Jim Dey | Promised tax cuts for poor, middle class mostly illusory

Jim Dey | Promised tax cuts for poor, middle class mostly illusory

On primary election night in March 2018, Democratic gubernatorial nominee J.B. Pritzker stood before cheering throngs and laid out a series of campaign pledges to his supporters.

Among them was the following:

"Let's institute a progressive income tax, so we can lower the tax burden on the middle class and those striving to get there."

In essence, Pritzker vowed to take from the rich and spend the revenue raised on the poor. He further pledged to take less from the poor and middle class so they would have more money to spend on themselves.

Pritzker is clearly working hard to keep the first half of that promise. His progressive state income tax proposal, he asserts, will raise taxes on just 3 percent of Illinois taxpayers — those making above $250,000 a year.

But he's singing a different tune now than he was a year ago about tax cuts for the middle class and the poor.

He's urging the Legislature to put a constitutional amendment authorizing a progressive income tax on the November 2020 ballot. But while his proposed tax increases on upper-income earners are substantial, his cuts on those earning up to $100,000 are negligible.

Further, Pritzker has proposed a series of other tax increases that will be much more difficult to afford for lower- and middle-income earners than upper-income earners.

Pritzker's proposed increases include an array of sin taxes voters have traditionally not cared much about. They include increases on cigarettes, e-cigarettes and video gambling and fees on pending proposals for sports gambling and recreational marijuana.

Dramatically higher gasoline taxes and vehicle fees will be particularly painful for low-income motorists. Meanwhile, his proposed plastic bag tax will be a minor, but continuing, irritant to shoppers.

Then there are the taxes imposed on businesses that will be passed on to consumers.

They include a tax on Medicaid providers that will be spread across managed care programs and then on to consumers through higher premiums. He also is planning to cut reimbursements to retailers for collecting sales taxes, a move that will cost them an estimated $133 million they'll have to make up somewhere else.

Pritzker's progressive income tax amendment seeks what amounts to a blank check from voters — the power for legislators to set multiple tax rates at any levels they wish.

That's why whatever legislators say now about what they'll do when they have the authority to set progressive rates represents promises easily broken.

Pritzker and Democrats have promised voters they'll tax only those Pritzker has described as "millionaires and billionaires" while cutting rates for everyone else.

But progressive tax rates approved by the Senate include only two reductions from the current flat 4.95 percent tax rate. Those earning up to $10,000 would pay 4.75 percent — a reduction of 0.20 percent. Those earning up to $100,000 would pay 4.90 percent, a reduction of 0.05 percent. He also has proposed some minor breaks for property tax and child deductions.

Meanwhile, rates on those earning $250,000 a year and above would jump three levels — to 7.75 percent, 7.85 percent and 7.95 percent.

It's non-income tax hikes where Pritzker targets everyone.

The governor hopes to break new ground, creating a first-in-the-nation statewide plastic bag tax that could be anywhere from 5 cents to 10 cents per bag.

But he's also targeting old standards.

Senate President John Cullerton recently urged increasing cigarette taxes by $1 per pack, dwarfing Pritzker's proposed 32-cent per pack increase.

Pritzker's on board with a 25-cent a gallon hike in gasoline taxes that would be accompanied by boosts in vehicle registration fees.

He already has plans to spend tax money that would be generated by non-existent programs — sports gambling ($200 million) and recreational marijuana ($170 million).

All told, Pritzker's proposed tax increases would produce an estimated $4.5 billion. Much of it — $3.4 billion — would come from, if it passes, the progressive income tax that would take effect Jan. 1, 2021.

Clearly, that's targeted at upper-income earners. The rest falls most heavily on Joe and Jane Sixpack because folks like them vastly outnumber the Pritzker's millionaires and billionaires.

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

Sections (2):Columns, Opinion
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