The utter collapse of Illinois’ middle class

House Speaker Mike Madigan doesn’t care much for manifestos.

When questioned over the years on his policy positions, Madigan usually resorts to bromides about how he supports the Democratic Party and its fight on behalf of the middle class. (Please disregard the utter collapse of Illinois’ middle class under his reign.)

Because of Madigan’s distaste for policy principles, an observer of his more than 40 years in state government will find the speaker has taken a number of contradictory stances on a variety of issues. What do those positions have in common? Pursuit of political power.

One of those policy issues now becomes especially relevant: a massive tax hike.

Madigan has stared down Gov. Bruce Rauner for more than 700 days while the state has sputtered along without a budget, daring him to “make a deal” as the House refuses to pass a budget.

Rauner just blinked.

His administration gave its blessing to a GOP budget plan that includes the $5.4 billion tax hike Illinoisans first saw in the Senate’s failed “grand bargain.” Dubbed the “Capitol Compromise,” the plan starts with a 33 percent income tax increase, and contains new taxes on services such as Netflix, laundry services and more. Each Illinois household would eventually have to pay $1,125 in additional taxes annually under this plan.

What the GOP budget proposal lacks in spending restraint it makes up for in fake reforms: A four-year property tax freeze time bomb that doesn’t address bloated local contract costs; a four-year spending cap that does nothing to rein in core spending drivers; and unconstitutional changes to government worker pensions that keep in place the failed defined-benefit system.

The trap worked.

Madigan got his tax hike without any real medicine for Illinois’ fiscal sickness.

Perhaps the GOP needs a history lesson. Madigan is the nation’s most powerful state legislative leader and the longest-serving state House speaker in U.S. history.

And one of the ways in which Madigan asserted dominance in his early years as speaker was by blocking tax increases backed by Republican Gov. Jim Thompson.

“I am not in favor of raising taxes,” Madigan said in a 1985 interview.

“If the governor wishes to advance a proposal to raise taxes, then I think he should travel around the state and build a consensus for the tax increases and bring it back to the legislature.”

Four years later, Madigan put Thompson on the ropes by pushing for a small, temporary income tax hike in contrast to the governor’s desire for a larger, permanent hike.

“For the past two years, I have said Illinois does not need a 40 percent increase in taxes,” Madigan told the Chicago Tribune at the time. “The government of Illinois does not need to grow anymore.”

State lawmakers today should heed those words. Despite the crippling budget impasse, Illinois government is spending at record levels under a mix of court orders and consent decrees.

The Republican solution to this problem – devastating tax hikes – is baffling for a number of reasons.

Chief among them is the havoc it will wreak on households across the state. Illinois is home to a Depression-era economy that includes the worst personal income growth in the nation and anemic jobs growth. People are leaving the state in record numbers, and the No. 1 reason cited among those who want out is high taxes, according to a Paul Simon Public Policy Institute poll.

The GOP plan is also a political failure. Polling by Fabrizio, Lee & Associates conducted on behalf of the Illinois Policy Institute shows Illinois voters will not abide by an income tax hike, even if paired with a property tax freeze.

A tax hike would also cause a subtle but crucial shift in the political battleground – suddenly, a progressive income tax becomes an easier sell.

Right now, Illinoisans pay a flat rate of 3.75 percent regardless of income. Do the dirty work of hiking that rate and it becomes much easier for Democrats to run on promises of middle class tax cuts, while raising rates on wealthier Illinoisans.

Here’s the rub: Those rates for the rich quickly find their way into middle class wallets. Just look at Illinois’ neighbors. Missouri, Wisconsin, Iowa and Kentucky all have a progressive income tax. And in each of them, a worker making $50,000 pays more in state income taxes than the same worker in Illinois.

But no one seems to care about such things when you’ve got an election to win.

The Republicans behind the Capitol Compromise are playing with fire. And if they persist, the party and taxpayers will both get torched


Austin Berg
Senior Writer Illinois Policy

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