Illinois politicians will continue to hail a progressive income tax as a quick fix to the state’s poor spending habits. Don’t be tricked.
Illinois is home to a few powerful interests who believe one problem is at the root of the state’s horrific finances.
It’s not the sinkhole of pension debt swirling beneath Springfield and communities across the state. It’s not the Illinoisans leaving – one every five minutes – to other states, taking their taxable incomes with them. It’s not the deck that’s been stacked against taxpayers for decades. And of course, it’s not that the state’s spending is out of control.
The problem, they say, is that Illinois does not tax its residents enough.
It’s a scary thought.
And without fail, the proposed solution to this non-existent problem is as follows: change the state’s constitution and pass a progressive tax hike.
As opposed to Illinois’ flat tax, where all earners are meant to pay an equal percentage of their income to the state, a progressive tax structure allows the state to set different tax rates for different incomes.
There would be arguably no bigger political victory for House Speaker Mike Madigan and his caucus. Every major Democratic candidate for governor – J.B. Pritzker, Chris Kennedy and Daniel Biss – has openly endorsed a progressive income tax as the solution to Illinois’ fiscal woes.
But Illinoisans of all political stripes should be holding out crisscrossed fingers en masse to ward it off.
But where did that idea come from? Why Illinois? And why now?
In the Land of Lincoln, the modern inception of this idea came from a little-known Chicago think tank backed by Illinois’ most powerful labor unions. It’s called the Center for Tax and Budget Accountability, or CTBA.
CTBA released a report in 2010 claiming: 1) The reason Illinois politicians can’t balance the state’s books is because residents don’t pay enough in taxes and 2) A progressive income tax hike is the solution to this problem. A subsequent report in 2012 made the same argument.
Also in 2012, a job posting by union groups sought candidates to direct a “statewide, three-year legislative and referendum campaign to amend the Illinois Constitution and enact a graduated state income tax.” That role was filled with veterans of the failed effort to recall Wisconsin Gov. Scott Walker.
The effort to enact a progressive income tax failed similarly.
But think of Pennywise in Stephen King’s “It.” The progressive tax appears in various forms. All are frightening and manipulative.
Illinoisans got a glimpse of that shape-shifting monster in 2014, when lawmakers attempted to implement a so-called “fair tax,” which they claimed would only hike taxes on the rich. The reality was the 2014 proposal would have increased taxes on anyone with more than $22,000 in taxable income.
And it reared its head in 2016, again in a different form.
Madigan’s assistant majority leader, state Rep. Lou Lang, D-Skokie, filed a bill containing a nearly $2 billion tax hike that more than doubled the top personal income-tax rate in Illinois, bumping it up to 9.75 percent from 3.75 percent.
It failed. One reason was that Illinoisans realized Lang was peddling snake oil. Progressive tax structures are a Trojan horse for middle-class tax hikes.
At the time, out of the 33 states that had a progressive income-tax system, 31 hit the middle class with a higher rate than Illinois’ 3.75 percent.
CTBA’s plan was dead. But things are different now.
The same forces behind the progressive tax rammed through a painful, record-breaking income tax hike this summer on all Illinoisans. That makes the progressive tax structure an easier sell, as politicians can claim they’ll reduce the tax burden on the middle class by increasing the tax burden on the rich.
Forget the fact that the state’s already losing high-income individuals by the truckload – Illinoisans need only look across the state border to see the term “rich” has been redefined to dip deep into the middle class.
The highest tax rate of 8.98 percent in Iowa applies to those earning more than just $70,785. The highest tax rate of 6 percent in Kentucky applies to those earning more than $75,000. The highest rate of 6 percent in Missouri kicks in on any income (after deductions) just over $9,000. And Wisconsin’s second-highest tax rate of 6.27 percent hits worker incomes from approximately $22,400 to $247,000.
Illinois politicians will continue to hail a progressive income tax as a quick fix to the state’s poor spending habits.
Don’t be tricked.