Thinking of moving to Illinois? Make sure you’re willing to hand over almost ¼ of your income to the state to cover unfunded pension liabilities. The GOP tax reform plan will most likely eliminate state and local tax deductions. Is this going to finally stoke the revolt against Springfield’s big government spending and corruption? After tax reform, what is the next big item Congress is going to tackle? Wall Street Journal Columnist, Senior Economist for CNN, and former Donald Trump advisor, Steve Moore joins Dan and Amy to discuss.
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Proft: Good morning...good morning, Dan and Amy. And uh...hold on a second here... Jacobson: Uh oh... Proft: Trying to get Steve Moore...NO RELATION! Don't hold him accountable. Jacobson: Do you need a minute? Proft: Yeah...why don't you guys pipe in Steve Moore, since I'm having technical difficulties. Moore: Good morning! Jacobson: Oh, hi Steve! Proft: Good morning, thanks for joining us. Moore: Good morning guys! By the way, did you see the editorial this morning in the Wall Street Journal? Proft: About Illinois driving people away? Moore: Haha..."Land of Lincoln turns into Land of Losers". It's sad, actually. It's really sad, and I would refer every one of your listeners, when they get into the office, to read that editorial. It just chronicles the absurdity of policies in the great state of Illinois and how...I didn't realize, by the way, 9% corporate income tax in Chicago. Proft: 9 and a half, to be exact. Moore: *laughing* NINE AND A HALF? It's like *static* our country. It's amazing that any businesses are located in Chicago, and it's a great great city. It's just a sad commentary. Proft: Just a couple of bullets from that, since you brought it up...yeah, a couple of bullets from that since you brought it up...Illinois' unfunded pension liabilities, according to Fitch, equaled 23% of residents personal income last year, compared to a median of 3 percent across all states, 1 percent in Florida. 7x, 22x in Florida. Moore: What that means for the residents of Illinois or anyone who would want to move into the state, you know, is the government would have to take a quarter of your income to be able to pay...just to pay the unfunded liabilities for the services that have already been provided. It just makes Illinois an extremely attractive place to be, and again I say that heartbrokenly because I love the state of Illinois, I love Chicago. But how could the policies possibly be worse? Jacobson: I know. And our property taxes too. I mean, I have to refinance because it's...it's too much. So our property taxes in Cook County and Chicago, collar counties, are the highest in the country outside of California and the northeast. So with this new tax plan, are we going to feel the brunt of this? Moore: Well, you know, Illinois is...well first of all, everyone in the country is gonna benefit from this tax cut. I think it's gonna cause an even bigger boon in the economy, the economy by the way is growing at 3 and a half percent according the latest Federal Reserve data and, you know, I think we're gonna get the 4 percent next year, which is something that Obama in 8 years never came close to. But Illinois is just, as you just said, it's a high property tax state. Say your income taxes are kind of average, but your property taxes are through the roof...there's a $10,000...amount...on there that you can deduct from your income ta...your Federal income taxes, for your property tax in Illinois. But most people in Illinois are way over $10,000, so you're going to lose that deduction, and unfortunately in high tax states, and unfortunately that's going to make Illinois even less competitive, and what that means what has to happen for Illinois to get back to normalcy is to, you know, march with pitchforks on Springfield, and get those people *static*, cut the expenditures, cut the pension liabilities...the same thing in Chicago, I mean it has to happen. Cause you're in a slow...what was just a slow drip decline is now a Niagara Falls. Proft: Well, you know, we need Michael Jordan to come back, like Charles Barkley came back to Alabama, and say "We need to stop looking like idiots here in Illinois!", and maybe that will help. Moore: Ha ha ha, that WOULD help. And I mean, I'm disappointed in the governor, I'm disappointed that he hasn't taken a harder line on stuff. Now, he's tried, he's fought like crazy... Proft: Eh...not really... Moore: ...and he's tried, but he's facing...a machine in Springfield, really. Dan and Amy, do people really understand how CORRUPT it is in Springfield? And you have these people that have been in charge, I think, since I was in HIGH SCHOOL! Jacobson: Oh yeah, Madigan...Madigan's been there what, 30 years, what...Dan? Proft: He's been in the General Assembly since the 1970s, Speaker for 34 years. So that's not enough of a probationary period. We're still waiting to see... Moore: A little more time, yeah. A little more time to see if he'll do things right. I've got two words for you guys; TERM LIMITS. Let's get some rotation in office, get some people who know something about how state, city is run, and you know look, I travel to Florida, I get to Texas, I travel to Utah, I go to Idaho, I go to New Hampshire, you know, states that are well run. I mean, Illinois is spending almost TWICE per person on state and local services what they spend, for example, in New Hampshire or Utah. And yet, New Hampshire, Utah, BETTER public services than Illinois. So what's going on here, where's that, where does all the money go? It'd be one thing if you spent more money on public services and you had great schools, and you had great roads, and great hospitals, and all this. Proft: Well, it's interesting... Jacobson: So where IS the money going? Proft: Well, it's a long story, but it's a kleptocracy with layers of Ponzi schemes, that's the short answer. But here, this is interesting...Steve, you travel a lot, but you're in this bubble of politics and policy. I was talking to a friend who travels about 15 states, he's got a region of 15 states, so he's in these 15 states all the time throughout the course of the year. And one thing that he noticed is that "in Chicago and Illinois, you guys talk more about politics then in conversations I hear in the other 14 states COMBINED." And you know what, what the reason for that is, my suggestion, is because when you are living in a government-centric society, like Chicago and Illinois is, of COURSE you're going to talk about government and politics because it has an outsized influence on your life, and that to me is one of the biggest indictments, and the most fundamental problem, in this state. Moore: Well, by the way...and you're exactly right...I was reading, or re-reading, an article that I mentioned, because you were talking about *static*, and how in the world is Illinois *static*ky and Missouri? I mean, c’mon...people are leaving Illinois to go to KENTUCKY? Proft: Yes! Moore: So what's wrong with that picture? Proft: Yes. They're going there to protect Rand Paul from his neighbors. Jacobson: Yeah, cause the grass clippings...which that fight was about, by the way. Proft: All right, so give us, uhh... Moore: Just gotta get the tax cut done! So I believe it will be next Wednesday, it will have passed through the House and the Senate. They're gonna have this conference, that will...they're gonna get the deal done by either tomorrow night or Friday, and then we're gonna get this bill! And I'm feeling very very confident about things, and I think the deal will be fine. I mean, they're working out some last-minute details...what's the corporate rate going to be, 20 or 21 percent, what are they going to do with the alternative minimum tax...the local tax deduction is going away, ladies and gentlemen. So it's a new reality for high tax states like Illinois. And this is going to be rocket fuel for the US economy, and the only question is whether Illinois will share in the benefits. Proft: So you're...just to be clear here...you're saying that a week from today, this goes to the President's desk? Moore: Well, probably...what's today, Wednesday...so probably...Thursday, I'm gonna say. A week from tomorrow. Jacobson: And then when they get back from the break, they're going to work on entitlement programs? Moore: Well, the next big...exactly, Amy. Let's *static* this moment, Amy! Umm, yeah, I think next year is Welfare reform. How do we get people off Welfare and into work? We did that in 96 under a Democratic president, Bill Clinton, and a Republican Congress. One of the most successful policies ever. By the way, Democrats...to mention Welfare reform to a Democrat is like putting a cross in front of a vampire, because the Welfare establishment hates that. But there's no argument for that anymore when you've virtually got full employment almost everywhere in the country, for people who are "Well, there's just no jobs for people!" There are jobs out there, everywhere I go I hear people tell me "We're looking for skilled people who could do the job, who could show up to work on time." We still have, what is it, 42 million people on Food Stamps, this is the EIGHTH year of recovery, cmon! If you get Food Stamps, you gotta work for it. If you're getting Medicaid, you gotta work for it. If you're getting, you know, public housing, you gotta work for it. I mean, we're a compassionate country, but we're giving people hand-UPS, not a handout. What do you think? Proft: Yeah, umm...right. "My brother's keeper", not a sugar daddy. Big difference. He is Steve Moore, Wall Street Journal columnist, senior economist for CNN, Steve thanks for joining us, appreciate it. Moore: Biggest tax cut since Reagan, baby! Proft: All right, mark Thursday, nick a week from tomorrow, thanks Steve. Jacobson: And he joined us on our Turnkey Dot Pro Answer Line.