Illinois Comptroller Dan Hynes, running for governor against his fellow Democrat, incumbent Pat Quinn, is promising to raise taxes. What courage! He wants, unsurprisingly, to raise taxes on the rich, but is concentrating not just on raising the state’s 3% flat-rate income tax on high earners, but also wants to raise taxes on “‘luxury’ items, such as tanning salons, auto rentals, health clubs, pet grooming, limo services and dating services.”
Earth to Dan Hynes: Raising such taxes may take a few cents out of the hides of rich folks. But it will also put a dent in the businesses of people running and employed by tanning salons, auto rental firms, health clubs, pet grooming salons, limo services and dating services. And, as counterintuitive as it may seem, most of those folks aren’t high earners themselves. Many are just scraping by. (Do you know any rich health club attendants or pet groomers?) My guess is that they’re heavily concentrated in metro Chicago singles neighborhoods and that they have been voting heavily Democratic. But if Dan Hynes gets his way, they may not vote that way in the future.
Dan Hynes, who was born in 1968 and got into politics on his family name (his father was Cook County Assessor and Illinois Senate President), may not remember the congressional Democrats’ yacht tax. Senate Majority Leader George Mitchell, in an attempt to levy taxes on rich people, put in a tax on yachts—on large pleasure boats—as part of the 1990 tax increase he extorted out of the first President Bush. But guess what. Rich people figured out a way to avoid the tax. They stopped buying boats and spent their money on other things. Who got hurt? Not the rich folks who remained very comfortable. The people who got hurt were the nice people who build large pleasure boats, who happened to be heavily concentrated in George Mitchell’s home state of Maine. The Democrats repealed the tax and George Mitchell decided not to run for reelection in 1994. Republican Olympia Snowe won his seat, and she and Republican Susan Collins have won every Maine Senate election since, even as Maine has voted five times in a row for Democratic presidential candidates. Yes, there may be other reasons for Mitchell’s retirement (he’s been making a whole lot of money as well as conducting negotiations in Northern Ireland and the Middle East) and for Snowe’s and Collins’s victories (they have moderate records and are hard workers with attractive personalities), but the yacht tax still has lessons to teach. Even for hereditary Democratic politicians in Chicago.
