Rauner Touts Right-to-Work Areas, Service Tax In Decatur Visit

Illinois Gov. Bruce Rauner says one of his priorities for his first year in office will be creating so-called "right to work zones'' in the traditionally union-friendly state.

The Republican disclosed his plan Tuesday during a speech in Decatur, a city with deep union roots.

Unions are on edge about what Rauner has in store for them. He has railed against “government union bosses,” and names Indiana's former Gov. Mitch Daniels as a political role model. It's Daniels who made Indiana a right-to-work state.

Rauner says that's not his plan for Illinois.

"I'm not advocating that Illinois become a right-to-work state. I do not advocate that. But I do advocate local governments, local voters, being able to decide for themselves whether to be right-to-work areas, right-to-work zones," the governor said.

Rauner says it would be a tool for communities suffering from high unemployment to create jobs, "so that we can compete with Indiana, and Michigan and Tennessee and Texas, that don't have forced unionization like we do here."

But unions are powerful in Illinois, and Democrats, who control the General Assembly, are sure to fight back. 

The governor also ran his campaign in part on a promise to overhaul Illinois' tax system.  He called the state's existing tax law "unfair" and "antiquated" - most of all, though, he said the tax code impeded businesses from growing, slowing Illinois' economic recovery.

Now that the state faces a $9 billion dollar budget hole next year, due in part to the sunset of a temporary income tax hike -- the expiration that Rauner had called for -- the governor and lawmakers must find other ways to make up the difference.

Enter taxes on services.

"The best way to grow an economy is to have a broad base for taxes and low rates," he said.  "We have a narrow base and high rates. That's counterproductive to economic growth."

Translation? Right now Illinois only taxes goods and not services. So, buy a new suit? You'll pay a tax. But get that suit tailored? That's tax-free.

Rauner had hinted at being open to service taxes before, but now seems committed to following other states' examples of taxing services from haircuts to oil changes.

However even expanding that tax base won't fill much of a hole in the state's budget gap.