Contact: Greg Blankenship | 217.544.4759 | greg@illinoispolicyinstitute.org
EMBARGOED UNTIL 10:30AM CST July 11, 2005

THINK TANK STUDY CHALLENGES WOULD BE
EDUCATION FUNDING REFORMERS
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(Springfield, Ill.) The Illinois Policy Institute today released a new report that challenges the efficacy of so called “ education funding reforms.” “A Critical Analysis of Education Funding Reform” measures the economic impact of lowering property taxes in exchange for higher income taxes and refutes assertions that inequalities in funding are hurting Illinois’ kids.

In the spring legislative session proponents of higher income and sales taxes in exchange for property tax relief failed to win passage nearly $7 billion in income and sales tax hikes in exchange for roughly $3 billion in property tax relief. These same proponents have vowed to push a compromised version of there tax swap – House Bill 755 – which proposes to hike income taxes by 67 percent and provide 30 percent property tax relief. Unlike previous tax hikes, this bill is specifically targeted at education spending.

The Illinois Policy Institute’s analysis found that the proposed tax hikes would have a very detrimental impact on the state’s ability to create wealth. The Institute used the Illinois State Tax Analysis Mapping Program – a computer generated model of the Illinois economy – to measure various tax swap proposals including the compromise bill, HB 755.

HB 755 would cost the state nearly 134.000 jobs over a five year period; would result in 1.7% dip in Gross State Product and shrink statewide disposable income by nearly $7 billion. “If you want less of something you tax it,” said Illinois Policy Institute director, Greg Blankenship. “Higher income tax rates on labor mean fewer jobs, lower growth and less money for workers.”

The report also found that by shifting the education purse string to Springfield inevitably local control of public schools would be lost to Springfield. Additionally, the report counters a number of assertions made by proponents of HB 750/755, thereby undermining many of tax swaps supporters’ key arguments:

  • more money for schools does not correlate with educational achievement
  • That inefficiencies in the state education spending means that fewer tax dollars are being used in the classroom
  • Illinois is not a “low tax state”
  • Increasing funding is not “reform”

“A Critical Analysis of Education Funding Reform” concludes that, “instead of talking about Education Funding Reform we should be discussing education reform period. Were we to enact reforms that made a serious attempt at efficiency in the public education system, only then should we consider funding increase. Reform though is the one thing that tax swap proponents are not serious about.”

About the Institute
The Illinois Policy Institute is a state based free market oriented think tank in Springfield, Illinois. The Institute's mission is to preserve and strengthen critical societal institutions in Illinois. The Institute does this through the promotion of free markets and limited government via rigorous research, writing and debate. Organized as a tax exempt not for profit corporation under 501c(3) of the Internal Revenue Code, the Illinois Policy Institute engages in non partisan public policy education and research.

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