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Daily Journal
     October 23, 2020      #82-297 KDJ
 

Scott Reeder: Applying a fine tooth comb to 'fair

By Scott Reeder

SPRINGFIELD — When it comes to the proposed income tax amendment to the Illinois Constitution, neither side is being particularly honest.

Sadly, that’s come to be expected in any political campaign, but it doesn’t make it any easier for voters to make an informed decision as they cast their votes before polls close Nov. 3.

What the proposal would do is move Illinois from its current flat income tax rate of 4.95 percent to a graduated income tax that takes a higher percentage of folk’s income as they earn more money.

Gov. J.B. Pritzker and other advocates of the change say it will lower taxes for 97 percent of Illinoisans and raise it for just 3 percent.

Maybe. But probably not the case for the long haul.

Here’s why — the rates aren’t included in the constitutional amendment. The amendment empowers the Illinois Legislature to set the rates at whatever it sees fit.

It is true that the Legislature has passed a measure setting rates that would very slightly reduce taxes for most people and jack it up for top earners. But — and this is a big but folks — Illinois lawmakers could change rates at any time for anyone. So, the rates they are proposing almost certainly won’t be permanent.

In fact, since top earners derive much of their income, not from paychecks but from investments, fluctuations in the stock market would make it hard to depend on revenue under the proposal year-to-year.

That’s why it’s likely the higher rates will spread downward to those earning much less.

When the state constitution was drafted in 1970, a flat tax rate was created as a deterrent to lawmakers routinely raising rates. The idea was that if all voters would see more withheld from their paychecks, lawmakers would think twice before increasing taxes.

On the other hand, opponents of the change haven’t exactly been paragons of virtue either.

For example, one of the most oft repeated lines is that creating a progressive income tax will lead to taxing retirement incomes.

Lawmakers could tax retirement income now, but choose not to. They could choose to tax retirements if the constitutional amendment is passed, but it’s a stretch to think one causes the other.

One often shared meme on social media is, “Every state with a progressive income tax, taxes retirement income.”

Well, only three states — Illinois, Pennsylvania and Mississippi — don’t tax proceeds from retirement accounts or pensions. But Mississippi has a progressive income tax, so that statement isn’t accurate.

Also, Alabama and Hawaii don’t tax pensions but both have progressive income taxes.

So, the argument is spurious at best.

That said, there are sound reasons not to alter our state’s constitution and give greater taxing powers to legislators.

I routinely receive letters and emails from readers saying they are leaving the state because of the high taxes levied here. It’s not just the income tax, it’s the aggregate load of property, income, sales and business taxes that are fueling this exodus.

Passing this amendment will spur more wealthy individuals and businesses to leave for better managed, tax-friendly states.

And when businesses leave, workers will follow.

Somehow, we need to stem the flow of people and jobs from this great state.

The governor and Democratic legislative leaders need to embrace reform before they even think of asking voters for more taxing power.

Here are some good places to start:

• Reduce the number of governmental entities in Illinois. Illinois has about 7,000, much more than any other state and this is an expensive, inefficient way of delivering services. Whether it is mosquito control boards, townships, libraries, school districts or a host of other entities, we need to consolidate.

• Bring pension reform to Illinois. The Land of Lincoln has the worst funded pension system in the nation and desperately needs to reduce its liabilities. For too long, lawmakers have talked but failed to act on ways of reducing costs that contribute to an unfunded liability that exceeds $130 billion.

• Embrace ethics reform. Four of the last 10 men elected Illinois governor have ended up in prison. Commonwealth Edison is cooperating with federal prosecutors in an apparent corruption investigation of House Speaker Michael Madigan. And a host of legislators and other state officials have gone to prison over the years on corruption charges. It’s time for lawmakers to implement reforms and end this culture of insider deals and pay-to-play politics.

These are reforms well within the power of the General Assembly to address. And, yet, they haven’t. Only after they have done so, should we even consider amending our constitution.

Scott Reeder is a veteran statehouse journalist and a freelance reporter.

His email address is ScottReeder1965@gmail.com

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shadow @ November 15, 2020, 6:18 pm
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