and vision to lead Chicago into the future?
  • And, which candidate has the best chance of bringing all Sides and neighborhoods of this great city together and not drive them further apart?

I’ve answered those questions for myself and I urge you to give them serious thought as well. No matter what your final answer is, most importantly exercise it in the voting booth April 7. You are the only one who has real tipping point power, so please use it!

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Run your home on a balanced budget? If so, Crunch this!

Most of us run our homes on a balanced budget – because we have to. Otherwise, bankers and debt collectors are breathing down our necks to make those payments, even at highly inflated interest rates.

Government, as we know all to well, dances to a different beat. The Fed prints more money or relies on other red ink absorbing tricks to stay afloat. The State of Illinois, on the other hand, raises taxes, lets bills slide at avalanche speed or stiff former employees’ hard-earned pensions. And we keep re-electing the same crew that’s sailing our boat over the fiscal cliff.

Look out below! Illinois is now only $8 billion-plus in the red.

But Crain’s Chicago Business, that now-you-hate ‘em now-you-love ‘em feisty business mag, is giving you a shot at bringing Illinois’ sinking budget back to the surface at  http://illinoisbudget.chicagobusiness.com/calculator — a crafty do-it-yourself state budget-balancer.

Give it a whirl. It may not be as hard as Springfield’s leaders try to make us think it is. Yes, we’ll have to do without some things. But Johnny can’t always play travel baseball or Susie might forego sleepover summer camp if we can’t make ends meet at home. Or maybe our kids will have to look at a local junior college instead of ivy-covered walls to further their studies.

Something’s gotta give.  What’s in Illinois’ wallet?

Prez O, How’s your tax planning for next year?

My wife and I are both basically self-employed. I consult and Karen is a real estate agent for Dream Town Realty, a cool, internet-savvy agency in metropolitan Chicago. As April 15th rolled around, we got socked pretty good by federal and state taxes. But, that’s to be expected, living in the land of the free and the home of the brave.

We heed the advice of our tax consultant, Bob Rounsfull & Associates, whose sharp pencil does a great job helping us understand and avoid the big tax hammer as much as possible.  But in Bob’s post tax-day blog that I received today, he points out how President Obama and his wife do it at 1600 Pennsylvania Avenue. Here’s Bob’s analysis:

“For 2013, the Obamas reported $608,611 in adjusted gross income. This included $400,000 for leading the Free World, $258,772 in book royalties, $11,462 in interest, and a whole $2 in dividends. They also reported $3,000 in long-term capital losses, with an additional $115,516 to carry over to future years or offset future gains. Of course, they enjoy some nifty tax-free perks, too — helicopters, airplanes, personal chefs and other staff. They also enjoy the use of a 132-room mansion in the heart of Washington, DC, which has been appraised at anywhere from $110 million to $302,021,348.

“On the “deduction” side, the Obamas stashed $50,000 into a retirement plan. (That should be reassuring in the event they can’t support themselves on the speaking circuit.) They also deducted $45,046 in mortgage interest, $63,305 in state and local tax, and a total of $150,034 in charitable gifts to 33 separate organizations. (The largest single gift, $103,871, went to the Fisher House Foundation, which provides free or low-cost lodging to veterans and military families receiving treatment at military medical centers.)

“The Obamas finished up with $335,026 in taxable income. The regular tax on that amount is $87,465, which is more than most voters make in a year. But they got whacked for another $21,221 in Alternative Minimum Tax, plus $6,930 in self-employment tax on the book royalties. Subtract $3,402 in foreign tax credits, and the total bill settles in at $112,214.

“What’s ahead for next year? Well, if the Obamas report the same income and expenses in 2013, they’ll avoid the new 39.6% bracket that kicks in for taxable incomes over $450,000. But they’ll lose 3% of their itemized deductions and 2% of their personal exemptions for each dollar of adjusted gross income over a $300,000 threshold. They’ll pay an extra 0.9% payroll tax on earned income over $250,000, plus a 3.8% “unearned income Medicare contribution” on their investment income.

“Presidents usually find themselves solidly in the “top 1%” that dominated the conversation in last year’s election. George W. and Laura Bush reported $784,219 in AGI in the fourth year of his presidency, including nearly $400,000 in interest and dividends. Bill and Hillary Clinton reported $1,065,101 in AGI in the fourth year of hispresidency, including $742,852 in Hillary’s book royalties that went to charity. And who can forget 1991, when George and Barbara Bush’s dog Millie “earned” $889,176 in royalties for “her” memoir, Millie’s Book? Of course, thebig money comes after leaving office — these days, Bill Clinton earns as much as $10 million per year from speaking.

“We prepare every return to stand up to the same level of scrutiny as the President’s. But we understand our real value comes from tax planning. And you don’t have to earn a presidential income to take advantage of our proactive approach. So call us when you’re ready to pay less!”

Thanks, Bob@rounsfull.com. I needed that!

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So, winter in Chicago’s hanging on like a bad cold!

And you feel like it’s a two-ton elephant sitting on your chest that isn’t about to get up.

And you think you might not be able to get your golf clubs out of the garage until July or August.

And you’re tired of running outside at the first glimpse of sunshine only to realize the wind chill is still below freezing.

Well, it is Chicago. And while you might be singing the Chicago Winter Blues a little longer, take a look at Eric Hines’ brilliant masterpiece of the most beautiful city in North America, thanks to Smithsonain.com. It’s bound to warm you up.

Amazing Chicago Timelapse Video | Smithsonian Magazine*

So your Caddie doesn’t matter?

I wouldn’t ask Tiger Woods this morning if your caddie doesn’t matter.

After leaving Augusta National with a late Masters’ charge boosting him no closer to another Green Jacket than fourth place Sunday, Tiger watched as his former caddie, Steve Williams, dished a resounding high-five on the 18th green as his latest employer, Adam Scott, drilled a 20-foot birdie to take a momentary lead in golf’s most prestigious outing.

It was the quiet, confident coaching from Williams, a New Zealander, to his young, fit pro, Scott, an Aussie, that helped him don the Green Jacket for the first time. Scott became the first Australian to win Masters’ glory after sliding in a winning 12-foot putt on the second playoff hole, past a valiant effort by Argentinian statesman Angel Cabrera, whose ball rested a half-a-roll short of continuing the competition.

As an old, late golf mentor of mine would have exclaimed, “jingle jangle!”

You’ve got to hand it to Scott to rise above what could have been one of his biggest mistakes if he ‘d canned Williams following Scott’s historic meltdown last year at the Open Championship. Though there was a lot of finger-pointing as Scott bogeyed the last four holes to fall to Ernie El’s victory, Scott kept Williams on his bag to make another run.

Even if Williams’ advice to Scott led to the younger Aussie’s 2012 colossal collapse in Lancashire, England, Scott was mature enough to know that his New Zealand caddie had a lot of pure golf knowledge to impart, despite knowing what came out of Williams’ mouth was not always the right stuff. He had been known to utter racist and defamatory comments on and off the course.

On what now is etched in Masters’ history as the defining putt of the 77th Tournament, the 32-year-old golfer turned to his 49-year-old caddie and asked for help.

“I said, `Do you think it’s just more than a cup?’ He said, `It’s at least two cups. It’s going to break more than you think,'” Scott later recounted. “He was my eyes on that putt.”

“The winning putt might be the highlight putt of my career,” Williams said later. “Because he asked me to read it.”

That’s quite a statement from a caddie who had been on Tiger’s bag for 13 majors. Now his advice was sought and he gave it. But not only did Williams give great counsel this time, Scott listened.

 

 

Hello Friends!

WelcomeWelcome to my new website for DRG & Associates, Ltd. I am pleased to have a platform to express thoughts and share interests. Please take a moment to look through our site and learn a little more about what DRG & Associates has to offer! Contact us with any inquires and we’ll get back to you in a timely manner!

Best regards,

Dave