Editor’s note: The following was received too late to run ahead of the election, but we thought the points were interesting enough to include on the morning after:
On Sept. 27, I started a thread in the “NextDoor” App that was sent to 23 neighborhoods encouraging my neighbors and fellow Oak Parkers to vote Yes on the constitutional amendment that would allow Illinois to have a “Fair” or graduated income tax. Not unsurprisingly, the thread accumulated 477 posts, mostly supportive, but with a fair representation of opponents voicing similar tired, unrelated, and often misinformed or disingenuous arguments, with links to Koch-funded and other conservative or libertarian “think tanks” like the “Illinois Policy Institute” or “Wirepoints,” such as those recently expressed in Wednesday Journal (Viewpoints, Oct. 28).
The case for the Fair Tax would seem to be a “no-brainer” as Illinois currently has the eighth most regressive state and local tax system of all the states, with the bottom 20% of filers paying almost twice as large a share of their income as the top 1% (ITEP 2019). But opponents seem to believe passing this and allowing Illinois to have a progressive income tax linked to an already passed tax bill (SB687) that will (if the amendment passes) cut or maintain taxes for the 97% of filers who make less than $250,000, but increase state income tax revenue by an estimated $3B for those with income above $250,000, would be a gift for corrupt politicians. They claim that passing the amendment would send the wrong message to elected officials on the need to: a) crack down on public corruption, b) further cut or eliminate defined benefit public pensions, c) reduce profligate state spending in general, and d) reduce the power of public sector unions.
But these arguments do not make logical sense or are factually incorrect. A) Voting against the Fair Tax amendment will do nothing to reduce corruption but rather make life worse via cuts to social services and more regressive, or flat, tax and fee increases for the bottom 97%. B) State pensions were already substantially cut in 2011 and many of the most egregious loopholes closed. The state even tried to cut already vested pensions but was rightly blocked by the IL Supreme Court. For all those who want to break contracts with state workers, how about breaking them with bond holders instead? But more the point, how could anyone ever again trust the state if this were to be permitted? C) Illinois is not a profligate spender but rather spends the lowest share of any state on education (hence our very high property taxes), among the lowest on human services, and is ranked in the lowest third of states in health care spending. These three sectors plus public safety make up over 90% of the state’s General Funds budget. They are dominated by labor intensive direct care workers so more cuts in almost all cases result in less or lower quality services. D) Public sector workers make less than comparable private sector workers; the difference is made up by better benefits, and Illinois state benefits are not out of line with other (relatively) high-income states. Note also that many state workers do not receive Social Security, and average pensions are not a good measure of “central tendency” as the small share of relatively high pensions pull up the average. For example, based on 2015 data reported in the Sun Times for city of Chicago and state of Illinois public workers (including a large number of very generous Chicago police and fire pensions) about 3/4ths of pensions were below $60,000 a year and these averaged $28,000. Also note that the 2011 state pensions cut will take several decades to show up in current data.
If the Fair Tax Constitutional Amendment passed, Illinois will finally join the list of 34 states plus the District of Columbia with a progressive income tax. We need to leave the “flat earth” society and join the 21st Century!
Ron Baiman, an Oak Park resident, is associate professor of Economics at Benedictine University, and former, director of Budget and Policy Analysis, Center for Tax and Budget Accountability.