Note to Illinois: Direct Democracy Does Not Produce Good Fiscal Policy


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In Illinois, Lt. Gov Pat Quinn and Cook County Commissioner Forrest Claypool are leading the charge to allow taxpayers to use the ballot to block local tax changes. Currently voters in the state don't have the power to decide tax questions through the ballot. But in response to the Cook County sales tax's recent increase to 10.25 percent, some now want the state assembly to give voters the power to stop tax increases by local governments.

To decide whether or not this is a good idea, one need only look around at the states that are already deciding tax issues via the ballot. One can look to Maine, where business interests are spending large amounts of money to convince voters to choose cheap beer over health care. Or look to Massachusetts, where some well-funded individuals have managed to secure a ballot question that would abolish the state's income tax, the source of 40 percent of the state's budget, without any provision to replace the money. Or look to the train wreck that started it all, California's Proposition 13, the infamous ballot referendum approved by the state's voters 30 years ago. One of the changes it made requires that the legislature approve any income tax increase by a two-thirds majority. Another provision limited property taxes to one percent of property's assessed value and limited increases in assessments to 2 percent each year. California's schools went from the best in the nation to among the worst as a result.

Why does direct democracy produce unfair tax policy? The answer is obvious. Every single state has people who are elected and paid to make policy decisions. It's their job. They are supposed to study up on issues, talk to the people who care about the issues, and make a an educated decision. Most of us don't have the time to put that kind of work into learning about public policy and formulating positions. That's why we pay our lawmakers to do it. If they do a good job we reelect them, if they do a terrible job we throw them out. Ballot referenda allow lawmakers to escape this responsibility by placing issues before the voters, who have not thought through certain intricate questions (like whether or not eliminating a state's income tax will make it impossible to pay for schools, health care and road repair).

As budget watchers have noted, the Illinois state government would probably not receive any awards for excellent fiscal policy these days. They will only make matters worse if they saddle the local governments with what is possibly the worst conceivable process for determining fiscal policy.

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