Competing goals of budget reforms

February 18, 2014

Competing goals of budget reforms


The short papers in the Illinois Budget Policy Toolbox are intended to analyze the pros and cons of alternative tax and spending reforms that help bring the Illinois state budget deficit towards balance.

For any given amount of deficit reduction, those pros and cons normally involve other goals such as maximizing economic efficiency and fairness while minimizing bureaucratic costs and uncertainty about future tax liabilities for those who must make decisions about how much to work and invest. Often these goals are not consistent with each other, so policymakers in state government must make tradeoffs among them.

Regarding the sales tax, for example, economic efficiency is advanced by a using a broad tax base on all goods and services in order to apply low rates, while a fair distribution of the tax burden may require exempting necessities like food and medicine.

The best policy package is one that results from a process that recognizes all these goals and is aware of the tradeoffs, with conscious decisions about what is most important for the citizens of Illinois.


(.PDF 391.24 KB)

Research Area: Fiscal and Economic Policy

Policy Initiative: none