Tom Kacich: Jakobsson to push graduated income tax
There are plenty of hot topics headed for debate in Springfield this spring: more state budget cuts, pension reform, gay marriage, gambling expansion, restrictions on hydraulic fracturing.
State Rep. Naomi Jakobsson, D-Urbana, is tossing another incendiary issue into the mix: a proposal to scrap Illinois' 43-year-old flat-rate income tax in favor of a system of undefined but graduated rates.
Jakobsson is the chief sponsor of House Joint Resolution Constitutional Amendment 2, a remarkably concise piece of legislation. It eliminates two words from the Constitution's revenue article, adds 23 more and makes a huge change in Illinois income tax policy. Instead of the current 5 percent income tax that taxes everyone at the same rate, Jakobsson's amendment would move Illinois to a graduated, or progressive, income tax with the actual steps and rates to be set later by the Legislature.
Illinois is now one of seven states (including Indiana and Michigan) with a flat-rate income tax. Thirty-four have a graduated income tax. Nine — none of them in the Midwest — have no income tax.
Jakobsson and her crosstown colleague state Sen. Mike Frerichs, D-Champaign, have pushed a graduated income tax in previous legislative sessions. But this time the proposal may have legs: The recently approved state income tax increase expires for the most part on Jan. 1, 2015; the state is in desperate need of more revenue (or billions of dollars in cuts); and Democrats have overwhelming majorities in both houses as well as the governorship. It's probably now or never for a progressive income tax.
Jakobsson, now in her sixth term in the House, said she favors a graduated tax for two reasons.
"You've heard me say before that we really need to change the way our tax structure is if we're going to address our revenue situation. We're a wealthy state and a pretty low-taxed state," she said.
Indeed, even in last fall's re-election campaign she pushed the idea in candidate questionnaires and in a debate with her Republican opponent, Champaign businessman Rob Meister.
"The main purpose of the amendment is that our tax code is unfair," Jakobsson said in an interview last week. "Other state and local taxes are certainly regressive. Our flat tax doesn't provide enough revenue to operate the state and pay back our unfunded liability. I think this is a way to help the state move in a direction to have additional revenue and to meet our obligations, both the past ones that are still unfunded, and current and future obligations."
Jakobsson insists that most Illinois residents would pay less with a graduated income tax, even though she doesn't know what the rates would be or how they would be split.
"We ran some numbers on the 103rd District (the Champaign-Urbana district she represents) and most people in the 103rd would see their taxes go down. Some of the higher-income people would see them go up, but that's what graduated means," she said.
Asked if the switch from flat tax would mean that wealthy residents would leave Illinois, she said simply, "I don't think so."
Republicans and many interest groups would, of course, dispute that. Jakobsson, however, even hopes to get some Republicans behind her plan.
"I would think that as people get more understanding of what it would do, when people find out that it would provide income tax relief to the lower- and middle-income ranges of the Illinois population, that people put their partisanship aside and think about their constituents," she said.
The proposal, she admitted, is "open-ended." No revenue goal is established. No tax rates are suggested, not even a top rate.
"I didn't state it because I thought that should be part of the General Assembly's role in this," she said. All of those figures would be set by the Legislature in 2015, should lawmakers approve the amendment and voters OK it at the November 2014 election.
"It takes a lot of people to be on board," she acknowledged. "It shouldn't be taken lightly, to change the Constitution. But it has been done in the past.
"I anticipate it is possible it will get put off a year (to 2014), but in any case it's going to take a lot of education for the general public to understand what this is about. If it happens this year, that would be wonderful, because then we could move on to educating the public on why to vote for it. But I think it will be a process that will take some work not only with the public but with my colleagues."
Since the Illinois Constitution was adopted in 1970, it's been amended 11 times. On eight other occasions amendments failed. But perhaps no other amendment was as controversial as this one.
"I haven't begun to work it really hard, but I do have a chief co-sponsor already (Rep. Linda Chapa LaVia, D-Aurora) and when we're in Springfield and I'm talking to my colleagues, I'll certainly try to encourage them," she said.
Rep. Barbara Flynn Currie, D-Chicago, the No. 2 Democrat in the House, "was a sponsor before so I am hoping she will be again," Jakobsson added.
Just because Democrats alone approved the last income tax increase bill and are a strong majority now doesn't mean the graduated income tax plan will pass, she said.
"It might help, but just because you have a majority doesn't mean that you're going to see those votes along the same line all the time," Jakobsson said.
Disabled list. Jakobsson may be at a bit of a disadvantage trying to pick up votes in Springfield for the next few months. She broke her right ankle and twisted the other in a fall at her Urbana home on Jan. 16. Doctors say it will take at least eight weeks to recover.
Her Springfield office is in the Stratton Office Building, across the street from the Statehouse. It's an enclosed walk when using the tunnel that connects the buildings, but it's still a good hike.
"But I do know where there are a couple of elevators," she said, joking. "I'm hoping I'll be able to manage it."
Tom Kacich is a News-Gazette editor and columnist. His column appears on Sundays and Wednesdays. He can be reached at 351-5221 or at email@example.com.