Jim Dey | With Democrats in charge, progressive-tax talks begin

Jim Dey | With Democrats in charge, progressive-tax talks begin

Politicians in the scandal-ridden state of Illinois are notoriously untrustworthy.

So it's ironic that state legislators next year (November 2020) probably will propose a state constitutional amendment that asks voters, in effect, "How much do you trust us?"

If all goes as Gov. J.B. Pritzker plans, the query will come in the form of a proposed amendment asking voters if they wish to replace the current flat-tax mandate in the Illinois Constitution with a progressive one that allows levying ever-higher tax rates on rising levels of income.

State Sen. Don Harmon, D-Chicago, this week introduced the legislation, which, for the time being, has been referred to the Senate Assignments Committee.

The proposal is simple, with the bill's synopsis explaining that it "removes a provision that provides that a tax on income shall be measured at a non-graduated rate."

The devil is in the details that will be discussed when and if the measure is approved by voters. That's when Pritzker and legislators will decide who will pay how much.

Pritzker has been nothing but elusive in terms of identifying the specific rates he wants. He has said repeatedly those details must be negotiated with the Legislature.

But it is clear that Pritzker, reportedly acting on the advice of former Republican Gov. Jim Edgar, refused to be more expansive on the subject because he wanted to avoid voter blowback during last year's election campaign as well as assure himself maximum flexibility in setting tax rates.

Despite his caution, however, Pritzker has placed himself in a rhetorical trick bag on the issue.

In attempting to defuse voter anger, Pritzker explained the tax as inoffensively as possible.

For starters, Pritzker has said he wants to raise tax rates on super-earners, citing himself and former Republican Gov. Bruce Rauner as examples of those who should pay more.

But Pritzker is a multibillionaire who reaps hundreds of millions of dollars in annual income from his own personal wealth and family trusts established by his super-wealthy forebears.

At the same time, Rauner, a self-made man, also reaps annual incomes approaching $100 million that are generated from his success in business.

Both men have filed statements of economic interests with the state outlining their personal holdings. They go on page after page, ad nauseam.

Clearly, there are only a relative handful of super-earners like them among the state's 12 million-plus population.

At the bottom end of the tax question, Pritzker has said he also wants to reduce the state's current 4.95 percent rate on middle- and low-income earners.

Those goals — increasing taxes at the very highest level and reducing them at the middle- and low-income levels — conflict with Pritzker's desperate desire to generate more income.

His ambitious social-welfare spending plans will cost billions of dollars in new revenue. But his stated goal of cutting taxes at the bottom would dramatically reduce the amount of revenue generated from raising taxes at the very top.

Given that reality, Pritzker will have little choice but to abandon his vague rhetorical commitments and embrace the flexibility he gained by refusing to discuss tax specifics.

State Rep. Jay Hoffman, a member of Democratic House Speaker Michael Madigan's leadership team, alluded to that after Harmon introduced his legislation.

Hoffman suggested higher rates would focus on "people who make over $1 million a year," although those high-income earners also make up a small percentage of the income-tax-paying population.

That means all the details will be in play if voters approve the amendment.

Proponents intend to wage class warfare in the upcoming campaign, arguing that it's time to squeeze the 1-percenters hard.

Opponents, however, have an equally strong card to play. They note the vast majority of taxpayers fall into the middle-income categories, leaving rapacious legislators no place else to go to generate the new tax revenue they want.

That's why state Rep. David McSweeney, R-Barrington Hills, who opposes the amendment, said a progressive income tax would "harm the middle class."

"There is a reason we don't see a tax rate schedule from those supporting a progressive income tax. They do not want voters to see exactly who the progressive income tax will affect. Do you really trust Illinois career politicians to set your tax rates?" he said.

Well, they set them now, and they've been steadily raising the flat income tax since 2011, when it was 3 percent, to where it is now, 4.95 percent.

But a flat tax requires legislators to apply the same rate to everyone, which they fear doing. A progressive tax allows them to pick and choose specific targets of earners for tax hikes, dramatically reducing the political risk.

Jim Dey, a member of The News-Gazette staff, can be reached at jdey@news-gazette.com or 217-351-5369.

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