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“Fair Tax” defeated, “millionaire’s tax” advances

Thursday, Mar 27, 2014

* The House Revenue Committee has voted down a proposed constitutional amendment for a graduated income tax while approving Speaker Madigan’s “millionaire’s tax” - a three percent surcharge on income over $1 million.

Today, by the way, was the “Fair Tax” Statehouse lobby day. The group has focused more of its progressive tax efforts on the Senate, but it got a taste of harsh reality in House Revenue today. A rally is scheduled for noon.

- Posted by Rich Miller        


52 Comments
  1. - Norseman - Thursday, Mar 27, 14 @ 11:45 am:

    The Great Oz has spoken!


  2. - Anon - Thursday, Mar 27, 14 @ 11:49 am:

    Our Fair Tax friends are naive in their expectation that some Republicans will join their cause, or that Franks will change his mind.


  3. - Grandson of Man - Thursday, Mar 27, 14 @ 11:50 am:

    As expected, from reading this blog and getting great insight. The Fair Tax people didn’t lose completely, because if they want more revenue for education, they might have their chance yet with the millionaire surcharge.


  4. - Just Me - Thursday, Mar 27, 14 @ 11:51 am:

    Voting to raise taxes on someone else is always politically popular.


  5. - Mokenavince - Thursday, Mar 27, 14 @ 11:52 am:

    Madigan and the Dems will get us a new tax. How original.


  6. - wordslinger - Thursday, Mar 27, 14 @ 11:57 am:

    Kind of puts a damper on the rally.


  7. - OneMan - Thursday, Mar 27, 14 @ 12:01 pm:

    Voting to raise taxes on someone else is always politically popular.

    For a long time I have proposed my Tax On other People or (TOP) tax Plan..

    These include
    A tax of lite beer
    A tax on Cubs tickets
    A tax on country/western music
    A tax on any beer that advertises on TV that isn’t Sam Adams
    A tax on garages that can hold more than 2 cars.
    A tax on anything besides shampoo that they sell for hair.


  8. - OneMan - Thursday, Mar 27, 14 @ 12:04 pm:

    So you think they will bail on the rally and just go grab a beer and a horseshoe?


  9. - From the 'Dale to HP - Thursday, Mar 27, 14 @ 12:07 pm:

    Wonder if they have enough time to turn the rally into a “funeral for the middle class”.


  10. - Carl Nyberg - Thursday, Mar 27, 14 @ 12:39 pm:

    Is the roll call posted online?


  11. - Anon - Thursday, Mar 27, 14 @ 12:44 pm:

    So who will the ten Dem targets be that get to vote NO on the Quinn tax? I’m guessing Andrade, Cloonan, Moylan, Willis, Conroy, Sente, Mussman, Scherer, and Farnham’s replacement (to be named later). That’s nine. So who is number ten?


  12. - jake - Thursday, Mar 27, 14 @ 12:49 pm:

    A Better Illinois really screwed up by not emphasizing tax cuts for the majority of people. “A Better Illinois” sounded like bigger government. It would have been far better to call it “Middle Class Tax Relief” which would have been completely accurate. One of the major people in it told me that one of the Reps had said he would support progressive tax rates if they were revenue neutral, and she said to me “What is the point of that?” I pointed out to her that our low income groups in Illinois are very heavily taxed relative to other states and need relief. The fact that she wasn’t already thinking about this, and was traveling the state promoting the amendment, spoke volumes.


  13. - Rod - Thursday, Mar 27, 14 @ 12:59 pm:

    I am getting emails claiming that Jack Franks was put on the Revenue Committee of the whole as a replacement by the Speaker and that he led the charge against HJRCA0033. Can anyone verify that?


  14. - Allen Skillicorn - Thursday, Mar 27, 14 @ 1:00 pm:

    Anon 12:44, since the 3% tax increase is a Constitutional Amendment, all 71 Dems are needed.

    It’s great politically, because people loving taxing someone else, but fiscally it’s very short-sighted.

    More status quo out of Springfield!


  15. - Grandson of Man - Thursday, Mar 27, 14 @ 1:13 pm:

    The Quinn tax plan gets support from the top two Democrats, the millionaire surcharge is advancing and the Fair Tax gets shot down.

    Bitter pills all around.


  16. - Lord Stanley's Cup - Thursday, Mar 27, 14 @ 1:19 pm:

    @Rod - That’s wrong. The standing Revenue Committee defeated the amendment.


  17. - LakeviewJ - Thursday, Mar 27, 14 @ 1:32 pm:

    Anon 12:44- As far as I know, Andrade doesn’t even have a fall opponent. The race in that district is the primary, Andrade will be a yes.


  18. - Frustrated Voter - Thursday, Mar 27, 14 @ 1:36 pm:

    I really wish they would quit calling it a “Fair Tax”. Here is the real Fair Tax:

    www.fairtax.org


  19. - Demoralized - Thursday, Mar 27, 14 @ 1:51 pm:

    @Frustrated Voter:

    Taxing services would hit the poor extremely hard. I understand the appeal of a simple service tax but I don’t think I would classify it as “fair.”


  20. - ChinaTown - Thursday, Mar 27, 14 @ 2:00 pm:

    ==A Better Illinois really screwed up by not emphasizing tax cuts for the majority of people.==

    The Harmon proposal seems like an implicit acknowledgement of that… and the message of tax cuts for 94% is now front and center. Perhaps too little too late… we’ll see.


  21. - Dirty Red - Thursday, Mar 27, 14 @ 2:01 pm:

    Carl, it was a partisan roll call.


  22. - Jimbo - Thursday, Mar 27, 14 @ 2:09 pm:

    Frustrated, calling something fair doesn’t mean it is… In either case. Neither one is the “real” fair tax. One is a regressive tax on services that the poor will pay a larger share of their income in, and the other is a progressive tax in which the rich will pay a larger proportion of their income. The only tax that hits everyone equally is zero, and that isn’t feasible. So I’m sorry fella, there is no tax scheme that treats everyone equally. We can argue about which ones are most equitable, but no one can say their tax is the “real” fair tax.

    Just an FYI, the first tax scheme named the “fair tax” was not called the fair tax until Luntz or someone like him renamed it to make it sound more acceptable. Guys like Rauner don’t spend all of their income so taxing only money that is spent hits folks hitting paycheck to paycheck much harder than folks socking cash away. Also, your “fair” tax creates a disincentive to spend money. That is bad for the economy. The progressive “fair” tax makes wealthy folks pay more, and maybe you don’t think that’s fair, but the extra taxes they pay don’t mean they can’t eat or afford shelter. Extra sales taxes could very well mean that for the lowest earners in IL.


  23. - Upon Further Review - Thursday, Mar 27, 14 @ 2:14 pm:

    If it feels good, do it.

    Of course, should many of the wealthy decide to become “tax exiles,” Illinois may collect nothing at all from those who depart, but, hey, it’s the thought that counts, not the results.


  24. - Walker - Thursday, Mar 27, 14 @ 2:15 pm:

    Realism wasn’t cynicism.


  25. - Generation X - Thursday, Mar 27, 14 @ 2:22 pm:

    So incredibly frustrating that this State refuses to consider alternative to taxing our way out of the fiscal mess.

    Legalize Marijuana and more taxing may not be necessary. Colorado is likely to see 50 Million or so in tax revenue from legalization. More importantly it is a new legal industry creating jobs. So far they have given 160 licenses for businesses to sell which has created thousands of jobs.

    Illinois is roughly double the size of Colorado so the results could be much larger. Jobs would be created growing, selling, transporting and from head shops.


  26. - Commander Norton - Thursday, Mar 27, 14 @ 2:31 pm:

    You called it, Norseman. A resounding defeat in committee (not a quiet death in Rules, nor a dramatic showdown on the House floor) is a clear message from the Speaker that it’s time for the progressives to take their toys and go home.

    Again, if only the unions had been willing to face reality earlier and had focused their efforts on more productive pursuits…


  27. - Keyser Soze - Thursday, Mar 27, 14 @ 2:37 pm:

    Bye bye millionaires. Florida beckons.


  28. - Yellow Dog Democrat - Thursday, Mar 27, 14 @ 3:03 pm:

    So Cynical, Rich. :)

    YDD


  29. - AnonymousOne - Thursday, Mar 27, 14 @ 3:05 pm:

    Those poor millionaires don’t have many places to run off to! Florida is one, of course, but the rest of the states have figured out that they can’t squeeze blood out of a turnip. Taxing the homeless, unemployed and middle class doesn’t get you as much. If you want to secure revenue, you have to get it from those who have it to pay. When asked why a bank robber robbed banks, his reply, “That’s where the money is!” Duh.


  30. - wordslinger - Thursday, Mar 27, 14 @ 3:06 pm:

    –Of course, should many of the wealthy decide to become “tax exiles,”–

    –Bye bye millionaires. Florida beckons.==

    Yeah, Beverly Hills, Marin County, Park Avenue, Belgravia, — practically ghost towns.

    So, because of the pleasant climate, you’re in Chicago pulling down a million a year in taxable income, you’re going to pull up stakes….

    ….why? Aren’t you pretty successful where you’re at?

    If you’re very rich, you can live anywhere in the world — if you can keep making the bucks. Yet the highest concentration of wealthy people are in the highest tax cities in the world.

    They’re high maintenance; they want to be taken care of. They pay for it.

    Maybe that marginal tax rate isn’t the game-changer that the nebbies are led to believe.

    By the way, did Jimmy John move his hq out of Champaign yet? He was shedding crocodile tears four years ago. But last I saw, he was an Illinois GOP delegate for Romney.

    Why does anyone buy this tax-exile stuff? If you can’t spot the chump the first time the deal goes round, you’re it.


  31. - Truthteller - Thursday, Mar 27, 14 @ 3:06 pm:

    Rational fiscal policy takes another hit in the Illinois House of Representatives where good legislation goes to die.
    The one thing that the Fair Tax does that neither the Madigan nor the Quinn plan do is create the possibility that state revenues will match the state’s expenses.
    Much too far-sighted for Quinn and Madigan who are farsighted enough to see all the way to the next election and not a day beyond.
    The cynics, masquerading as realists, need to explain how we are going to get our fiscal house in order.
    How high are they willing to raise the flat tax?
    What services do they want to slash?
    Are they willing to let the state limp along, with vendors waiting forever to be paid and the state forever mired in a pile of overdue bills?


  32. - Frustrated Voter - Thursday, Mar 27, 14 @ 3:15 pm:

    @Demoralized - Obviously you have no understanding of the real FairTax, and didn’t bother to check out the site and how it works. It essentially un-taxes the poor, in that their first $31,000 of annual spending wouldn’t be subject to tax, via the pre-bate:

    http://www.fairtax.org/PDF/PrebateExplained.pdf


  33. - Generation X - Thursday, Mar 27, 14 @ 3:18 pm:

    Wordslinger is right. All this leave the state stuff is totally overblown. You aren’t going to leave a million + income here unless you can seamlessly replicate that success elsewhere. Very Difficult.

    However, what they may do while staying in this state is cut back on discretionary spending. Maybe not buying the new car or redoing the add on room or whatever. A million is alot in some parts of the state but lets not pretend that this tax will only hit the Rauners of the world. You could not live long in Chicago frivolously on a million per year. These people have budgets and 30,000+ will always be missed.


  34. - Cassandra - Thursday, Mar 27, 14 @ 3:44 pm:

    Since a constitutional change is apparently required for both taxes (answering my own question above)then does it matter which tax gets through in the near term. The important change would be to abolish the flat tax requirement in the constitution. The it’s Hallelujah or Katy bar the door, depending on one’s perspective. If the real goal is to abolish the flat tax, then the
    millionaires’ tax might be the more effective political tactic. Especially if populism is going
    to be a central Democratic theme in the runup to 2016.


  35. - x ace - Thursday, Mar 27, 14 @ 3:53 pm:

    Caterpillar - “Tax Evasion” Allegations being Investigated

    State Farm - Big time lawsuit (Hale v. State) Farm alleges “Racketeering” involving Big Money appeal( Avery v State Farm ) and the 2004 Illinois
    Supreme Court Race

    So taxing or motivating those “Millionearner” executives ain’t a bad idea.


  36. - Demoralized - Thursday, Mar 27, 14 @ 4:43 pm:

    @Frustrated Voter:

    I understood it and looked at the site. I just disagree with you that it’s a “fair” tax. I stand by my comment.


  37. - Yellow Dog Democrat - Thursday, Mar 27, 14 @ 4:49 pm:

    @Truthteller -

    I do not disagree that a graduated income tax is rational.

    The problem is that you have not convinced the majority of constituents of a majority of Revenue Committee members it is rational.

    Better yet, just get all your troops together and spend a week or two knocking on doors in Leader Durkin’s district, and convince him to take the brick off the measure and maybe even put some votes on it.

    Or did you honestly think you were going to be able to pass it through the Illinois House without a single Republican vote?

    It’s not cynicism, it is math.


  38. - Arthur Andersen - Thursday, Mar 27, 14 @ 4:54 pm:

    word, I think Jimmy John just relocated himself to Florida, leaving HQ (and a tacky McMansion) behind in C-U. Worry not, though. He “commutes” aboard his Challenger.


  39. - RNUG - Thursday, Mar 27, 14 @ 6:21 pm:

    - Cassandra - Thursday, Mar 27, 14 @ 3:44 pm:

    As far as I can see, only a graduated tax would clearly require a constitutional amendment.

    Retaining the existing 5% rate is not in conflict with the constitution. Even raising that rate higher would not be in conflict. However, as Rich has pointed out (and even though I’ve joked about it), you can’t get radical with personal exemptions to the point where it totally undermines the flat tax provision. Maybe you could get away with moving the personal exemption up one or two thousand but you won’t be able to move it tens of thousands.

    The so-called millionaire’s tax may or may not require an amendment. It will probably come down to the exact language used. By making it a surcharge, as opposed to part of the actual income tax, the GA could be legally skirting the flat income tax provision … because the GA says it isn’t a tax, it’s a surcharge! Remember, the presumption is that any law passed by the GA is legal and constitutional until proved otherwise in court, and part of that determination is the intent of the GA as determined by the on record discussion of the bill.


  40. - Arthur Andersen - Thursday, Mar 27, 14 @ 6:46 pm:

    OneMan, I can sign on to all of your tax plan except that garage thing. I’ll never be Jay Leno, but if I hit the Lotto, I would get a couple wheeled toys and a man-cave to house them.


  41. - Anon. - Thursday, Mar 27, 14 @ 9:01 pm:

    ==The so-called millionaire’s tax may or may not require an amendment. It will probably come down to the exact language used. By making it a surcharge, as opposed to part of the actual income tax, the GA could be legally skirting the flat income tax provision … because the GA says it isn’t a tax, it’s a surcharge!==

    The millionaire’s tax IS a constitutional amendment (HJRCA 51), and it is needed. Art. IX, Section 3:

    “A tax on or measured by income shall be at a
    non-graduated rate. At any one time there may be no more than one such tax imposed by the State for State purposes on individuals and one such tax so imposed on corporations.”

    Call it what you will, it would be a second tax measured by income and unconstitutional without amendment.


  42. - RNUG - Thursday, Mar 27, 14 @ 10:58 pm:

    Oneman,

    I’ve also got a problem with your garage tax. I hope the garage proposal is just a trial balloon bargaining chip …

    AA,

    I’m not in Leno’s class either, but for the first time in over 30 years, I finally managed to afford to build a garage to shelter all my cars.


  43. - RNUG - Thursday, Mar 27, 14 @ 11:00 pm:

    - Anon. - Thursday, Mar 27, 14 @ 9:01 pm:

    Thanks.


  44. - amerigom - Friday, Mar 28, 14 @ 4:01 am:

    The Fair Tax does not have a “Rate”, The Fair Tax oes not “favor” any particular “class”! The Fair does two tings; Eliminates the Income tax, and taxes cosumption and service. Not rocket science; simple taxing without any if’s; and’s or but’s! OH! One other advantage; It will cut down the number of tax “collectors”!


  45. - DuPage Moderate - Friday, Mar 28, 14 @ 7:59 am:

    I love the speculation that millionaires won’t flee the state or haven’t left the state? The migration reports seem to prove the exact opposite.

    All I know is in the last week 4 of my close business associates who make north of this mark, have stated that they’re going to relocate to their winter homes in Naples. With technology, it’s really not that hard.

    Besides, the ones making the most money are the ones most able to flee.

    I can’t wait until the tax eating reps figure that out and directly tax those making $200,000-$500,000…because they’re likely stuck. And they’re “rich”…so they’re an easy target for wealth redistribution and voting backlash.

    What do you expect is going to happen when we continually pander to the lowest common denominator. I fear for my kids future around here.


  46. - PublicServant - Friday, Mar 28, 14 @ 8:44 am:

    @Dupage Moderate - Thanks for the anecdotal evidence…always persuasive…NOT!


  47. - Anonymous - Friday, Mar 28, 14 @ 8:45 am:

    DM, a lot of people say they’re going to relocate. Actually doing so is another story. Look at Jimmy John.


  48. - Yellow Dog Democrat - Friday, Mar 28, 14 @ 8:50 am:

    @DuPage Dan -

    “Pander to the lowest common denominator.”

    You do realize that half the households in Illinois live on less than $56,000 a year, right?

    What you call pandering to the “lowest common denominator” some folks would call “democracy.”

    Now, by virtue of the fact that you are here, I am going to assume that you are not a big fan of oligarchies, and you don’t believe that public policy ought to be bent to the cacoethes of not just the one-percenters, but the tenth-of-a-percenters?

    So, you and all your friends who own summer homes in Naples tell me what you recommend. Is 3% too high but something more like 2.5% okay? Or do you think we can somehow provide a worldclass education for 4 million children each year without any additional revenue?

    And please, don’t give me that “grow the economy” or “eliminate waste” rhetoric.


  49. - PublicServant - Friday, Mar 28, 14 @ 8:51 am:

    @amerigom-A consumption tax decreases demand, and our economy is heavily dependent on demand. We need to encourage consumption, not discourage it, and we only need to encourage savings up to only a reasonable amount. Anything in excess of that, should be taxed and used to rebuild this country’s infrastructure. That’s what a progressive income tax does, and that’s FAIR! Oh, and to discourage the offspring of the rich from inhabiting a hammock provided by their inheritance, we need to re-instate an inheritance tax on any inheritance over, say, 1 million dollars per heir, and use that money to invest in America.


  50. - Frustrated Voter - Friday, Mar 28, 14 @ 9:01 am:

    @PublicServant: spoken like a true socialist. Eventually you’ll run out of other people’s money.


  51. - PublicServant - Friday, Mar 28, 14 @ 9:05 am:

    @Frustrated Voter: Spoken like a true plutocrat. I’ll take that chance. Oh, and bite me.


  52. - Anon. - Friday, Mar 28, 14 @ 9:27 am:

    ==- RNUG - Thursday, Mar 27, 14 @ 11:00 pm: ==

    I appreciate the thoughtfulness and detail of your postings. When I first read the post I was correcting, I thought you were being facetious or that maybe it was an imposter!


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        * In Chicago the race is on. It’s easy as ABC.
        * No justice.
        * Be like Martin Luther King.
        * Bruce still hasn’t gotten it right. Pardon who?
        * Tweeting #FergusonInClass


        * Governor Quinn Announces Investment to Help Regional Food Banks Better Serve Those in Need - Governor’s Investment Will Ensure Lower Cost and Higher Efficiency for Services Reaching Nearly 2 Million Illinois Residents
        * Governor Pat Quinn Takes Clemency Action
        * Governor Quinn Statement on Abner Mikva Receiving Nation’s Highest Civilian Honor
        * Department of Insurance Announces Multi-State Settlement with Symetra Life Insurance and Symetra National Life Insurance Company - Illinois will share part of a $1.2 million penalty against Symetra Life regarding Life Insurance policies
        * Avoid Foodborne Illness This Holiday Season




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