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Illinois Lawmakers Boost Income Tax 67 Percent to Help Fill Gap - (www.bloomberg.com) Illinois lawmakers in the waning hours of their term passed a 67 percent income-tax increase, the largest in the state’s history, to help close a $13 billion budget deficit. The boost in the tax rate to 5 percent from 3 percent was approved by both chambers. Governor Pat Quinn, a Democrat, has supported an increase. A new Legislature will be sworn in today. The increase, intended to last through 2014, is aimed at fixing Illinois’s worst fiscal crisis, including a backlog of more than $6 billion in unpaid bills and almost $4 billion in missed payments to underfunded state pensions. The deficit amounts to about half of planned general-fund spending for this fiscal year, which ends in June. “The wolf is at the door and we have some very difficult decisions to make,” said Representative Gregory Harris, a Democrat from Chicago. Democrats in the House of Representatives passed the measure by the minimum necessary vote, 60-57, with no Republican support.
Businesses don't like increase , but neighboring states do - (www.chicagotribune.com) Illinois' current 4.8 percent corporate tax rate would go to 7 percent until 2015. While the size of the state corporate income tax hike ultimately was whittled down a bit, Illinois businesses still feel gored, and neighboring states began circling immediately to woo relocations. The 11th-hour modification "is a joke," said Ty Fahner, president of the Civic Committee of the Commercial Club ofChicago. "It's like saying I'm going to hit you hard, and now I'm going to hit you a little. I believe it's disingenuous and it puts Illinois in a terrible spot in terms of creating or keeping jobs here." The outcry by business leaders, and even Chicago Mayor Richard Daley, was not lost on neighboring states. "We won't be the only ones coming to poach companies out of your state, and I guess we'll be well-received by frustrated firms there," said Indiana Commerce Secretary Mitch Roob. Indiana Gov. Mitch Daniels joked that having Illinois as a neighbor "is like living next door to 'The Simpsons,' you know, the dysfunctional family down the block" during a chat this week on the Don Wade & Roma morning show on WLS-AM 890.
Strained States Turning to Laws to Curb Labor Unions - (www.nytimes.com) Faced with growing budget deficits and restive taxpayers, elected officials from Maine to Alabama, Ohio to Arizona, are pushing new legislation to limit the power of labor unions, particularly those representing government workers, in collective bargaining and politics. On Wednesday, for example, New York’s new Democratic governor, Andrew M. Cuomo, is expected to call for a one-year salary freeze for state workers, a move that would save $200 million to $400 million and challenge labor’s traditional clout in Albany. But in some cases — mostly in states with Republican governors and Republican statehouse majorities — officials are seeking more far-reaching, structural changes that would weaken the bargaining power and political influence of unions, including private sector ones. For example, Republican lawmakers in Indiana, Maine, Missouri and seven other states plan to introduce legislation that would bar private sector unions from forcing workers they represent to pay dues or fees, reducing the flow of funds into union treasuries. In Ohio, the new Republican governor, following the precedent of many other states, wants to ban strikes by public school teachers. Some new governors, most notably Scott Walker of Wisconsin, are even threatening to take away government workers’ right to form unions and bargain contracts. “We can no longer live in a society where the public employees are the haves and taxpayers who foot the bills are the have-nots,” Mr. Walker, a Republican, said in a speech. “The bottom line is that we are going to look at every legal means we have to try to put that balance more on the side of taxpayers.”
Germany and France want Portugal to accept aid - (news.yahoo.com) Citing Der Spiegel. Germany and France want Portugal to accept an international bailout as soon as possible in order to prevent its debt crisis spreading to other countries, German magazine Der Spiegel reported on Saturday. Without citing its sources, the magazine said government experts from both European heavyweights were concerned Lisbon will soon not be able to finance its debt at reasonable rates, after its borrowing costs rose at the end of last year.
Berlin and Paris also want euro zone countries to publicly commit to do whatever it takes to protect the bloc's single currency, including topping up a 750 billion euro ($968 billion) rescue fund if necessary.
For B. of A., mortgage ‘put backs’ aren’t over - (www.marketwatch.com) Bank of America Corp. unveiled a $2.8 billion deal with Freddie Mac and Fannie Mae on Monday that settles legal spats over losses on hundreds of billions of dollars in home loans that the lender sold to the government-owned mortgage giants. However, the agreement only deals with part of Bank of America’s exposure to mortgage repurchase, or “put back,” requests, according to analysts. The bank said it paid Freddie Mac $1.28 billion in cash on Dec. 31 to extinguish “all outstanding and potential mortgage repurchase and make-whole claims” from alleged breaches of representations and warranties on home loans sold by Countrywide Financial to Freddie through 2008. This covers 787,000 loans with a total unpaid principal balance of $127 billion, the bank noted. Bank of America also said Monday that it agreed to pay Fannie Mae $1.52 billion in cash. But this payment only deals with 12,045 Countrywide loans with about $2.7 billion of unpaid principal balance. It also resolves specific outstanding repurchase or make-whole claims, or extends the cure period for missing documentation-related claims, on another 5,760 Countrywide loans with roughly $1.3 billion of unpaid principal balance, the company noted. “We have largely addressed the remaining GSE repurchase exposure for legacy Countrywide and the other Bank of America entities,” Bank of America Chief Financial Officer Charles Noski said during a conference call with analysts on Monday.
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Import Prices in U.S. Rise 1.1%, Led by Fuels, Food - (www.bloomberg.com)
Rising Chinese Inflation to Show Up in U.S. Imports - (www.nytimes.com)
Fed’s Bullard Says Too Soon to Reduce QE on Improved Outlook - (www.bloomberg.com)
Mortgage applications increased last week: MBA - (www.reuters.com)
Housing’s Anemic Rebound to Give Little Boost to U.S. Economy - (www.bloomberg.com)
Fed Officials Signal Intent to Back Bond Buys . - (www.online.wsj.com)
Apple, Verizon Took Years to Clear IPhone Differences - (www.bloomberg.com)
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