Unfair term for a fair tax

Opinion: Letters To The Editor

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A recent contribution to Viewpoints did readers a disservice by describing the proposed Fair Tax as a "moolah grab" [Fair tax or moolah grab? March 26]. This pejorative term completely ignores the fact that:

1) The state's current fiscal situation is dire. 

2) The state has experienced a deficit every year for the past 20 years. 

3) Regardless of what the Illinois Supreme Court decides, the state will still owe its pension funds $100 billion. 

4) Since 1970, the 3% flat tax has failed to generate sufficient revenue to enable the state to fully pay its vendors, much less its pension obligations. 

5) 90% of the state's revenue is spent in just four core areas: education (35%), health care (29%), human services (20%) and public safety (6%). Any proposed cut in state expenditures must recognize that Illinois ranks near the bottom nationally in its spending on core services. 

Illinois desperately needs a graduated income tax. According to the Center for Tax and Budget Accountability (CTBA) a graduated income tax would cut the overall state income tax for 94% of all taxpayers. In addition, it would raise at least $2.4 billion annually in new revenues. It would accomplish this by shifting the tax burden to affluent taxpayers, e.g. those with annual incomes in excess of $150,000. 

According to the CTBA, these taxpayers would pay 4.3% of income instead of the current 2.1%. Joseph Stiegliz, Nobel Prize-winning economist, avers that modestly increasing taxes on the affluent does not materially reduce their spending because of their significant portion of all income growth. Since their spending is a smaller proportion of their income than it is for lower-income taxpayers, Stiegliz says, they have a low marginal propensity to consume. 

On the other hand, spending by low- and middle-income families is a much larger proportion of their income and so these folks are said to have a high marginal propensity to consume; they simply do not earn enough to save and invest.

Illinois current tax policy is neither fair to lower- and middle-income taxpayers nor is it designed to sustain state services. Our current tax policy also hurts Illinois' economy by reducing consumer spending by lower- and middle-income families. 

In 2015, the temporary income-tax increase will begin to phase out. This will add an additional $2 billion to an already $8 billion deficit. Illinois, however, will still need to fund vital public services as well as pay current and past bills. 

Now is the time to act.

Al Popowits

River Forest

Reader Comments

5 Comments - Add Your Comment

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OP Res 253 from Oak Park, Illinois  

Posted: April 10th, 2014 11:46 AM

I found this youtube video laden in irony. Features a teacher speaking up against the "fair tax" because it would increase taxes on TEACHER wages in order to fund teacher pensions. The outrage! http://www.youtube.com/watch?v=KqMp8kijWQk

Amerigo M Cimino from Palm Coast, Florida  

Posted: April 10th, 2014 5:10 AM

It would be interesting; to find the occupation of the people, who condemn the Fair Tax! The Fai Tax; is un-friendly with government "tax-collectors!"! ALL government "workers" are tax-collectors! Their "pay", comes from taxes! Politicians, don't like it; It cannot be manipulated! Politicians don't like it because; it takes away their ability to "pay-off", their favors! Just check the occupation of the detractors!

Mark Curran from Morton  

Posted: April 9th, 2014 9:25 PM

Why not find the folks who turned our adequate pension program into a goofy piggy bank for big whigs. When I started with state in 1974, you had to work 40 years to get 44%, so people worked till age 65, then drew pension for like 5-8 years. Someone changed that to pay 60-70% and lowered retirement age to 52 effectively. So we get twice as much pension, almost three times as long. I knew that was insane when they changed it. Why didn't the experts know? Cap the pensions at 50K.

OP Res 253 from Oak Park, Illinois  

Posted: April 9th, 2014 10:40 AM

Once again, Mr. Popowitz continues to lay out all the money spent, including the insanely generous, but not funded, public pensions for way too long retirements. And, once again, argues that we have a revenue issue! I, for one, plan to depart this state as soon a possible. I'm following a long line of other companies and earners who are being abused by this sense of entitlement and tax increases on work we must continue. Then, dear Al, who will you tax? Your fellow pensioners, perhaps?

muntz  

Posted: April 9th, 2014 9:54 AM

This would require a change to the IL constitution that states IL income tax must be applied with one rate paid by all taxpayers. If Mr Popowits is so anxious to change the constitution, why not also endorse removing the pension "benefits of which shall not be diminished or impaired" clause? A graduated tax would open pandora's box to politicians changing the threshholds on a whim w/o addressing spending. Mr. P - I'm still waiting on a proposal where you actually have some skin in the game.

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