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Gas tax and vehicle fee hikes erase Pritzker's promise of progressive income tax relief

MADISON - ST. CLAIR RECORD

Thursday, November 21, 2024

Gas tax and vehicle fee hikes erase Pritzker's promise of progressive income tax relief

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Gov. J.B. Pritzker carried his “fair tax” to voters’ 2020 ballots on the promise of middle-class tax relief, but numerous tax and fee hikes the governor is expected to sign into law will rob many Illinoisans of any promised savings.

Under Pritzker’s proposed progressive tax system, a married couple in Illinois with two kids earning the $79,168 median annual income and paying the average property tax bill of $4,157 would see $195 in total tax relief, according to the Pritzker administration’s online “fair tax calculator.”

But if that same family uses two cars on a regular basis, they will see a $300 tax hike under Pritzker’s capital plan, which doubles the state’s gas tax and hikes annual vehicle registration fees.

That would leave them $105 in the hole under the income tax rate structure that would take effect if voters approve Pritzker’s progressive tax ballot referendum. And that’s assuming lawmakers don’t change those rates to target the middle class for more revenue. An Illinois Policy Institute analysis found that to fully pay for Pritzker’s spending promises, the average family would have to pay $3,500 more per year under a progressive tax.

Under Pritzker’s plan, average Illinoisans will see the state’s gas tax double to 38 cents from 19 cents per gallon and annual vehicle registration fees spike to $148 from $98, an increase of $50. An Illinois Policy Institute analysis that found the typical Illinois driver will pay $100 more on gasoline each year under a doubled gas tax.

That doesn’t include a 6% tax on hourly or daily parking garage use, and a 9% tax on monthly or annual parking spaces; or a $1-per-pack cigarette tax hike that comes atop the infrastructure plan’s vehicle tax and fee increases, raising the state’s tobacco tax to $2.98 from $1.98.

Owners of electric vehicles, meanwhile, will register for $251 annually, up from $25 every two years, under Pritzker’s plan.

While the governor has blamed Illinois’ “regressive” flat income tax for the state’s chronic population decline, each of the excise tax and fee hikes included in his capital plan are regressive. Moreover, those tax and fee increases taken together more than offset any potential relief from his proposed progressive tax structure.

Unless the governor addresses the root cause of Illinois’ appetite for tax hikes – unaffordable growth in government worker pension costs – a progressive system will not protect Illinois’ middle class from the threat of higher tax rates.

In fact, Illinois’ current flat tax structure is one of the only obstacles state lawmakers face when weighing income tax increases. On Illinoisans’ November 2020 general election ballots, voters will decide whether to scrap that constitutional protection.

As Pritzker’s signature promise continues to deteriorate, the governor should not be surprised if Illinois voters reject his “fair tax” proposal at the ballot box in 2020.

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