Why The So-Called “Fair Tax” Is Wrong For Illinois (For Now)

Oh, the irony!

If, back in 2008 when it was on the ballot, the call for an Illinois constitutional convention had passed, if we hadn’t been snookered by our betters who told us to vote no, if we Illinois voters had understood that the state constitution had fundamental flaws — including the pension clause, the provisions granting the House Speaker such substantial powers, the narrow definition of topics eligible for an amendment by means of petition-gathering, and more — then I’ll admit readily that I would have found it entirely acceptable to remove the clause forbidding graduated tax rates in the personal income tax as part of an overhaul.  Why should that be in the constitution, rather than simply left for legislators to decide, based on the conditions any any given time?

But as it is, I cannot support the proposed amendment, because the elected officials who are and will be making decisions about tax rates have not left the world of corrupt and broken politics in which a graduated income tax is a recipe for failure.

A simple look at the new tax structure itself makes its flaws apparent.  In the first place, there is a significant marriage penalty, as the tax brackets for the lowest four rates are the same for singles and couples.  Bizarrely, it is only at the higher income levels that joint filers have a higher bracket level than single filers.  What’s more, when a single taxpayer earns more than $750,000 or a couple earns more than $1,000,000, all of their income is taxed at the highest rate.  In addition, the tax brackets are not adjusted for inflation or wage increases over time, so that over time, more and more Illinoisans will be subject to the higher rates.  These three components of the new tax rates are completely out of line with the way the federal government, any state, or any sensible entity, taxes its residents.  In fact, after the new legislation was proposed, I kept expecting these provisions to be revised, but that’s exactly how the bill was passed.

But beyond that, the advertising around the new amendment promises Illinoisans that they can have it all:  all the state services they’re used to, improved education funding, property tax reductions, as well as a tax cut for themselves, paid for by the wealthy.  This is corrosive to our civil society — and I’m not just speaking of the risk of businesses leaving the state due to the impact on small businesses filing as individuals as well as the corporate tax hike, but of the “us against them” mindset that the tax promotes.

The explanation on the ballot further misleads; as watchdog group Wirepoints observed, the ballot language misleads voters into believing that the constitutional change will only raise taxes of high, not middle-earner taxpayers.  It falsely states that the method of taxing higher earners more is how “a majority of states do it” (in reality, it is more common for states to use their graduated tax rates to protect lower earners, while taxing middle- and high earners at the same rate).  And it omits the change that removes a provision that there may be only one income tax, leaving open the possibility of adding a tax on retirement income by using a lower tax rate to make it more palatable, for example.

And at the same time, although thankfully we can keep adding to the tally of “years since a governor was sent to jail,” the state of Illinois and its elected officials have not truly committed to changing the way the state operates.  Pritzker gives speeches professing “shared sacrifice” but in the end promises Illinoisans that they can have it all, paid for by increasing gambling, pot use, and taxes on the wealthy, and even still, despite massive budget holes facing the state, has made no cuts to payroll.  A pension amendment is rejected out of hand.  Ethics reforms stall.  Madigan stays in power seemingly immune to scandals surrounding him, defended rather than being called to account by his party.

It is not sufficient merely to profess that Illinois is, or will be well-governed.  To deserve its citizens’ trust and be given this new taxing power, the legislature must prove it has reformed.  And it has failed to do so.

https://media.defense.gov/2019/Feb/12/2002088973/-1/-1/0/181206-A-UM169-0001.JPG; https://www.dover.af.mil/News/Article/1755127/what-you-should-know-about-filing-2018-taxes/ (public domain/US gov)