Jim Dey | Tax cat has caught Pritzker's silver tongue

Jim Dey | Tax cat has caught Pritzker's silver tongue

Democratic gubernatorial candidate J.B. Pritzker, turning traditional political tactics upside down, has been but nothing but forthright about his plans to raise state income taxes.

That's why he has a hard time understanding why reporters keep pestering him on the subject.

"I've been clear about what the principles are for a fair tax system," Pritzker said during a recent Q&A session.

At the same time, Pritzker has been consistently and intentionally unclear about the tax rates he'll propose.

Indeed, to hear Pritzker tell it, he has no idea and just can't discuss it until after he's been elected the state's chief executive. Then, he said, he'll initiate negotiations with Democratic legislative leaders — House Speaker Michael Madigan and Senate President John Cullerton.

Well, reporters ask, what would your opening proposal be in this forthcoming negotiation? Pritzker said he can't discuss that either.

The ongoing cat-and-mouse game between reporters, who are seeking information, and Pritzker, who is withholding it, has moved the tax issue up near the top of the campaign debate.

Recent headlines illuminate the controversy.

"J.B. Pritzker Proposes Tax Hikes, Refuses to Reveal Entire Tax Proposal," ran one.

Republican Gov. Bruce Rauner, who opposes another state tax increase, has criticized Pritzker for refusing to be specific. So have a chorus of Republican legislators who are trying to carry underdog Rauner first across the finish line.

"Be honest with Illinois citizens, don't dodge. Double-talk is over. Illinoisans must know what your intentions are before you ask for their vote," House Republican Leader Jim Durkin told Pritzker.

Don't hold your breath waiting for Pritzker to come clean. It's not going to happen.

Short of the being waterboarded, he won't reveal any details.

But there's room for informed speculation inside Pritzker's information vacuum.

Here's what's known — it's a tale of two Pritzker tax plans.

Pritzker has proposed legislators put on the 2020 ballot an amendment to the Illinois Constitution that would replace the current flat tax mandate with a progressive income tax.

If voters approve it — a shaky proposition, at best — the governor and legislators could impose escalating levels of taxation on rising levels of income.

But that prospect is at least two years away, and Pritzker wants more revenue now. So, in the interim, Pritzker has said he wants to increase the state's current tax rate from 4.95 percent to an undisclosed level to generate revenue to support his social justice spending plans, which include a state universal health care program that would cost billions of dollars.

The state's flat income tax rate was 3 percent in 2011. That's when Gov. Pat Quinn and the Democratic Legislature raised it to 5 percent — a 66 percent increase. Quinn wanted to keep the rate at 5 percent, but Madigan hoped to force Rauner to request a tax hike. That's why Democrats allowed the tax rate to fall back to 3.75 percent on Jan. 1. 2015, just weeks before Rauner's inauguration.

But Rauner declined to ask for more revenue unless legislative Democrats approved spending and budget reforms, something they refused to do. Finally, after a two-year budget battle, Democratic legislators in 2017 passed over Rauner's veto a second income tax increase — this time from 3.75 percent to 4.95 percent.

That's two increases since 2011 — one a 66 percent increase and the second a 32 percent increase.

Given Pritzker's appetite for new revenues and past tax hike precedents, wouldn't he naturally seek to increase the flat rate to something substantially over 5 percent and, perhaps, close to 6 percent?

News reports indicate that the 2017 hike — a jump of 1.2 percent to 4.95 percent — produced $5.6 billion in new revenue.

With the state's unpaid bills standing at nearly $8 billion, state pensions underfunded to the tune of $130 billion and the state's budget perpetually running multibillion-dollar deficits, Pritzker will need a major flat tax hike to meet those obligations as well as pay for the social programs he's proposed.

Hikes in the flat tax, however, are politically dangerous because they hit virtually everyone. A variety of rates provide better cover.

That's why Pritzker insists his progressive tax plan will require "people like Bruce Rauner and me to pay a slightly higher rate."

The problem, of course, is that there aren't enough multimillionaires like Rauner and multi-billionaires like Pritzker to generate the revenue Pritzker desires.

He's said his multiple rates will be designed not just to tax the super-rich but also cut taxes for "people in the middle class and those who are striving to get there."

That approach doesn't compute unless the Pritzker administration comes up with elastic definitions of what a rich person's income level is.

In discussing his ideal progressive tax plan, Pritzker has cited high-tax states like "New York and California and Minnesota" that have "created lots of jobs."

California has 10 tax rates, including 6 percent for a single person with a $30,000 income, 8 percent for a $41,600 income and steadily up to 13.3 percent for an income over $1 million.

New York has 8 tax rates, including 5.9 percent for a single person earning $13,900, 6.45 percent for an income over $21,400 and steadily on up to 8.82 percent for incomes over roughly $1.1 million.Minnesota has four rates including 7.05 percent for single earners over $25,300, 7.85 percent for an income over $83,400 and 9.85 percent over $157,000.

All those rates are significantly higher than Illinois' current flat rate, explaining why Pritzker won't discuss specifics.

So far, his strategy of keeping his mouth shut is working well. Pollsters say Pritzker is the clear favorite in the Nov. 6 election.

He'll continue to hold frontrunner status unless and until the GOP finds a more effective way to let taxpayers know what Pritzker has in store for them and their wallets.

Jim Dey, a member of The News-Gazette staff, can be reached by email at jdey@news-gazette.com or by phone at 217-3513-5369.

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