My first job out of college was in the Illinois General Assembly, where I worked as a legislative analyst. Lawmakers trained me to read bills and think about where a given piece of legislation would take our state.
They always asked me, “What have other states done on this?” Lawmakers never want to be an anomaly — it’s much easier to watch other states pass controversial legislation and then track the results.
This approach allows you to see how an idea works in practice — does it succeed, or does it fail?
As voters consider voting to swap out Illinois’ flat tax structure, we can see where the 32 other states with a progressive tax have ended up. The roadmap is clear: A progressive tax will lead to a tax on retirement income and hikes on middle-class families. All 32 states with a progressive tax also tax retirement income.
Progressive taxes in deeply indebted states have allowed politicians to continue to increase tax rates on all income brackets. In more than half of progressive tax states, the middle class pays the maximum state income tax rate.
Lawmakers know pushing middle-class tax hikes and a retirement tax is political suicide — that’s why they don’t want voters to understand that a progressive tax would lead to higher taxes on these folks.
But lifelong Chicagoan Don Wojtowicz knows that Illinois politicians don’t think twice about other people’s money these days.
He learned how to spot dishonesty during his years as a Chicago police officer and doesn’t trust Gov. J.B. Pritzker’s message that he’s not going after retirement income if the governor’s “fair tax” passes.
“They’re in the hole for billions. How do you think they’ll get that money? They’re going to take it out of my pocket, your pocket and everyone else’s pocket,” said Wojtowicz, 84. “And they’re lying when they tell you they’re not.”
The state hasn’t even had the decency to shoot voters straight on the progressive tax ballot language and give them the unvarnished, unbiased version of their tax scheme.
That’s why Wojtowicz, two other Cook County retirees and the Illinois Policy Institute are suing over that dishonest ballot language and a taxpayer-funded pamphlet about the constitutional amendment. The suit asks that voters be given the plain truth before the Nov. 3 election.
Two members of Pritzker’s administration have floated the retirement tax idea, but the most telling public statements came from Illinois state Treasurer Michael Frerichs. He said the vote to eliminate Illinois’ flat tax was needed so state lawmakers could target higher-income retirees and start taxing them.
“One thing a progressive tax would do is make clear you can have graduated rates when you are taxing retirement income,” he said in June. “And I think that’s something that’s worth discussion.”
Illinois’ decision not to tax retirement income is a saving grace for the 2 million Illinoisans age 65 and older who already shoulder the nation’s second-highest property taxes.
If Illinois voters on Nov. 3 agree to remove the Illinois Constitution’s flat tax protection, state lawmakers will gain the power to divide taxpayers into as many income groups as they wish and set different tax rates on them.
While a retirement tax is not a new idea, it historically has been blocked by public opposition and the current constitutional mandate that if one retiree is taxed, they all must be taxed the same. A 2019 poll by the Paul Simon Public Policy Institute found 73% of Illinoisans are against taxing retirement incomes, while just 23% believe it is a good idea.
Like Wojtowicz said, after the “rich” and higher income retirees don’t generate the revenue state leaders want, they will go after the middle, where most of the taxable income resides. “They’re going to come after our retirement because they’ll have to. I can’t afford that.”
Illinois has been losing residents among all age groups for years, but residents 65 and older have left at the lowest rates since 2013. That is likely because the state keeping its hands off retirees’ income is its singular advantage in an otherwise uncompetitive tax code.
Connecticut, the last state to adopt a progressive tax in 1996, loses retired residents at significantly higher rates than Illinois and more than twice as fast as its residents in the “prime working years” of 26 to 54. Were Illinois’ progressive tax experience to match Connecticut’s, there would be nearly 10,600 fewer seniors in Illinois as they said “hello” to better climates and lower taxes.
If we look at what other states have done that have passed the progressive tax, it’s clear that Illinoisans will regret it if they agree to the “fair tax” here — especially retirees.
Matt Paprocki is president of the Illinois Policy Institute, a nonpartisan research organization.
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