* Eric Zorn…
One thing — really the only thing — I don’t like about Democratic House Speaker Michael Madigan’s proposed constitutional amendment to add a 3 percent state tax on all income over $1 million is that it’s not indexed for inflation.
“We thought about it,” said Steve Brown, Madigan’s spokesman. “But we decided this is a cleaner proposal, simpler to understand, easier to get through the legislature without arguing about whose inflation index we’re going to use and so on.”
Yes. And a clever if crude way to gain popular support for the introduction of needed progressivity in our income tax system.
But constitutional amendments are designed to last a long time, and $1 million 10 years from now will not be worth as much as $1 million today.
Think of it this way: If we’d put such an added tax into the revised state constitution when it was ratified in 1970, it would have targeted only people earning more than the equivalent of $6.1 million a year in 2014 dollars, according to the inflation calculator at the U.S. Bureau of Labor Statistics website.
That same calculator says that a person earning $165,000 a year in 1970 had the same purchasing power of a person earning $1 million a year today.
Agreed. It’s so difficult to change the Constitution that hard and fast numbers should never be used.
* But I’d add two more real problems with Madigan’s proposal:
1) The language leaves to the General Assembly the task of defining the word “income.” In Madigan’s proposal, the wording could be legislated to mean gross income, without any adjustments for expenses whatsoever. That would indeed leave some farmers and small business owners in danger of being hit with the surcharge, as Bruce Rauner and others have warned.
2) If voters approve the idea in November, the tax hike is retroactive to January 1st of this year. That’s an awful big first bite.