Editorial | Pritzker puts tax issue on table

Editorial | Pritzker puts tax issue on table

Democratic gubernatorial candidate J.B. Priztzker showed this week that he's not afraid to mention the "T" word in public.

With six months to go before Illinois' gubernatorial election, voters still have plenty of time to decide whether they want to give Republican incumbent Gov. Bruce Rauner another four-year term or opt for new executive leadership in the person of Democratic challenger J.B. Pritzker.

There are many issues that divide the two candidates. But the root of most of them goes straight to taxes and spending.

Although he could have been more forthcoming, Pritzker took a major step this week toward clarifying his solution to Illinois' financial woes — he re-confirmed that he believes the state does not generate sufficient revenue and that one of his proposed cures is raising state income taxes.

Pritzker included in his tax-hike plan allusions to simultaneous property-tax cuts and income-tax reductions for lower-middle and middle-class voters. But it was his embrace of plans to raise the state's income-tax rates that was strikingly candid.

Pritzker said he has a short-term plan and a long-term plan to increase income taxes. He declined to discuss specific tax rates and where and upon whom they would fall, but his acknowledgement of plans to increase the state's income tax during a political campaign was sufficient to draw public attention.

Ultimately, Pritzker said, he wants Illinois voters to adopt a constitutional amendment that would eliminate the state's constitutionally mandated flat income tax and replace it with a progressive income tax that levies higher percentage rates of taxation on increasing levels of income.

But Pritzker said that is a long-term solution because, assuming voters approve, it would take at least two years to pass and implement a progressive income tax. That's too long to wait because, Pritzker said, he wants additional revenues to fund existing programs as well as the new ones he's promised in the current campaign.

So, Pritzker said, as soon as he takes office, he'll urge the Democratic legislature to approve an immediate increase in the state's current 4.95 flat income-tax rate.

At the same time he's proposing an income-tax increase, Pritzker said, he'll urge legislators to increase exemptions and deductions to ensure that lower- and middle-income taxpayers would not pay more.

"... You could have what I would describe as ... an artificial progressive income tax in which we would raise the exemptions for those striving to get to the middle class, those in the middle class too, and raise the overall rate and raise the earned income tax credit at the same time — all of which would create a kind of artificial graduated income tax in the state," he said.

There is, of course, no guarantee that Illinois voters would be willing to approve a constitutional amendment on a progressive income tax. Putting it on the ballot takes a three-fifths approval vote in both the Illinois House and Senate. Voter approval also requires an extraordinary 60 percent majority.

So what Pritzker is touting as a temporary increase of the current 4.95 percent tax rate might well be a permanent one.

News reports indicate that a 1 percent increase in the current 4.95 percent rate would generate an additional $3.7 billion in new revenue.

Considering that Illinois taxpayers paid a 3 percent rate in 2011 and now pay a 4.95 percent rate, the state, at least theoretically, should be rolling in new dollars. Unfortunately, legislators have for two decades spent more than the state takes in, and as a consequence, Illinois is drowning in debt from unpaid bills, underfunded public pensions and unbalanced budgets.

In addition to those obligations, Pritzker has proposed a series of costly new programs that include universal health care for state residents, expanded early-childhood education, paid family and medical leave and increased funding for K-12 schools and public universities.

If all those come to fruition — and there's no reason to think they won't considering how closely aligned Pritzker is with powerful Democratic House Speaker Michael Madigan — it would almost certainly take more than a 1 percent increase in the income tax rate to generate the new revenue necessary to meet existing as well as new obligations.

That's especially so if Pritzker follows through on plans to reduce tax revenues at the bottom by increasing deductions and exemptions. Whatever he gives up at the bottom will have to be made up at the top with a bigger increase — a 1-, 2- or even 3-percentage-point increase above the current 4.95 percent rate.

Pritzer's embrace of the concept of higher tax rates obviously requires more specificity. He indicated reluctance to share his thoughts on that issue because he said it would be addressed in negotiations with the legislative power brokers like Madigan and Senate President John Cullerton.

That's certainly true in terms of the final legislative product. But as a prospective governor, Pritzker surely has an idea how much of an increase he wants and needs to pay for legislative proposals that he's describeda as "as bold as they are big," ones designed to "address the real economic injustice in Illinois by confronting it frankly and honestly."

Pritzker deserves plaudits for engaging in the kind of candor that provides voters a clear choice. But he needs to follow through with specifics that lets some people know how much more they'll benefit and others how much more they'll pay if he is elected.

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