Editorial: Closing arguments, Part One: Why voters should reject Pritzker Tax

September 14, 2020 Chicago Tribune
By Editorial Board

Editor’s note: Since Democratic lawmakers in 2019 put a graduated income tax amendment on the Nov. 3 ballot, we’ve been urging you to vote No. With the election imminent, the Tribune Editorial Board revisits and updates those editorials. This occasional series offers our closing arguments against a tax grab that would drive even more jobs, current taxpayers and young people to other states.

Gov. J.B. Pritzker and other Democratic politicians want voters to profoundly amend the Illinois Constitution. Call their proposal the “Pritzker Tax,” placed on the ballot thanks to exclusively Democratic votes in the General Assembly.

For the first time since Connecticut in 1996, if approved, an American state would switch from a flat income tax to a graduated tax. That is, if you earn five times what your neighbor earns, you must pay five times as much to the state. In 2018, Colorado voters rejected an amendment to convert from flat to graduated. North Carolina and Kentucky have gone the opposite direction, to flat taxes.

The switch hasn’t gone well for Connecticut, where progressively higher income and property taxes have driven residents to other states. The change would be similarly bad for Illinois, which already has lost population for six straight years. As young people abandon this state or don’t return here to start their families and careers, the Illinois Exodus intensifies. Every time a taxpayer departs for Florida, Tennessee or Texas, the tax burden on those of us who remain grows heavier.

So each of us should think skeptically, not reflexively by political tribe, about what the Pritzker Tax would do to Illinois. Five reasons, among others we’ll discuss in future installments, why you should vote it down:

The polls haven’t earned trust

Illinois lawmakers blithely increase state budgets, so taxpayers should blithely pay more to Springfield, right?

Wrong. The Democrats who have controlled the General Assembly since 2003 haven’t done the hard work to earn more of Other People’s Money. They’ve installed plenty of window dressing: truth-in-budgeting measures, more honest budget forecasts and tough talk on your doorsteps about controlling spending.

But the fact is, state spending has grown at a rate that outpaces the cost of living for decades. When lawmakers want to spend more, they don’t look to economize. They look to tax, which is why you’ve seen growth in alcohol and tobacco taxes, two income tax hikes since 2011, no real property tax reform, no new pension reform and the expansion of things like video gaming — those machines in bars and restaurants that were, again, supposed to help solve the state’s budget crisis but did not.

Lawmakers don’t make even a phony show of trying to economize. Instead, they have allowed public employee union leaders who fiercely oppose streamlining — and who support Democratic candidates — to help shape and dictate budgets. The state’s largest employee union, the American Federation of State, County and Municipal Employees, is aggressively pushing the Pritzker Tax. The union’s current contract with the state, which expires in June 2023, provides workers with a $2,500 bonus, four raises totaling 11.5% in addition to step increases and a minimal increase in their share of health insurance costs. It’s no wonder why AFSCME wants the amendment to pass.

‘Save Illinois — and get a tax cut too!’

Retailers call it a “loss leader,” the low-priced item that attracts customers who often wind up buying high-priced items. The baited hook here is that, at least initially, the Pritzker Tax would gouge only the highest-income 3%; the rest of us would see our taxes stay the same or decrease a bitsy amount. Maybe, at least initially, that’s so. And maybe, at least initially, that pledge will convince voters into allowing graduated tax rates. Just as a $5.99 toaster gets people to shop at Biggy Bob’s Bargains.

We wish Pritzker & Co. were forthright: Deadbeat Illinois has $7.4 billion in bills, an unfunded pension shortfall north of $137 billion, yet they want to spend a lot more. There is no guarantee once the flat tax is gone that lawmakers won’t begin to move those goalposts on high earners. Do you trust them?

‘Double pinkie swear, this time is different!’

Advocates of the Pritzker Tax frame the issue as one-stop salvation. As they have done before.

We haven’t forgotten that notorious night of 1/11/11, when Democrats ramrodded a four-year, 2-percentage-point hike in the income tax. Quoth then-Senate President John Cullerton: “The purpose of this bill is to raise enough money so that we can continue to pay our pensions without borrowing the money. To pay off our debt. To have enough money to pay the interest on that debt. And, for the first time ever, establish caps on how much we can appropriate.” Didn’t happen. “We have just come through the worst economic crisis in our lifetimes. And we have not paid our bills.”

The temporary tax hike passed, and then Democrats moved to make it permanent. Only because of voter outcry, the tax did roll back to a lower rate as scheduled in 2015, only to jump back up to 4.95% in 2017 with help from some Republican lawmakers.

The promise is always the same: Give us the tax hike, we’ll fix Illinois!

Except today’s tax hike always is tomorrow’s license for Springfield to spend more. And then to impose, yes, another tax increase.

What the Dems don’t admit

Once lawmakers can tinker with graduated rates, they will want to pursue middle-class taxpayers. The state’s obligations are concrete; another $3 billion won’t cover existing debts plus new spending Pritzker wants.

We ask yet again: Democrats, you guarantee that your new tax rates will hit only the 3-percenters for … how long, exactly? Why do you never say? Maybe because if voters approve the Pritzker Tax, you know you’ll carve the rest of us into smaller income cohorts and goose our rates too.

The beauty of today’s flat rate is that raising it on everyone at once is much harder politically than gouging one cohort at a time. This amendment would strip taxpayers of their leverage against ever-more hikes.

‘Let the people vote’

One solution to Illinois’ financial fiasco is hiding in plain sight: relax the state constitution’s rigid pension clause. Benefits earned so far would be protected, but going forward, lawmakers could adjust such unaffordable guarantees as 3% compounded cost-of-living adjustments.

When lawmakers want more money, their proposed amendment flies onto the ballot. But when taxpayers want to address spending? Democrats refused to put a pension reform amendment, too, on the ballot. When Pritzker said, “Let the people vote,” he meant “on my tax scheme,” not on reducing overhead costs.

Voters, you can ignore this sorry history and believe the Democrats’ promise that, if you pass the Pritzker Tax amendment, they’ll squeeze only 3-percenters.

Or you can rebuke their history of broken promises and vote No this Election Day on the governor’s amendment to change the state constitution.