Why Pritzker’s tax promises can’t be trusted
A five-letter word should sink Gov. J.B. Pritzker’s new tax plan: trust.
Illinoisans have a lower level of trust in their state government than residents of any other state, according to Gallup polling. This has been the case for years, with good reason. So why should they trust J.B. Pritzker’s promise to lower their taxes in exchange for eliminating the most important taxpayer protection in the state?
Neither taxpayers nor lawmakers should believe Pritzker when he makes claims of tax cuts – specifically that 97 percent of Illinoisans would see one – as part of his effort to scrap Illinois’ constitutionally protected flat income tax. Here are four reasons why.
1) Pritzker’s plan does not raise what he says it will.
Pritzker claims his tax plan will raise $3.4 billion. But even under a “static” revenue estimate that doesn’t take into account the economic effects of a tax hike, his proposal would raise about $1 billion less than his office claims. A “dynamic” estimate that models those effects shows Pritzker comes up nearly $2 billion short.
Despite Freedom of Information Act requests to multiple departments, his administration has yet to detail its methodology for producing this estimate.
Illinoisans deserve complete transparency on a tax hike this large. They’re not getting it. And that doesn’t build trust.
2) Pritzker’s plan does not raise what he wants to spend.
Even if Pritzker’s estimate were accurate, it’s not nearly enough to cover the $14 billion to $19 billion in new spending he’s promised.
Under Pritzker’s proposed tax structure, the typical Illinois family with two children making around $79,000 a year would see a tax hike of up to $3,500 to fund his spending promises. That’s not relief.
One of the loudest cheerleaders for a progressive income tax, union-backed Center for Tax and Budget Accountability Executive Director Ralph Martire, has publicly acknowledged that Pritzker’s “fair tax” is not enough to pay for the governor’s promises.
Who makes up the difference when those dollars fall short? Get out your wallet.
3) State lawmakers just broke the same promise Pritzker is making.
One reason Pritzker’s claim of tax cuts for 97 percent of Illinoisans is so frustrating is that the cuts are a pittance compared with what families had to fork over in 2017, when lawmakers broke their last tax cut promise.
The seeds were sown in 2011 when politicians promised a temporary income tax hike, moving the rate up to 5 percent from 3 percent. They promised that tax hike would partially sunset in 2014 to 3.75 percent, and sunset again in 2025 to 3.25 percent.
“We have some temporary tax increases that are designed to pay our bills, get Illinois back on sound fiscal footing and make sure that our state has a strong economy,” Gov. Pat Quinn said in 2011. Senate President John Cullerton said lawmakers would “establish caps on how much we can appropriate … and it is going to work.”
Of course, it didn’t work. Overspending didn’t slow down. Credit downgrades continued.
So in 2017, lawmakers broke the sunset promise. They passed the largest permanent income tax increase in Illinois history, costing the typical family around $800 a year. Now Pritzker is promising that same family around $200 back.
That’s not a tax cut. It’s a partial rebate on a tax hike, subject to change.
4) The elephant still in the room.
About 90 cents of every dollar of the “temporary” income tax hike went to pensions. And Pritzker has already pledged that “hundreds of millions of dollars” from his new tax plan will go to pay for pensions.
Without pension reform, lawmakers will go back to the well for yet another tax hike should Pritzker get his amendment.
Standard & Poor’s Global Ratings recently confirmed that Illinois cannot avoid a junk credit rating without a “practical reduction in liabilities,” which can only be achieved through pension reform. Amendments currently filed in both chambers of the General Assembly – SJRCA 9 and HJRCA 21 – would allow reasonable pension changes that protect every dime of current checks cut to retirees, and benefits earned to date by current employees. Specifically, lawmakers would be allowed to make changes to compounding 3 percent benefit increases for life, as well as retirement ages.
If Pritzker is serious about adequately funding social services while putting the state on sound fiscal footing, he would back pension reform.
He’s pursuing political promises instead. And when they’re inevitably broken, Illinoisans will pay.
Austin Berg is a writer for the Illinois Policy Institute. He wrote this column for the Illinois News Network. Austin can be reached at firstname.lastname@example.org.