Endorsement: A Difficult “No” on Graduated Tax Referendum

October 15, 2020 Daily Herald
By The Daily Herald Editorial Board

There have been few issues that have divided our Editorial Board as sharply as the referendum on the proposed amendment to allow for a graduated income tax in Illinois.

We encourage you to take that into account when weighing our position on the matter. It is not a unanimous opinion. There is a clear alternate view. This editorial will try to summarize both.

First, let us set out the areas of agreement, because there are a few significant ones.

All of us on the Editorial Board agree with the concept of a graduated income tax, where higher-income earners pay more than those with lower incomes. In addition, none of the Editorial Board members are particularly trusting that Springfield would handle this new power responsibly. While the degrees of our skepticism may vary, we all agree that skepticism is warranted.

And we all agree that because of the state’s mismanagement over the years, there’s a huge hole in the state’s finances that somehow must be filled and that hole is only growing larger with each passing day.

Where we disagree among ourselves is on the implications of this amendment’s passage or, conversely, of its failure.

In viewing a proposed amendment that would irrevocably change taxation so profoundly, it’s important for all of us as voters to remind ourselves that things aren’t always as simple or straightforward as they appear.

A quick example: For more than a century, voters in Illinois used to elect members to the state House under a now-forgotten system called cumulative voting.

Each district elected three representatives, typically two members of the dominant party and one member of the minority party. In the suburbs back then, that usually meant two Republicans and one Democrat. In Chicago, two Democrats and one Republican.

In 1980, this system was removed by referendum. The so-called Cutback Amendment seemed an easy call. Cut the size of the legislature significantly, sharply reduce the cost. Hard to argue with that. But 40 years later, a strong case could be made that today’s climate of dominance by party leadership, orthodoxy rather than independence, and extreme polarization is a direct result of that change.

The minority party representatives elected in those districts tended to be centrists because, for example, a conservative district isn’t going to elect a strong liberal and a liberal district isn’t going to elect someone from the far right. They also tended to be less beholden to the party. And they tended to be collaborative simply because they had to be.

All that’s gone — very unlikely to ever to be restored — because the referendum question seemed so simple on its face.

We believe the graduated income tax amendment plays to the same simplistic temptation: The rich should pay more. Who can argue with that? And for most of us, what’s not to like about having someone else pay the bills? But is it really so simple?

It’s impossible to say what would happen if the amendment is passed. Could the wealthy flee the state, leaving the rest of us to pay more of the bills? Possible. Could it open the door to taxing retirement income? State Treasurer Mike Frerichs has already raised the possibility. Could we trust there’d be no movement in rates and the income ranges that proponents are outlining? Well, how much do you trust Springfield? Nothing about that structure would be set by the constitution. We asked most of the legislative candidates running in this election about that, and the answers we got from amendment proponents generally were that they’d commit to them for the duration of their terms. In other words, two to four years.

Conversely, it’s impossible to say what would happen if the amendment fails. This is the issue that is at the center of our Editorial Board’s minority opinion. Given the magnitude of the state’s debt, if the amendment doesn’t pass, could there be big tax increases for all of us? Can’t rule that out, although there’d be a heavy political price to pay for legislators and the governor if they pushed that through without addressing the cost of government.

Having listened to the arguments from both sides, we encourage a “No” vote on the graduated income tax amendment on the following grounds:

If you cut out all the noise and emotion and just zero in on the crux of it, it is clear that this amendment is a response to the deep hole the state has created for itself. Pure and simple. This amendment asks the taxpayers to bail out years of mismanagement by the state. Proponents concede that the proposed rates will be needed to pay down that debt but that the total projected revenue will fall short of satisfying all that debt.

That being the case, forget about property tax reductions. And forget about the state holding fast to the rates and ranges it outlines.

As we have said, we are not opposed to the concept of a graduated income tax. Frankly, the concept makes a lot of sense to us. But it ought not be a bailout and it ought not trust the keys for future increases and range creep to a General Assembly that has shown little discipline in the past. It ought to be combined with a constitutional amendment that enables the state to reform the pension programs (fairly without breaking promises) so the taxpayers have some assurance that the source of the problem is being addressed, not just paid. And it ought to be combined with a constitutional amendment to end gerrymandering so that the voters truly do have the power to do something about it if the General Assembly behaves inappropriately with these new and almost unlimited taxing powers.

In other words, we don’t just need one constitutional amendment. We need three. So far, we do not have even as much as a promise from the politicians on the other two.

As voters, we need to send Springfield a message that we’re not going to agree to do this piecemeal.