You beat the ‘fair tax,’ big business. Now what’s your politically doable alternative?
Illinois business and civic groups led the fight to kill a proposal for a graduated income tax. How now would they avert a state budget crisis? Let’s have no more ducking.
We have two questions for all the business groups and billionaires who succeeded this month in killing a proposal to create a progressive income tax for Illinois:
- What spending cuts should the state now make to erase a $3.9 billion deficit for the current budget year, which ends on June 30, and a projected $4.8 billion deficit for the next budget year?
Be specific. Don’t hide behind vague talk about the need to “streamline” government. Don’t duck political reality by saying the solution is a constitutional amendment to reduce the growth of government pensions. There is no way Democrats in Springfield — and even many Republicans who represent districts that are heavy with state employees — will ever support that, just as there was no way you would support a progressive income tax.
We think that’s unfortunate. We have long favored both changes to the Illinois Constitution — the change you love and the change you hate — but wishing won’t make it so. What then, in the real world of Illinois politics, should the state do to dramatically cut costs?
- Where should the state find more revenue? Because the state really needs more revenue. Spending cuts alone won’t be enough. Not in a state where budget deficits are projected to be $4 billion annually through at least 2026. Where the backlog of unpaid bills is projected to reach $33.16 billion by 2026. Where pension obligations, which stand at $8.624 billion for this budget year, are projected to hit $10.59 billion in 2026.
Cuts alone not enough
Let’s have no more sitting on the sidelines. You opposed a ballot proposal on Nov. 3 to allow the state to move from a flat income tax to a progressive tax. You spent millions of dollars to defeat the so-called “fair tax” amendment, just as the other side spent millions of dollars in support of the amendment, and you won.
Well done and fair play. But now what?
Tax hike always likely
It was always a fiction, perpetuated in your TV ads, that a vote against the progressive tax amendment was a vote against an increase in income taxes. That was not true.
The reality, we wrote then, is that Illinois income taxes were likely to be increased no matter what, given the dire state of the state’s finances and the absence of a politically viable alternative. The only question was whose taxes would go up first or more. Would income taxes be raised only on the wealthiest people in Illinois, as allowed by a progressive tax? Or would taxes be raised on everybody, even the working poor, as required by the flat tax?
And now we’re there. As predicted. We fully expect that Gov. J.B. Pritzker, who is running out of options, soon will propose a significant increase in the flat tax, along with more spending cuts and perhaps a cap on future spending.
If you find the first part of that approach — hiking the flat tax — to be abhorrent, then it’s on you to give the governor a better idea. A politically doable idea. One that can fly. Railing about corruption in Springfield (as real as that is) or the need for pension reform (as real as that is) or the need to reduce the 6,963 units of government in Illinois (as real as that is) won’t balance the state’s budget or wipe out the red ink.
Supporters of the progressive income tax amendment, including this editorial page, always understood it to be a Hail Mary pass, a way to repair decades of damage to the state’s finances in one quick and minimally painful way. But now that the amendment has failed, there’s much to be said for the extra pressure that puts on Pritzker and the Legislature to reduce the costs of government in every responsible way. We get that.
Pritzker, along those lines, has ordered the heads of all state agencies to cut 5% from their current budgets.
Feet firmly on the ground
But we also know that many of the more prominent opponents of the progressive tax amendment always understood that the measure’s defeat would not necessarily avert the need for a tax hike of some kind or size. Anti-tax ideologues working for supposed “think tanks” might make that argument, but mainstream business-minded groups with their feet on the ground, such as the Civic Federation and the Illinois Chamber of Commerce, knew better.
The simple fact, they understand, is that Illinois still must pay its bills. Pension obligations, like it or not, must be met. Essential services provided by the state — school funding, access to health care and social services for children, the elderly and the disabled — must be continued. We still need state troopers. We still need high quality public universities.
Exactly what then — priced out in dollars and cents — should be cut? Who exactly should be fired? Which state highways should go unpatrolled? Which universities should be closed? Which recreational centers for the elderly should get no more funding?
And if you dread an increase in the flat tax, where else would you find new revenue? What tax breaks for businesses would you end? What corporate loopholes would you close?
Let’s hear best ideas
The fair tax is dead, and here comes an increase in the flat tax. If there are honest alternatives — short of truly ill-considered ideas such as a “LaSalle Street tax” on financial transactions — let’s hear them all now.
Knowing that every alternative is bound to rile up somebody.
You won. You beat the fair tax.
Now get in the game for real.
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