Excerpts from recent editorials in newspapers in Illinois
May 5, 2019
Illinois’ estate tax is the American way — let’s keep it
It is not a “death tax.”
Can we be honest about that?
An estate tax is not a tax on a dead person. It is a tax on inherited great wealth.
It is a tax, that is to say, not on a person who may have worked hard all his life to earn his money — the American way — but on those who did nothing to earn it — the aristocratic way.
As part of an effort to build political support for a graduated income tax in Illinois, state Senate President John Cullerton has proposed repealing the state’s estate tax. His hope is that some Republicans and Downstate and suburban Democrats —who loathe a graduated income tax because it taxes wealthier people at higher rates — might warm to it in return for ending the estate tax, which they also loathe.
We think this is a bad idea.
At a time when our state and nation are threatened by historical levels of inequality, where the richest 1 percent hold 40 percent of the wealth, we can’t see the wisdom in eliminating one of the few direct ways to check this dangerously un-American trend.
There’s an argument for revising Illinois’ estate tax to make it less of a burden on, say, family farmers, by increasing the threshold at which it kicks in and pegging it to the rate of inflation. Since 2013, the graduated tax has been levied on estates valued at $4 million more. The first $40,000 to $90,000 is taxed at .8 percent, while values above $10.04 million are taxed at the highest rate, 16 percent.
But to abolish the estate tax altogether runs counter to an urgent need to reduce wealth inequality, not aid and abet it. Illinois also would lose about $300 million in revenue. Less wealthy residents — including all of you who so foolishly failed to choose rich parents — might be expected to make up the difference.
Members of the Progressive Caucus of the state House are opposed to repealing the estate tax, warning in a statement Friday that this is just the sort of thing that could lead to “a new American aristocracy of unearned fortune.”
If that sounds a little lefty radical, we would remind critics that our nation’s Founding Fathers were a little lefty radical on this point, too. They warned of the danger to the American Experiment of inherited wealth and power and took measures to limit it.
They banned inherited titles of nobility — duke and earl and the like — and prohibited the European inheritance practices of primogeniture and entail, by which massive estates were handed down through generations.
James Madison had this to say about the matter:
“The great object (of political parties) should be to combat (this) evil: . . . by withholding unnecessary opportunities from a few, to increase the inequality of property, by an immoderate, and especially an unmerited, accumulation of riches.”
The downside of the estate tax in Illinois, critics say, is that it encourages wealthy people to move away to avoid the tax. We would never dismiss that concern, but we believe a greater good is achieved by insisting on a tax system that rewards merit, not bloodlines. The secret to a stronger Illinois economy is not a give-away to the rich; it is a stronger middle class that has greater buying power.
We favor a progressive income tax for Illinois, as we’ve been saying for decades. And if forced to choose, we’d say that enacting that fairer tax, finally, is more important than retaining the estate tax. A progressive income tax, more so than the estate tax, is central to Illinois working its way out of its financial crisis in the most socially responsible way.
But where is the proof such a trade-off is necessary? Where’s the proof it can work?
On Tuesday, as Rich Miller of Capitol Fax reported, Republican members of the Senate Executive Committee refused to support a measure to repeal the estate tax — a measure they had sought for years — because it would be tied to passage of the graduated income tax. Cullerton’s gambit, at least so far, has gained him no Republican votes.
Revise the estate tax, by all means. Give those family farmers a fairer shake. But don’t abolish it.
May 3, 2019
The (Champaign) News-Gazette
One down, one to go
Gov. J.B. Pritzker is halfway home in his quest to put a progressive income tax hike amendment on the November 2020 ballot.
His progress comes courtesy of a vote in the Illinois Senate on Wednesday, when that body voted 40-19 in favor of the measure. The total broke along partisan lines, Democrats favoring the amendment to replace the current flat tax mandate and Republicans opposing it.
“Now comes the hard part: getting House lawmakers to give their blessing,” one legislative analyst stated.
That depends on how one defines “the hard part.” It’s impossible to imagine that if Democratic House Speaker Michael Madigan really wants his chamber to approve the amendment that it won’t pass.
If anything is obvious in Springfield, it’s that Madigan gets what he wants when it comes to legislative action. While he usually plays his cards close to the vest, Madigan is on board with the governor’s plan to stick it to high-income earners. If his past actions are not sufficient to make that clear, his spokesman, Steve Brown, issued a “reminder that the speaker has supported it since November.”
So the real question is not whether House Democrats will vote to put the amendment on the ballot. They all favor it, but they do not all want to be seen by their constituents as favoring the measure.
Some of them just got elected from Republican areas in the 2018 election, and they perceive, probably correctly, a pro-progressive tax amendment vote as a threat to re-election.
So which House Democrats will get a pass and be allowed by Madigan to vote no? Who will be forced to walk the plank?
Madigan, of course, has flexibility in shaping the vote.
Thanks to the November landslide in Illinois, he holds a supermajority of 74 Democratic seats (there are 44 Republicans) and needs 71 votes to approve the Pritzker tax proposal.
Politico reports that one House Democrat says the number of “yes” votes currently stands “at 50.” That’s ridiculous. Two other House Democrats told the news outlet that the number of “yes” votes is “actually closer to 70.” That makes more sense.
There’s another question overshadowing the process, but one that will have to simmer for a while.
The proposed amendment simply authorizes the Legislature to set rising levels of taxation on rising levels of income. What those specific tax rates will be are subject to legislative action and change any time legislators decide to do so.
Pritzker and the Democrats have promised to tax only the super wealthy at higher rates. Republicans note that no one can hold them to that pledge and that higher tax rates will inevitably fall on middle-income earners because that’s the category in which most taxpayers fall.
Pritzker has proposed his own numbers, levying higher rates on incomes starting at $250,000.
The Senate has proposed a different set of rates. Meanwhile, the House, specifically Madigan, has yet to propose his own numbers or express support for the Senate proposal.
That’s all complicated stuff. But one would not know it from the cursory review the Senate gave the proposed constitutional amendment — senators debated the matter for all of seven minutes before approving it.
That may be typical of the kind of thought and energy lIlinois legislators put into momentous policy issues. But it certainly is not emblematic of how a responsible legislative body would review matters of this significance.
What it does reflect, however, is political power. Pritzker and his allies have it, and they’re moving with dispatch to exercise it.
May 2, 2019
(Decatur) Herald and Review
Capital bill leverage may help Pritzker tax plan
Graduated income tax, meet your potential carrot: the capital bill.
Lawmakers on Tuesday returned to Springfield in the annual five-week dash to the end of the session. Building is a flurry of legislation on key proposals like legalized pot and sports betting — two marquee proposals for freshman Democratic Gov. J.B. Pritzker.
Overshadowing them all is Pritzker’s ambitious plan to replace the state’s flat income tax system with one that charges based on earnings. This was a key plank in the governor’s campaign, and he’s mounted a statewide outreach effort to get it off the ground. Because the flat tax is specified in the state constitution, he needs the Democratic-controlled General Assembly’s OK to get the measure on the November 2020 ballot for voters to decide.
The Senate on Wednesday quickly approved it by the required three-fifths majority. It’s not certain whether all elements will survive the House vote with time running out.
The capital bill could be the political lever needed to get action. The proposed public works program would rebuild roads and bridges statewide.
The state hasn’t had such a spending stream since 2009 — and our infrastructure shows it. Without investments, the fixes get more and more daunting. Omer Osman, acting state secretary of transportation said at least $13 billion is needed over the next 10 years just for road and bridge maintenance and another $30 billion to upgrade rail, highways, public transit and aviation infrastructure.
Where will that money go? Enter lawmakers, who stand to gain tremendous political capital from such legislation. Who wouldn’t want to be the legislator who filled that nasty pothole and fixed that raggedy bridge?
It makes sense that the capital bill will become part of the horse trading common in the final stretch of the session. Another possibility is that lawmakers may want to solve the income tax puzzle before delving into the capital bill or direct funding from sports betting, pot, plastic bag fees and other Pritzker revenue tricks to transportation-related fixes.
A better solution would be finding a more stable funding source for infrastructure. One option is to hike the 19-cent-per-gallon fuel tax for the first time since 1990 and link future increases to inflation. That option is less attractive because fuel mileage continues to increase, meaning there’s less money spent on gasoline. Other legislation would increase the gas tax and phase out the state sales tax on motor fuel.
And on yet another track is the federal government. President Donald Trump on Tuesday met with Democratic leaders at the White House to talk about a national infrastructure repair plan.
What’s next? In Springfield, a lot happens after the Easter break. Our hope is the capital bill doesn’t get caught up in the meat grinder of this final few weeks of the session. It’s too important.