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Friday, April 19, 2024

House committee approves Pritzker progressive tax amendment

Their View

A proposal to eliminate a vital barrier between state lawmakers and middle-class income tax hikes cleared its first hurdle in the Illinois House of Representatives. 

The Illinois House Revenue & Finance Committee voted 9-6 May 20 to approve Senate Joint Resolution Constitutional Amendment 1, which would scrap the state’s constitutional flat tax protection and allow for a graduated, or “progressive,” state income tax system.

SJRCA 1 can now move to the House floor for a full vote, where 71 “yes” votes would place a progressive tax referendum question on Illinois voters’ ballots in 2020.

Those speaking in support of the progressive tax made multiple pleas to “let voters decide” whether to opt for Gov. J.B. Pritzker’s preferred progressive tax amendment. But sending this amendment to voters on the false premise of fixing the state’s problems is no way to treat Illinoisans suffering under a laggard economy and persistent tax hikes. Further, voters have already made their voices heard to their representatives. In six House districts held by Democrats, polling shows more opposition than support for switching the state to a progressive income tax among likely voters.

If state lawmakers truly wished to amplify voters’ voices, popular ideas such as term limits, redistricting reform and pension reform would similarly be on the table. These were left unmentioned by progressive income tax proponents in testimony.

Progressive tax pain

The Illinois Senate passed SJRCA 1 on May 1, along with adjoining bills that would repeal Illinois’ estate tax and enact a toothless property tax freeze, as well as separate bill that would define graduated income tax rates should voters approve the ballot question. The amendment that passed committee May 20 came with none of those additional proposals.

But lawmakers need not wait until 2020 to know where Illinoisans stand on Gov. J.B. Pritzker’s progressive tax hike. Opposition from voters and civic leaders across the state has only intensified in the months since Pritzker pledged to take away one of the few buffers between taxpayers’ income and lawmakers’ ability to tax it.

Leading by example, state Reps. Jonathan Carroll, D-Northbrook, and Sam Yingling, D-Grayslake, were the latest lawmakers in the House Democratic caucus to declare their opposition to Pritzker’s tax plan. Carroll cast a “yes” vote on the amendment in committee, noting that he thought an issue of this magnitude deserved debate in front of the full House. He expressed he still had serious reservations about the proposal, and as a result his vote should not be taken as an indication of a “yes” vote on the House floor.

Both Yingling and Carroll correctly highlighted the proposal’s failure to address the need for property tax relief. Indeed, Illinois Policy Institute research found Pritzker’s promise of middle-class income tax relief under Pritzker’s progressive income tax plan would quickly be wiped out by rising property taxes.

That’s because the governor’s plan for a progressive income tax does nothing to address some of the biggest cost drivers for both state and local governments: government worker pension and health insurance costs. Without spending reform, property tax bills will continue to spike.

Worse yet, Pritzker already distanced himself from his promise that his $3.4 billion tax hike would deliver income tax relief to most Illinoisans. Less than a month after launching his “fair tax” campaign, the governor watered down his promise to cut taxes for 97% of Illinoisans by declaring instead not to raise them. He downgraded his promise further in April, telling ABC 7 there were “no guarantees” the middle class would be protected from income tax hikes under his plan.

In fact, research from the advocacy group leading Pritzker’s progressive tax push shows the middle class would be the socio-economic group most exposed to tax hikes under such a system. When progressive tax states raise income tax revenue – the purpose of Pritzker’s plan – the middle class disproportionately suffers, their research showed.

Promises the governor hasn’t abandoned have been challenged by professional fact-checkers. PolitiFact, in partnership with the Better Government Organization and Chicago Sun-Times, rebuked Pritzker’s claim that progressive tax state economies grow faster than flat tax ones. PolitiFact also labeled “mostly false” Pritzker’s earlier claim that progressive tax states generally tax the wealthy at a higher rate.

Without addressing the structural spending problems that have led to the highest overall tax burden in the nation, a progressive income tax system would only be a bridge to higher income taxes.

And by how quickly Pritzker’s “fair tax” promises have receded, it has become clear to taxpayers the ease with which income tax rates could rise under the governor’s plan. Instead, Pritzker should follow a responsible roadmap to tax relief and restored fiscal health through constitutional pension reform.

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