Over the next nearly 17 months, Illinois Democrats will try to persuade voters to profoundly amend the Illinois Constitution. Call their proposal the “Pritzker Tax,” placed on the Nov. 3, 2020, ballot thanks to exclusively Democratic votes in the spring session of the General Assembly.
The change hasn’t gone well for Connecticut, where progressively higher income and property taxes drive residents to other states. We suspect the change would be every bit as counterproductive in Illinois, which has lost population for five straight years. As young people abandon this state or don’t return here to start families and careers, the Illinois Exodus is intensifying. That leaves fewer people working and paying taxes to Illinois’ state and local governments. Every time a taxpayer departs for Florida, Tennessee or Texas, the tax burden on those of us who remain grows heavier.
For the first time since Connecticut in 1996, an American state would switch from a flat income tax to a graduated tax scheme. Meanwhile, North Carolina and Kentucky have gone the opposite direction. to flat taxes: If you earn five times what your neighbor earns, you pay five times as much to the state. And in 2018, Colorado voters rejected an amendment to convert from flat to graduated.
So each of us should think skeptically, not reflexively by political tribe, about what the Pritzker Tax would do to Illinois. Six reasons — for now — to vote it down:
The pols don’t deserve more of Other People’s Money
Recall how candidate Lori Lightfoot pledged to wring spending from City Hall before asking Chicagoans to pay higher taxes. In Springfield, by contrast, annual budgets blithely rise, so taxpayers should blithely pay more, right? Pritzker’s Democrats haven’t done the hard work to earn more of Other People’s Money. They didn’t make even a phony show of trying to economize. Remember those news stories about Dems’ agency budget cuts, greater outsourcing and their other spending reforms? Neither do we.
Yes, the Democrats feel they must placate the government employee union leaders whom ambitious streamlining would aggrieve. But by advocating for more income tax revenue, Democrats who rely on labor for campaign support seek to make their problem the taxpayers’ problem: Tax rates now on the table would extract an additional $3 billion a year from the private sector to placate workers in the public sector.
Retailers call it a “loss leader,” the low-priced item that attracts customers who often wind up buying high-priced items. The baited hook here is that, at least initially, the Pritzker Tax will hit only the high-income 3%; the rest of us will see slight tax decreases. Maybe, at least initially, the math works. Maybe, at least initially, that pledge will sucker millions of voters into supporting graduated tax rates — just as the $9.99 toaster gets people to shop at Biggy Bob’s Bargains.
We wish Pritzker & Co. had been forthright from the get-go: Deadbeat Illinois has $6 billion in unpaid bills, an unfunded pension obligation north of $133 billion, and we want to spend a lot more on programs our voters like. If taxpayers give us another $3 billion a year it’s, um, a start. But nowhere near enough. So you know what comes next.
Instead, the messaging is that the Pritzker Tax would be one-stop salvation. We thought we’d stepped into the Wayback Machine with Sherman and his dog Peabody when we read the words of Rep. Robert Martwick, a Chicago Democrat who sponsored the measure: “This is reform. This is what we all come here to do: identify problems, find solutions. This is the solution for Illinois going forward.” Other Democrats went on and on about this shortfall, or that deficit or the other crying need that fresh buckets of money from the Pritzker Tax would ameliorate.
Look at the tax-hike marketing from — well, from any recent year. Always the promises:
Give us the tax hike, we’ll fix Illinois!
Except, today’s tax hike is tomorrow’s license to spend … more.
If they can legalize graduated rates, Illinois Democrats soon will have to come after middle-class taxpayers. The state’s obligations are set in concrete, and $3 billion annually won’t cover existing costs plus the new spending Pritzker wants.
We ask yet again: Democrats, your new tax rates are guaranteed to hit only wealthy people and spare the middle class for … how long, exactly? Because if voters approve the Pritzker Tax, you can raise rates on every one of us, as often as you like.
The beauty of the flat tax is that raising the rate on everyone at once is much harder politically than gouging only those 3-percenters. That’s the leverage you want all of us to surrender to you.
One solution to Illinois’ financial fiasco is hiding in plain sight: a constitutional amendment that would relax the constitution’s rigid pension clause. Benefits earned so far would be protected, but going forward, lawmakers could adjust such unaffordable guarantees as 3% compounded cost-of-living-adjustments.
When lawmakers want more money, their proposed amendment flies onto the ballot. But when taxpayers want to address pension crises? Democrats, you have about 11 months to put this proposed amendment, too, on the ballot. About 11 months to do what Pritzker said about his tax scheme: “Let the people vote.” On pension reform too.
We have mixed reactions, but as the 2020 election approaches, this taxing frenzy is a bad look for Democrats.
Yet those grabs are mere prelude to citizens’ vote on the Pritzker Tax. The ultimate aim is to make middle-class taxpayers soakable, from here to eternity. So getting voters to trust that this only punishes those rich swells is key. As we’ve been showing in this series — When taxpayers trust Springfield … here’s what happens — Illinois voters would be fools to think tomorrow’s “emergency” need for higher rates won’t obliterate today’s earnest promises. Let’s revisit Springfield’s Hall of Promise Breakers, lawmakers who assured voters that:
Illinois tollways will be freeways by 1973. (Promised conversion dates varied.)
The Illinois Lottery, authorized in 1973, will fund schools. (Instead, in a shell game, lottery proceeds get diverted).
The 1989 income tax surcharge is just temporary. (Made permanent in 1993.)
Gov. Jim Edgar in 1994 signs into law a plan to fix a $15 billion unfunded pension liability that Edgar calls “a time bomb.” (Lawmakers give themselves pension holidays and spend the money elsewhere. Taxpayers’ unfunded liability now exceeds $133 billion.)
The “College Illinois” program Speaker Michael Madigan helps pass in 1997 is guaranteed to pay for itself. (Unfunded liability now facing taxpayers: $501 million.)
In 2010, Gov. Pat Quinn says he won’t permit an individual income tax hike higher than 1%. In January 2011 he signs into law a “Quinncome Tax” twice that size.
In 2011, while legislating a 67% increase in the income tax rate, Democrats include a provision that by 2025, the rate will retreat to 3.25%. Democrats also promise that the tax hike will fix the pension system, eliminate overdue bills, boost Illinois’ economy, create jobs, end annual budget shortfalls and improve state bond ratings. (None of that happens.)
In 2017, lawmakers instead say they need much more revenue than the retreating tax rate gives them. So they raise the personal income tax rate by 32%, to 4.95%. Democratic sponsors say the spending plan should start paying down old bills and reduce costs in the pension system. (Instead …)
In 2017, lawmakers instead say they need much more revenue than the retreating tax rate gives them. So they raise the personal income tax rate by 32%, to 4.95%. Democratic sponsors say the spending plan should start paying down old bills and reduce costs in the pension system. (Instead …..
Voters, you’re free to believe that, sometime after Year One, lawmakers wouldn’t greatly expand the Pritzker Tax.
Gov. Pritzker and fellow Democrats, again, our suggestion to you:
Be honest. Admit to voters that for all your talk of “fairness,” you came up with this plan because you want private-sector workers and companies paying much more into your public sector.