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Senate income tax roundup

Thursday, May 2, 2019

* The Sun-Times headline was great today

‘Stairway to Heaven’ longer than Senate debate before historic tax vote

You don’t usually hear much from proponents during a tax vote, but it was kinda weird that the Republicans didn’t put up more of a floor fight.

* From the Tina Sfondeles story

After just seven minutes of debate, Senate Democrats took the first major step Wednesday in advancing Gov. J.B. Pritzker’s goal of revamping how the state taxes income — seeking the biggest change in the state income tax since it was enacted a half century ago.

The Illinois Senate passed its version of a graduated income tax package on strictly partisan lines — and its fate now lies within the Illinois House, where changes are anticipated. […]

Up next is a battle in the Illinois House, where not all facets of the plan may make it through. Legislators have just weeks to figure out a capital plan, approve a budget and try to pass another one of Pritzker’s priorities: legalizing recreational marijuana. It sets the stage for an action packed home stretch of the spring session.

Steve Brown, spokesman for Illinois House Speaker Mike Madigan, said the speaker will “continue to work with the governor and the Senate supporters to move that all to the governor’s desk.”

“Just a reminder that the speaker has supported it since November,” Brown said of the graduated income tax plan.

It’ll be tougher to pass this constitutional amendment in the House, but I do think it’ll still pass. If it goes down, the whole session will explode.

* Tribune

House Democratic leader Greg Harris of Chicago said the concept of a graduated tax has broad support among his caucus, but before the House votes, Democratic leaders need to “carefully analyze” the Senate’s changes to Pritzker’s original proposal.

“We need to review them,” Harris said. “It’s very complicated legislation. It has a lot of moving parts.”

Somehow, I just cannot see the House sending a bill to repeal the estate tax to the desk of a billionaire governor who inherited much of his wealth, unless they want to truly mess with the guy.

* Meanwhile, on the one hand, you see rhetoric like this Daily Herald editorial

Since even before Pritzker won election last November, opponents to a graduated income tax have decried the change as a grand “bait-and-switch” scheme in which lawmakers will get voters to free them from the yoke of a constitutionally mandated flat tax, then run rampant adjusting a graduated income tax schedule however the mood suits them to meet ever-increasing spending goals.

On Wednesday, senators demonstrated that not only is that a legitimate fear but they’re willing to do the switching even before the bait has been taken.

True, the complaint about lawmakers running amok with taxes under a graduated system ignores the fact that they could just as easily run amok with the existing flat tax. And, true, the changes approved Wednesday were not comprehensive; they accounted for only a small fraction of a percentage point in the middle to upper regions of the income scale. But, let’s be real, lawmakers have been playing fast and loose with the flat tax since installing a “temporary” increase in 2011, letting it expire in 2014, then hiking it again in 2017, this time to 4.95% and permanently.

Yeah, those flat tax hikes were soooooo easy to pass. No problems at all. Fast and loose.

* On the other hand, you see this

Senate Republican Leader Bill Brady of Bloomington said the current flat tax system protects taxpayers because lawmakers are reluctant to raise taxes on everyone and that a graduated tax amendment will be defeated by voters.

“We believe our current Constitution crafted by the 1970 constitutional convention wisely decided that Illinois taxpayers need protections against politicians,” Brady said. “The fact that our Constitution currently calls for a flat tax has given various protections to those individuals and protected, we believe, the middle class.”

He said a graduated tax will open the door to raising taxes on the middle class. Harmon, though, said it is false that a flat tax protects the middle class.

“It does exactly the opposite,” Harmon said. “If you are saying the flat tax is a good idea, you are protecting the uber rich, not the middle class.”

Brady is right. The flat tax has most definitely worked against attempts to raise the rates because they’d have to raise ‘em on everybody. Upper-income earners are right to be wary of this change and Harmon just confirmed it, as did Sen. McConchie

“With a flat tax, you raise rates on everybody,” said Sen. Dan McConchie, R-Hawthorn Woods. “The changing of rates becomes not an issue of first resort but an issue of last resort. As soon as we implement a graduated tax system, we actually make it structurally and politically easier to change those rates and brackets going forward.”

Yep.

- Posted by Rich Miller        

48 Comments
  1. - wordslinger - Thursday, May 2, 19 @ 10:21 am:

    –As soon as we implement a graduated tax system, we actually make it structurally and politically easier to change those rates and brackets going forward.”–

    You could have proposed chaining the rates. With any future increases or decreases, all brackets adjust equally.

    But Republicans need funders now that Rauner is gone, and likely sources want to kill the amendment outright.


  2. - Rich Miller - Thursday, May 2, 19 @ 10:22 am:

    ===You could have proposed chaining the rates===

    Agreed. And I also agree with the rest of what you said.


  3. - Grandson of Man - Thursday, May 2, 19 @ 10:24 am:

    We sadly have very recent history that beckons Democratic House members to pass the amendment. Do they want to make drastic cuts after we experienced two years without a full budget? Or do they want to pass a flat tax increase that is more harmful than the graduated income tax?


  4. - RNUG - Thursday, May 2, 19 @ 10:26 am:

    This is a case where:

    (a) both sides are partially right

    (b) the Illinois citizens should get to decide

    (c) most likely, pure democracy will override the monied aristocracy

    Which is why the 3% (funded by the 1.4%) is desperately trying to stop this before it goes to the voters.


  5. - Perrid - Thursday, May 2, 19 @ 10:26 am:

    Brady is not “right”. At the very least he is being intentionally misleading if not outright lying through his teeth. When he says the flat tax “protects taxpayers”, that very much implies it protects at least the majority of taxpayers, if not the entirety of taxpayers. That’s absolutely how he hopes people will understand him. This is not true. A flax tax protects the minority of taxpayers, the rich and the very rich. So Brady is advocating for taking someone making $50k hostage to protect someone making $500k. But he can’t say that and get reelected, so he lies.


  6. - Anon - Thursday, May 2, 19 @ 10:27 am:

    The Dems did not enjoy the super-majority that they have now, and will likely enjoy for many years. So, history of changes to the income tax isn’t a good comparison of what might happen in the future.

    Also, unless there’s a way to adjust the brackets in the future, the higher rates will continue to capture more people as incomes rise (assuming they do). This is similar to the AMT at the federal level that wasn’t addressed until Trump’s tax reform. Not addressing that issue seems like a policy flaw, but it probably isn’t bad for future political pandering for both sides.


  7. - wordslinger - Thursday, May 2, 19 @ 10:28 am:

    For all the superficial and lazy talk over the years from the usual suspects on how Boss Madigan runs the state, it’s been clear for some time that the Senate Dems are a much tighter and effective crew.

    I can’t recall an instance where Cullerton got rolled by the likes of a Ken Dunkin, Scott Drury or Jack Franks, like Madigan was dozens of times during the Rauner years.


  8. - CPA - Thursday, May 2, 19 @ 10:29 am:

    Sorry, I am part of the 97% and won’t support this.

    Not without guarantees of no further hikes, bans of regressive taxes, etc…

    If they want to tax the rich go do it, but then make sure you give the middle class actual relief. Not $50.


  9. - State of DenIL - Thursday, May 2, 19 @ 10:36 am:

    Does Bill Brady also think it was wise to make pensions irrevocable individual contracts? I recall that he was cool with changing the Constitution when he was trying to stiff teachers.


  10. - 2018 - Thursday, May 2, 19 @ 10:37 am:

    Senate debate seven minutes BUT this debate has went on for a year and the voters must want it


  11. - wordslinger - Thursday, May 2, 19 @ 10:44 am:

    –Not without guarantees of no further hikes, bans of regressive taxes, etc…–

    What such “guarantee” is possible in a representative democracy? A third tablet from Mt. Sinai? Please enlighten.


  12. - NoGifts - Thursday, May 2, 19 @ 10:48 am:

    CPA “not without bans of regressive taxes” that’s a BIG ask. Do you mean across the board? sales tax? motor fuel tax? utility taxes? or something limited to income tax?


  13. - OutHereInTheMiddle - Thursday, May 2, 19 @ 10:51 am:

    ==Not without guarantees of no further hikes, bans of regressive taxes, etc…==

    CPA - could you explain what form you would expect those “guarantees” to take? Any legislative solution is only as good as the last vote in the GA. Are you proposing a constitutional amendment that taxes can never be increased? That would work well.


  14. - Cermak - Thursday, May 2, 19 @ 10:51 am:

    Re pension protection clause: “The 1970 Con Con was thoughtful, correct, and their deliberate wording must be retained.”

    Re income tax: “They had it wrong, let’s change it.”


  15. - City Zen - Thursday, May 2, 19 @ 10:53 am:

    ==You could have proposed chaining the rates.==

    Can you please provide consulting services to the Republican Party?

    It is possible to be against a proposal and simultaneously bargain for conditions that would make that proposal more palatable.


  16. - Steve - Thursday, May 2, 19 @ 10:55 am:

    Look at the proposed tables. the millionaire doesn’t face a different marginal rates through the different brackets. That individual is locked in to a higher rate from the first dollar. Which leads to : a hail mary attempt at a 14th Amendment lawsuit in federal court. “Denial of equal protection under the law”. Why should a millionaire have to pay a higher marginal tax rate on his first 50K than a guy who makes 50K? No one is saying that progressive taxes aren’t constitutional but.. like this?


  17. - Generic Drone - Thursday, May 2, 19 @ 10:58 am:

    Agree that flat tax protects the rich. This is what happens when trickle down doesn’t.


  18. - RNUG - Thursday, May 2, 19 @ 10:58 am:

    == could you explain what form you would expect those “guarantees” to take? ==

    My version of a guarantee would be to include in the graduated CA a restriction that rates can only be changed once every 5 it 10 years barring an economic emergency (defined as a depression). Changing outside the schedule would require super majority approval.

    That is probably the best that could be done to limit the GA on future tax increases.


  19. - Fixer - Thursday, May 2, 19 @ 10:58 am:

    CZ, that’s what happens when you outright refuse to come to the table to negotiate for your actual constituents, instead of just flailing about for your donors.


  20. - Donnie Elgin - Thursday, May 2, 19 @ 11:00 am:

    “Re pension protection clause: “The 1970 Con Con was thoughtful, correct, and their deliberate wording must be retained.

    Re income tax: “They had it wrong, let’s change it.”

    Th IL Constitution apparently is a evolving document - but that evolution is limited to the progressive ideas.


  21. - wordslinger - Thursday, May 2, 19 @ 11:02 am:

    –The Dems did not enjoy the super-majority that they have now, and will likely enjoy for many years. –

    Yesterday’s votes demonstrate they have a real super-majority in the Senate. Whether it truly exists in the House remains to be seen.


  22. - Steve - Thursday, May 2, 19 @ 11:03 am:

    The flat income tax was always a deterrent on raising rates. Without it : the limits are gone.


  23. - TheInvisibleMan - Thursday, May 2, 19 @ 11:03 am:

    ===That individual is locked in to a higher rate from the first dollar.===

    Yikes.

    This guy votes.


  24. - njt - Thursday, May 2, 19 @ 11:04 am:

    ==It is possible to be against a proposal and simultaneously bargain for conditions that would make that proposal more palatable.==

    Very true, but the past 5 years show that the ILGOP to a hard turn to the all-or-nothing strategy.


  25. - City Zen - Thursday, May 2, 19 @ 11:08 am:

    ==My version of a guarantee would be to include in the graduated CA a restriction that rates can only be changed once every 5 it 10 years==

    Bingo. They could also add a clause that locks in the proposed rates for the first 5 years.

    ==Not without guarantees of no further hikes==

    Absolutely agree. While we’ll never get the guarantee you suggested, there are countless reasonable protections and guarantees either party could add.

    Then if all your criteria are met, vote no. Tell your friends. Collective bargaining is en vogue.


  26. - Grandson of Man - Thursday, May 2, 19 @ 11:11 am:

    States with graduated income taxes don’t often raise rates. But some or many of these states are partly or fully Republican.

    If Republicans are scared of the graduated income tax, maybe they should change their philosophy and win elections, so they can have actual power to stop or change things.


  27. - Michelle Flaherty - Thursday, May 2, 19 @ 11:13 am:

    I’m shocked, shocked I tell you that Sen. McConchie wants protection against democracy happening in the future.

    I would imagine the “will of the people” is a pretty unpopular sentiment in that super-minority caucus.


  28. - Skeptic - Thursday, May 2, 19 @ 11:29 am:

    “locks in the proposed rates for the first 5 years.” So you’re saying that even though the Rep has to survive 2 election cycles in 5 years, that’s not enough?


  29. - Rich Miller - Thursday, May 2, 19 @ 11:37 am:

    ===They could also add a clause===

    They could also declare the moon is made of green cheese.

    The proposal is what it is. The minority party refused to negotiate.


  30. - Rich Miller - Thursday, May 2, 19 @ 11:40 am:

    ===but that evolution is limited to===

    …the votes an issue can receive in both legislative chambers by duly elected members and by the voting public at large.

    Fixed it for you.


  31. - Robert the Bruce - Thursday, May 2, 19 @ 11:44 am:

    I hope they take out the Senate estate tax compromise/gift. Republicans didn’t negotiate and you’ll be hit for a tax hike no matter what; why give anything to folks who don’t negotiate?


  32. - Michelle Flaherty - Thursday, May 2, 19 @ 12:01 pm:

    ===They could also add a clause===

    If there was a clause protecting the uber wealthy, who would hire all the lobbyists in future sessions?

    This is about protecting and adding jobs


  33. - JS Mill - Thursday, May 2, 19 @ 12:13 pm:

    Michelle Flaherty for the win.


  34. - City Zen - Thursday, May 2, 19 @ 12:23 pm:

    ==States with graduated income taxes don’t often raise rates.==

    Then there’s nothing to worry about by adding a specific clause guaranteeing a long-term rate lock. I mean, if it’s such a rare occurrence and all. No brainer.


  35. - Chad Hays - Thursday, May 2, 19 @ 12:37 pm:

    I have been informed by reliable sources that there will be plenty of time to enjoy Led Zeppelin I - IV during the House debate. Schedule accordingly. . . . . . . .


  36. - Nonbeleiver - Thursday, May 2, 19 @ 12:44 pm:

    Are thee rates adjusted for inflation?

    If not, inflation/bracket creep will take its toll over the years and more and more will ‘qualify’ to be ‘uber rich’ when they are not.


  37. - Cook County Commoner - Thursday, May 2, 19 @ 12:49 pm:

    Some form of progressive income tax is a foregone conclusion. But when its first iteration proves insufficient, perhaps a progressive sales tax should be considered. Ban all cash sales and allow credit card software to digitally apply a progressive sales tax rate based on the users prior tear income tax return.


  38. - TheInvisibleMan - Thursday, May 2, 19 @ 12:58 pm:

    @Chad Hayes

    Houses of the Holy?

    well… probably not.


  39. - Thomas Griffin State Unviersity Employee - Thursday, May 2, 19 @ 1:04 pm:

    Here are the Bible’s two cents on the issue.

    For us the poor the sacrifice of taxes is greater.

    “He sat down opposite the treasury and observed how the crowd put money into the treasury. Many rich people put in large sums. A poor widow also came and put in two small coins worth a few cents. Calling his disciples to himself, he said to them, ‘Amen, I say to you, this poor widow put in more than all the other contributors to the treasury. For they have all contributed from their surplus wealth, but she, from her poverty, has contributed all she had, her whole livelihood.’

    Marl 12:41-44
    https://en.wikipedia.org/wiki/Lesson_of_the_widow%27s_mite


  40. - Nonbeleiver - Thursday, May 2, 19 @ 1:06 pm:

    Republicans have every right to want to kill this bill. And why should they try to work with the DEMS to make it more ‘palatable’ if they oppose it in the first place?

    Of course, there power is so limited that it really makes any difference. All DEMS have to do is hold on to downstate Democrats.


  41. - SSL - Thursday, May 2, 19 @ 1:07 pm:

    I don’t share the fear that some have that there will be an unending series of rate increases if the progressive income tax becomes law. Eventually there will need to be increases, but even then the politicians will target the upper brackets. They don’t want to anger the voters, or we would already be taxing retirement income.

    More interesting to me is the estate tax elimination, which apparently JB doesn’t support. But if it is included in the package delivered to his desk, and he signs it, then this will be one of the greatest political maneuvers of all time. The Pritzker family wins big with an elimination of the estate tax. We’ll know soon enough.


  42. - Nonbeleiver - Thursday, May 2, 19 @ 1:09 pm:

    - Cook County Commoner - Thursday, May 2, 19 @ 12:49 pm:

    Some form of progressive income tax is a foregone conclusion. But when its first iteration proves insufficient, perhaps a progressive sales tax should be considered. Ban all cash sales and allow credit card software to digitally apply a progressive sales tax rate based on the users prior tear income tax return.

    So at least this person has the courage to admit that a progressive tax as presently outlined will be insufficient and more taxes will be needed.

    Most likely true. But wonder how many other supporters will admit this.


  43. - 47th Ward - Thursday, May 2, 19 @ 2:03 pm:

    ===there will be plenty of time to enjoy Led Zeppelin I - IV during the House debate===

    Does that mean the HGOPs plan to file some amendments? Because if it simply means forty-four floor speeches saying the same variation of nuh-uh, then I’ll put in my ear buds and crank up the Zepplin.


  44. - Jibba - Thursday, May 2, 19 @ 2:19 pm:

    ===“Re pension protection clause: “The 1970 Con Con was thoughtful, correct, and their deliberate wording must be retained.

    Re income tax: “They had it wrong, let’s change it.”

    Th IL Constitution apparently is a evolving document - but that evolution is limited to the progressive ideas.===

    Donnie Elgin, Republicans are bringing up the 1970 Con Con, not Democrats. And the ILSC made the decision about the pension protection clause being valid, not Democrats. That conversation you listed above was only taking place in your own head, despite the quotes, so please leave progressives out of it.


  45. - wordslinger - Thursday, May 2, 19 @ 3:45 pm:

    –Republicans have every right to want to kill this bill. And why should they try to work with the DEMS to make it more ‘palatable’ if they oppose it in the first place?–

    That’s fine. Remember that when you hear the complaints about how the GOP wasn’t “invited to the table” and Dems “won’t compromise” on the issue.


  46. - JS Mill - Thursday, May 2, 19 @ 3:52 pm:

    =Then there’s nothing to worry about by adding a specific clause guaranteeing a long-term rate lock. I mean, if it’s such a rare occurrence and all. No brainer.=

    And thus no need since there is nothing to worry about..in your own words.

    =Republicans have every right to want to kill this bill. And why should they try to work with the DEMS to make it more ‘palatable’ if they oppose it in the first place?=

    Whelp…there is their sworn duty to govern. For starters.

    We also have bills that need to be paid.

    Is it the ILGOP’s position not to pay them?

    I am ok with that so long as all bills every where are treated the same way. The Right is always crying about what is fair and that sounds fair to me.


  47. - City Zen - Thursday, May 2, 19 @ 4:19 pm:

    ==And thus no need since there is nothing to worry about..in your own words.==

    The Art of Negotiation.

    You need 60%. Some taxpayers on the fence have stated “trust” as an issue, as in they think rates will change early and often (yes, I know they can change anytime, but this is the voter we’re trying to convince here). You’re trying to get those folks to your side of the fence. What do you offer that addresses that concern of trust? Preferably something of high value to them but throw-away to you.

    If there’s no intention to raise the rates anytime soon, then offer a long-term rate lock. The state essentially gives up nothing in exchange for the necessary votes to get this passed.


  48. - Nonbeleiver - Thursday, May 2, 19 @ 4:45 pm:

    wordslinger - Thursday, May 2, 19 @ 3:45 pm:

    –Republicans have every right to want to kill this bill. And why should they try to work with the DEMS to make it more ‘palatable’ if they oppose it in the first place?–

    That’s fine. Remember that when you hear the complaints about how the GOP wasn’t “invited to the table” and Dems “won’t compromise” on the issue.”

    No disagreement with your statement. That is something the Republicans have to accept as they, or if they, make their case to the public.


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