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A question of trust, or the lack thereof

Monday, Mar 18, 2019

* My weekly syndicated newspaper column

A bunch of weak political arguments have been used so far against Gov. J.B. Pritzker’s proposed constitutional amendment for a graduated income tax. But there is a clear path to killing it.

My “favorite” argument was the complaint that the governor is trying to impose a “millionaire’s tax.” That’s precisely the sort of “Won’t everyone please think of the rich people?” reaction Team Pritzker wants desperately to provoke.

Another argument I’m seeing developing is that Illinois is too broke to include the governor’s proposed tax cut for 97 percent of taxpayers, no matter how modest that cut may be.

But in an age when the wealthy are receiving massive federal tax breaks and corporations are regularly handed taxpayer-financed gifts at the state and local levels, arguing against a smallish break for families earning $40,000 a year is political nonsense and also plays right into Pritzker’s hand.

The Illinois Policy Institute is trying to assert that the proposal doesn’t raise nearly as much money as Gov. Pritzker is claiming — anywhere from about a third to two-thirds less.

But that argument makes it look like the Pritzker plan would take far less money away from the private sector than the governor has advertised. It seems counter-intuitive.

The claim also undermines the House Republicans’ argument that they stand strongly opposed to a $3.4 billion tax hike. The claim may be useful down the road in another context, however.

Another argument is the tax hike won’t bring in enough money to close the state’s massive structural deficit. But Pritzker’s resistance to calls for even higher taxation will allow him to come off as a moderate, splitting the difference between the left and the right.

I mean, just imagine this press conference scenario. Reporter: “Governor, you’re being criticized for not raising taxes high enough.” Pritzker: “That’s fantastic news!”

Ideas Illinois, the dark money group fronted by former Illinois Manufacturers Association President Greg Baise, has probably the best argument right now against the Pritzker tax plan.

The latest We Ask America poll found that only 23 percent of Illinois voters believe the state is heading in the right direction while 65 percent say it’s on the wrong track. The idea is to feed into that anger by telling people what they already know.

“We really can’t trust J.B. Pritzker or the other Springfield politicians, the same people who in the last eight years have raised taxes twice, to really not take this as a blank check,” Baise said on WGN Radio not long ago. “And if you believe the rates that J.B. Pritzker talked about last week will be what the Springfield folks, Mike Madigan and John Cullerton, ultimately implement, then I might have a bridge to sell you, too.”

In other words, this tax plan is just an attractive placeholder that will be replaced by a much more harmful plan as soon as House Speaker Michael Madigan can muster the votes.

The truth is, income taxes are historically difficult to increase here. The tax has been raised just twice since 1989 (thirty years ago). And one of those increases was a partial restoration of an automatic tax cut. But some of that tax may not be so difficult to increase if a graduated tax is allowed by the Illinois Constitution. Temporary fiscal downturn? Pension payments rise? Just slap another percentage point or two of taxation on the rich people.

This is the biggest reason why the wealthy are so opposed to a graduated income tax here. And it’s also why a graduated tax would likely protect the middle class from significantly higher rates, no matter what Baise says.

However, because Illinois government is so thoroughly distrusted, the opponents may very well be able to convince enough of the electorate that while the governor may be urging them to vote to tax the rich, they’re really voting to give the hugely unpopular Mike Madigan carte blanche to raise taxes on the middle class. Remember, they just have to stop Pritzker from reaching 60 percent voter approval to kill a constitutional amendment.

In that context, using the argument that the tax hike on the rich won’t raise as much money as advertised and the claim that even if the tax hike brings in all the money Pritzker projects, it still won’t be nearly enough to balance the state’s books would serve a useful end: You’re taxing the rich today, but, one way or another, you’re taxing yourself tomorrow.

I don’t believe that prediction is true, but I do believe it could be a very potent argument.

* Meanwhile, the Wall St. Journal editorial board said the quiet part out loud over the weekend

Illinois has been a fiscal mess for years, but a saving grace has been that the state Constitution mandates a flat tax rate that is now 4.95% on personal income. This makes it harder to raise taxes because politicians have to include the middle class. Now Governor J.B. Pritzker is bidding to blow up that safety valve with a progressive tax that would drive even more taxpayers out of the state.

That “safety valve” they worry about is for the top 3 percent, in case you didn’t quite get it.

This is the clearest, most forthright explanation yet of what the opposition is really up to.

- Posted by Rich Miller        

44 Comments
  1. - wordslinger - Monday, Mar 18, 19 @ 9:26 am:

    –That “safety valve” they worry about is for the top 3 percent, in case you didn’t quite get it.==

    Nice of the WSJ to pull the curtain back.

    It also reveals the vacuity of Baise’s argument. If taxes are going to go up, Baise would rather the same flat rate apply to everyone to protect the 3%..


  2. - Grand Avenue - Monday, Mar 18, 19 @ 9:36 am:

    They will raise the specter of New Jersey


  3. - LXB - Monday, Mar 18, 19 @ 9:36 am:

    ==Another argument I’m seeing developing is that Illinois is too broke to include the governor’s proposed tax cut for 97 percent of taxpayers, no matter how modest that cut may be.==

    This pairs very nicely with the “Pfft – you call that a tax cut?” response.


  4. - Norseman - Monday, Mar 18, 19 @ 9:36 am:

    Good piece Rich.

    We’ve seen and will continue to see misdirection, misinformation and conspiracy theories from the opposition. As mentioned, playing on the mistrust of government is their most potent weapon. JB needs to continue to reach out and sell the plan. He needs to push allies to aggressively push back on the opposition. And, we know that JB will put money where his mouth is.


  5. - Honeybear - Monday, Mar 18, 19 @ 9:37 am:

    Excellent article Rich. Wow…top notch.
    So to the Article.
    Pritzker need to engender trust.
    a couple suggestions
    Labor peace- a fair contract now.
    Hire a lot of people, restaff the agencies-
    Jobs create loyalty.


  6. - Jibba - Monday, Mar 18, 19 @ 9:38 am:

    WSJ: Don’t believe those poindexters at the credit rating agencies who say the way out of our mess is to tax enough to cover our bills. We still believe in magic beans.


  7. - TinyDancer(FKASue) - Monday, Mar 18, 19 @ 9:45 am:

    Isn’t it just as easy to raise a flat tax as it is to raise a graduated tax?
    I don’t get it.


  8. - Last Bull Moose - Monday, Mar 18, 19 @ 9:46 am:

    Is the tax increase inadequate? I think so.

    That is an argument for spending restraint, not for having no tax increase. I really think the Republicans are fighting the wrong battle. Argue that the state should stop doing certain things and list those things. Argue that the state can do the same with less, and show how.


  9. - Rich Miller - Monday, Mar 18, 19 @ 9:48 am:

    ===I don’t get it.===

    People don’t generally care about taxes on someone else. And rich people are never very popular as a whole. Raising the taxes of just the rich, therefore, is easier than raising them on everyone.


  10. - BenFolds5 - Monday, Mar 18, 19 @ 9:48 am:

    Great article. I am about 875k a year away to get hit by that high rate. The concern that people have that I talk with is the raised rate a few years back meant more spending. We gained no real ground. I think most folks would be fine with an increase if we thought it would make us closer to solvency. But, they will pass along other taxes and fees that will probably be worse on the middle class.


  11. - Red Ranger - Monday, Mar 18, 19 @ 9:49 am:

    Trust is the exact right word. Do you trust that this is the last tax increase the Governor will ask for in his tenure? Do you trust that this tax increase, pot and gambling money will be enough to balance the budget, fund pensions and make all of the “investments” the Democrats want to do? Do you think this will trigger an era of growth in IL so that the natural growth of IL tax receipts will allow the state to spend more money on infrastructure and schools plus pay its pension obligations? I think any objective person knows the answers to these questions and therefore knows this is just the first round of tax hikes and defining “the rich” in Illinois.


  12. - Rich Miller - Monday, Mar 18, 19 @ 9:50 am:

    ===the raised rate a few years back meant more spending===

    You might wanna tell them (and yourself) that over 90 percent of that 2011 tax hike went to fund the pensions.


  13. - wordslinger - Monday, Mar 18, 19 @ 9:59 am:

    –I really think the Republicans are fighting the wrong battle. Argue that the state should stop doing certain things and list those things. Argue that the state can do the same with less, and show how.–

    History has shown the idea that Republicans, at any level, are concerned about spending restraint has been an unsupported fantasy since the 1980s.


  14. - Juvenal - Monday, Mar 18, 19 @ 10:00 am:

    The flip side of that “safety valve” is that the flat tax makes it impossible to pass a middle class tax cut.

    It’s all, or nothing at all.


  15. - Arock - Monday, Mar 18, 19 @ 10:01 am:

    Why people mistrust the Illinois Government? Close to twenty years with truly unbalanced budgets as they used accounting gimmicks to say they met the constitutional requirement. Pension fixes that they knew were gimmicks when they passed them and have cost taxpayers billions of dollars and the problem continues to get worse. Protecting corruption in politics instead of protecting the citizens of Illinois including the gerrymandering of districts. So why should we trust them with a new tax plan?


  16. - Anonymous - Monday, Mar 18, 19 @ 10:04 am:

    ==Raising the taxes of just the rich, therefore, is easier than raising them on everyone.==

    But didn’t Quinn have some kind of tax relief/rebate to protect middle/lower earners when he raised the flat tax?
    Aren’t there are ways to raise a flat tax on the wealthy while holding the line on lower earners?


  17. - PublicServant - Monday, Mar 18, 19 @ 10:05 am:

    ===You might wanna tell them (and yourself) that over 90 percent of that 2011 tax hike went to fund the pensions.===
    …went to pay back the debt run up by politicians to cover their euphemistic “pension holidays” and their chronic underfunding of the last 3 or 4 decades. I think I more clearly explained it for ya, Rich.


  18. - TinyDancer(FKASue) - Monday, Mar 18, 19 @ 10:05 am:

    Anonymous @ 10:04 was me.
    Typed in my name - what happened?


  19. - Anonymous - Monday, Mar 18, 19 @ 10:06 am:

    The pension debacle was largely a product of the few Republican governor’s this state had. Thompson, Edgar, Ryan. The bill backlog is a product of Rauner. If R’s want to throw Partisan punches, there are plenty to throw.

    They will be met with Considerable Political Will.


  20. - Jocko - Monday, Mar 18, 19 @ 10:12 am:

    All I keep hearing from the ILGOP is the warning “You’ll be sorry (exclamation point)” No offense, but that’s not a legislative position…only a lament.


  21. - TinyDancer(FKASue) - Monday, Mar 18, 19 @ 10:15 am:

    ==You might wanna tell them (and yourself) that over 90 percent of that 2011 tax hike went to fund the pensions.==

    Weren’t pensions underfunded in the first place because of a lack of sufficient tax revenue? Pension payments were diverted to cover expenses when state revenues fell short.
    According to Ralph Matter, we are low-taxing low-spending state.


  22. - TinyDancer(FKASue) - Monday, Mar 18, 19 @ 10:19 am:

    Martire.
    Oy


  23. - Rabid - Monday, Mar 18, 19 @ 10:28 am:

    65% think we’re on the wrong track, you want to keep status-quo


  24. - Grandson of Man - Monday, Mar 18, 19 @ 10:35 am:

    It’s very clear what the anti-fair tax people want, and that is for everyone who’s not wealthy to bear a disproportionate financial burden of the state’s problems. This problem has been going on ever since a flat tax was enacted. We need a graduated income tax for fairness’ sake, so that people with less money can be made safer from the harm of budget cuts and have a lighter tax burden.

    The ILGOP is backed into a corner on this—a party who protects the rich even to the point of refusing tax cuts for everyone else. This is what Republicans will have to run on.

    The biggest obstacle right now is obviously passing the fair tax out of the GA, particularly the House. Arguments should be directed at Democrats who are unsure of supporting this. Maybe some Republicans can help bring a product to the GA floor without voting for it, that can help get key Democratic votes.

    But that there is a search for “what sticks” as far as arguments against a fair tax shows disingenuity and that opponents are desperate to protect the rich.


  25. - RNUG - Monday, Mar 18, 19 @ 10:47 am:

    == ===the raised rate a few years back meant more spending===

    You might wanna tell them (and yourself) that over 90 percent of that 2011 tax hike went to fund the pensions. =

    Therein lies the problem. The State wasn’t paying its’ bills. It hasn’t for years. It wasn’t even making the minimum payment on its’ bills and debt. Been doing nothing but trying to play catch-up.

    It still isn’t paying the full freight. The previous tax hike and this tax switch / hike will just get the State back to fully paying its’ annual bills.

    If you hike taxes, voters expect shiny new things … roads, buildings, jobs. Just paying for what you’ve already used and fixing broken stuff isn’t sexy … but that’s what needs to be done.

    It’s a dangerous move politically, but JB needs to explain that … in one syllable words. Heck, just say Rauner wasted all the State’s money for 4 years. Then explain the graduated income will let the State pay its’ bills. If you want existing roads fixed and new roads built, it will require new taxes. New building projects and local grants will require even more new taxes. If you want property tax reduction, the State has to drastically up its’ K-12 school funding, and then even more new taxes or an even higher income tax is needed. And he could lay it all on Rauner and not even mention the IGOP.


  26. - wordslinger - Monday, Mar 18, 19 @ 10:50 am:

    –So why should we trust them with a new tax plan?–

    Because the new plan will raise rates on 3% while the current plan will almost certainly raise rates on 100%?

    Unless you know of some double-secret-probation alternative government that can take over and replace the constitutionally elected one.


  27. - thechampaignlife - Monday, Mar 18, 19 @ 11:08 am:

    Rather the try to nix the graduated tax with weak arguments, ILGOP really needs to advocate for a new “safety valve” if they want to walk away from this with something. Make the top rate no higher than twice the lowest rate, for example.


  28. - Sue - Monday, Mar 18, 19 @ 11:25 am:

    RNUG- doesn’t help that JB proposed a partial pension holiday in order to spend available revenue on what some might call discretionary items. How does that win trust?


  29. - guess who - Monday, Mar 18, 19 @ 11:36 am:

    Question of trust? Baise is right; Jb should not be trusted.

    Why? Because both sides of the ledger should be mastered by the leader, not just one.
    All revenue, and no expense management makes Jb an untrustworthy executive.

    He has shown zero competence in understanding that Illinois spends too much money.

    There will be growing distrust as this becomes more obvious.

    Full speed ahead.


  30. - wordslinger - Monday, Mar 18, 19 @ 11:41 am:

    –He has shown zero competence in understanding that Illinois spends too much money.–

    Help him. Start going through those budget books and crossing out line items. Show your work.


  31. - Honeybear - Monday, Mar 18, 19 @ 11:53 am:

    “He has shown zero competence in understanding that Illinois spends too much money.”

    You mean like Rauner spent on IT contracts and exorbitant consulting contracts like Mackensie, Deloitte, etc? Yeah, that stuff needed to be cut. But I would suggest that the zero competence is in your understanding of what needs to be spent and where in state government. So again I say, go ahead tough guy. Tell me what you’d cut
    Specifically

    You are obviously privileged from the
    pain of deprivation
    from the last four years.

    You have no idea what was done to regular folks.
    What was taken from them.
    It’s the only why you can make the statement to cut.
    because you have no idea what was already cut out, deprived, removed, neglected
    by Rauner.
    Rauner called it a “beast”
    to justify the starvation of the “beast”.
    But the “beast”
    was our poor, disabled, elderly, vulnerable, our state universities, our schools, our students, our public servants, our teachers, our local governments

    and you blithely
    admire cutting the beast more.

    Malignant Callousness
    produced by isolating privilege


  32. - Grandson of Man - Monday, Mar 18, 19 @ 12:20 pm:

    If it didn’t harm people it would be funny watching right wingers try to spin tax cuts for 97% as something bad. They say government shouldn’t be trusted to do the right thing. Well then, less money out of taxpayers’ pockets means less money for the government to mishandle, right? Wrong. Not in right wing propaganda-land, where messaging collides into itself. It’s bad to give government more money to spend, therefore it’s bad to enact tax cuts so that 97% of us pay the bad government less of our money. Is BTIA back doing messaging?


  33. - RNUG - Monday, Mar 18, 19 @ 12:22 pm:

    == doesn’t help that JB proposed a partial pension holiday in order to spend available revenue on what some might call discretionary items. ==

    True.


  34. - Left Leaner - Monday, Mar 18, 19 @ 12:31 pm:

    I get WSJ’s point, but it’s just not going to happen. Speaking as a middle class voter, I don’t want to see rich people leave Illinois, and I don’t talk to anyone who does. It’s about equity and equality, but attempts to continuously raise taxes on the wealthy would not be well received (I think) by the majority of IL voters.


  35. - Not a Billionaire - Monday, Mar 18, 19 @ 12:35 pm:

    The rich really stepped into it in this college admissions scandal.
    The ad
    The people that kept your kid out of college want to increase your taxes send them a message vote Yes on the Constitutional amendment.


  36. - Pundent - Monday, Mar 18, 19 @ 12:38 pm:

    =attempts to continuously raise taxes on the wealthy would not be well received (I think) by the majority of IL voters=

    There’s a lot of people out there that think the system is rigged for the wealthy. Whether it’s a majority or not is debatable but there’s certainly a fair amount of evidence to show that flat and regressive taxes have benefited the wealthy to the detriment of the middle class. A lot of folks might see this as more of a leveling of the playing field.


  37. - Lester Holt’s Mustache - Monday, Mar 18, 19 @ 12:50 pm:

    ==understanding that Illinois spends too much money.==

    I don’t know if this is actually true. Republicans say it a lot, but a lack of spending on education is the biggest reason our property taxes are so high. Maybe it’s more like Illinois spends money on the wrong things.


  38. - OneMan - Monday, Mar 18, 19 @ 12:56 pm:

    Wow, people don’t want to pay more taxes? This is a surprise to people?

    Because the message right now is, hey let’s change the tax system, most of you are going to pay less in taxes and we are going solve the financial problems of the state.

    I’m gonna fix the problem and someone else is going to pay for it.

    It isn’t going to be that hard to write ads that make that sound illogical.

    That sounds, well kind of like the same thinking that got us pension holidays and everything else that helped lead to this mess.

    I am fine with paying some more to the state, I really am. My fundamental concern it is going to be easy for the legislature to just increase taxes on the ‘x%’ it isn’t going to stay the 3%, let’s not kid ourselves.


  39. - illinifan - Monday, Mar 18, 19 @ 12:57 pm:

    The rich own much of the media so they are doing a good job framing the message that taxes on the rich will hurt the middle class. and the middle class buys into this propaganda. One of these days we will wake up and ensure that taxes are set so they are progressive.


  40. - SSL - Monday, Mar 18, 19 @ 1:03 pm:

    People are going to vote for the CA because of the college scandal? Seriously?

    The trust issue is real, but it will take funding to get the messaging out there to drive people to the polls. JB can counter, and he will, but his challenge will be that people really don’t like or trust Madigan and he’s still around. Rauner is gone.

    It will be interesting to see how many other taxes JB proposes at the same time. Increase too many, like a big gasoline tax, and it could further erode trust.


  41. - filmmaker prof - Monday, Mar 18, 19 @ 2:13 pm:

    ===I don’t get it.===

    “People don’t generally care about taxes on someone else. And rich people are never very popular as a whole. Raising the taxes of just the rich, therefore, is easier than raising them on everyone.”

    Rich, but if that’s true, doesn’t it mean it will be easy to create a graduated income tax?


  42. - wordslinger - Monday, Mar 18, 19 @ 2:18 pm:

    –Seriously- the media so despises anything other then progressives that one would think they are employees of the DNC–

    Yeah, the troncs and WSJ are just like Trotskyite reunions.


  43. - Nick Name - Monday, Mar 18, 19 @ 3:04 pm:

    ===- guess who - Monday, Mar 18, 19 @ 11:36 am:===

    Brucie, is that you?


  44. - OneMan - Monday, Mar 18, 19 @ 3:12 pm:

    The post about the next pension bomb illustrates the whole trust issue.

    They can’t even partially “fix” the problem right, but trust them with it now…


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