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* Earlier today, some Democratic legislators announced a new set of policies that they hope their party and voters will support. From their new website…
Priority Legislation: SJRCA 1 — Amends the Illinois Constitution to allow us to tax billionaires at a higher rate than janitors.
Principles
* Big corporations shouldn’t get huge tax breaks from the state that aren’t available to small businesses
* Stock market income shouldn’t be taxed at a vastly lower rate than income from working a job
* The highest earners should pay more than working people and the poor to stabilize our budget
* We should expand the Earned Income Tax Credit to support low-income working families
Emphasis added because I thought stock market income was taxed in Illinois like all income.
* So, I asked for clarification…
Yes, but it’s taxed at a vastly lower rate at the federal government, so we propose raising the rate in Illinois somewhat to bring it closer to parity.
* The Question: Do you support raising the state’s personal income tax rate on investment income? Click here to take the poll and then explain your answer in comments, please.
posted by Rich Miller
Wednesday, Mar 29, 17 @ 1:10 pm
Sorry, comments are closed at this time.
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Wish they had more detail and included some actual numbers…
Comment by Robert the 1st Wednesday, Mar 29, 17 @ 1:16 pm
What # does the gov’t have a right to take from you? 60%? 70%? 80%? 99%? Democrats NEVER answer this question because they are socialists at heart. Rich already pay more. Let’s move to a federal flat tax.
Comment by John Rawlss Wednesday, Mar 29, 17 @ 1:17 pm
They want to go to all of the trouble to amend the constitution but aren’t going for a graduated income tax? That might be the dumbest idea ever.
Comment by 47th Ward Wednesday, Mar 29, 17 @ 1:19 pm
Let’s punish investors - that’ll teach’em.
Comment by DD Wednesday, Mar 29, 17 @ 1:19 pm
===Rich already pay more. Let’s move to a federal flat tax.===
Except, when they don’t. The tax code (federal and state) are set up to reduce taxable income of the rich. Millionaires and Billionaires get off scott-free every year. Our current President is a prime example.
A true fair tax, where everyone is taxed the same % and not allowed any subtractions, credits, exemptions will never happen.
Comment by Dublin Wednesday, Mar 29, 17 @ 1:21 pm
What’s the definition of a billionaire? Is it $250k, (the federal definition) or $1,000,000,000.
Comment by billionaires Wednesday, Mar 29, 17 @ 1:24 pm
Amend if let it be so.
Take out that silly pension clause too while you’re there
Comment by Anonymous Wednesday, Mar 29, 17 @ 1:24 pm
Oh, and I voted no. From the clarification they provided Rich, it sounds to me like their goal is to get investment income taxed all the way up to 39%. That’s nuts.
Comment by Robert the 1st Wednesday, Mar 29, 17 @ 1:24 pm
47th ward is right. What is wrong that some party some where cannot come up with anything but the same old same old. Billionaires not paying their fair share. Welfare cheats gaming the system. Every answer is a campaign slogan. Maybe we should amend constitution and give everyone one 12 year term so this constant running for re election would stop and something might accidentally get done
Comment by DuPage Saint Wednesday, Mar 29, 17 @ 1:25 pm
Dublin - the Cruz plan was very close. 10% income, 10% VAT. Only 2 forms of deductions.
Comment by John Rawlss Wednesday, Mar 29, 17 @ 1:26 pm
No. It should be taxed the same at the state and federal levels. Just because the feds messed things up nationally is no excuse to mess things up locally. Uhgg the dems really screwed this whole thing up by muddying issues. Keep it simple. Oy.
Comment by Ducky LaMoore Wednesday, Mar 29, 17 @ 1:36 pm
===the Cruz plan was very close. 10% income, 10% VAT. Only 2 forms of deductions.===
No way it every comes to light. Way too much money involved in lobbying to ever allow that. You’ll have every sector voting against it:
Homeowners: Where’s my mortgage interest deduction
Student Loans: Where’s my student loan interest deduction
Students/Parents: Where’s my tuition deduction
Business owners: Where’s my EDGE credit
And on and on and on…THIS is the problem with our tax code.
Comment by Dublin Wednesday, Mar 29, 17 @ 1:36 pm
===What # does the gov’t have a right to take from you? 60%? 70%? 80%? 99%? Democrats NEVER answer this question because they are socialists at heart.===
Democrat here — I’ll answer this question so you can stop using that nonsensical absolute:
We’re talking about income tax here. I’m not aware of anyone paying a 60% income tax in this country? Are you? Sounds like you’re screaming about hyperbole and making up numbers to suit your argument.
Illinois has a flat tax. Look at the history of that rate. Mere pennies on the dollar. Illinois has a budget problem and a debt problem. I bet that has to do with that rate. Property taxes are high. Why? Well, someone has to pay for schools and the state isn’t really taxing enough to do that very well.
Y’all have had a Republican Governor for almost 3 years now, he’s had 3 budget opportunities, and not once has he introduced a balance budget. He expects imaginary revenues and imaginary savings. If you want to claim we can run our government at 3.75% how about you show us how it’s done before you cry like a little entitled ***** about taxes.
Now — this Democrat can’t speak for all Democrats, but he likes what our neighbors in Iowa and Wisconsin do which involves a progressive tax rate.
But if we have to keep it flat, here’s what we do — increase that rate up to 7%, get rid of the retirement income tax subtraction and provide a 10k individual exemption the primary and per the secondary filer on the return and then no additional exemptions (no extra ones for lots of kids) and then go ahead and make that exemption for old folks 20k too.
And then after all the bills are paid, after the pension is caught up, after we’ve erased the stain of Baby Boomer Finances from the State of Illinois, then, maybe, maybe we can talk about lowering the tax rate.
Other alternatives? How about we discuss a progressive tax rate.
Because while you’re making up tax rates — I don’t understand why anyone deserves to be a billionaire. Bruce Rauner has surely shown there’s nothing special, wonderful, or specifically great about a person that allows them to put their individual profit above anyone else.
So it’s put up or shut up time. If you want to cry about taxes, it’s time to show me what public programs you want to eviscerate. No more arguing from fallacy.
No more “Democrats never answer”
Because I’m a Democrat, and I just did.
Comment by Anon Wednesday, Mar 29, 17 @ 1:37 pm
You would need to tax investment income at a MUCH higher rate to come anywhere close to “equalizing” the preferential treatment that it gets on the federal level.
I normally roll my eyes when people claim this change or that change will drive people out of the state. This absolutely will.
Comment by so... Wednesday, Mar 29, 17 @ 1:39 pm
The copy on their landing page is quite childish - do they really mean just billionaires or are they meaning amend the constitution to allow for a graduated income tax? And at what income point are they hoping to increase rates, or are they scared to propose that?
I voted yes anyway, as the proposal is better for the budget and the state than the status quo.
Comment by Robert the Bruce Wednesday, Mar 29, 17 @ 1:40 pm
Raise taxes on everything until the bills are paid. I don’t care how high…
Comment by Saluki Wednesday, Mar 29, 17 @ 1:40 pm
===This absolutely will.====
And cutting $10 billion a year out of the state budget is going to make Illinois a great place to live, right?
Comment by Anon Wednesday, Mar 29, 17 @ 1:41 pm
Voted yes with the caveat that there should be an age/disability exemption and the rate tied to the actual investment income, i.e. higher rate for 100k +, etc.
Comment by Swift Wednesday, Mar 29, 17 @ 1:43 pm
If we’re going to amend the constitution we should do so to implement a progressive income tax system for Illinois. It could be implemented in such a way that many lower income people wouldn’t be paying any more than they do now.
Comment by The Dude Abides Wednesday, Mar 29, 17 @ 1:48 pm
No. If they do tax investment income at a higher rate, it could result in an more retirees leaving the state.
Comment by Winnin' Wednesday, Mar 29, 17 @ 1:49 pm
All income should be taxed the same, regardless of source, which doesn’t necessarily mean yes or no to your poll, so I answered no. I would vote yes to expanding the income tax to “retirement” investment income.
Comment by Anon Wednesday, Mar 29, 17 @ 1:57 pm
Retirees are leaving the state.
Comment by see ya Wednesday, Mar 29, 17 @ 1:57 pm
Wholly ignorant on the subject, but I’m intrigued. Currently, I abstain.
Comment by AlfondoGonz Wednesday, Mar 29, 17 @ 1:58 pm
No, it should be taxed at the same rate as all other income. For LT cap gains, specifically, the “gain” should be discounted by the amount of inflation in the interim.
Comment by Anonymous Wednesday, Mar 29, 17 @ 2:02 pm
Financial services are a major part of the Chicago economy and civic life, from the CME to Hedge Funds and everything in between. And those jobs are very mobile… Turn out the lights.
Comment by man oh man Wednesday, Mar 29, 17 @ 2:02 pm
@2:02pm was me.
Comment by Hieronymus Wednesday, Mar 29, 17 @ 2:06 pm
No. They didn’t specify if the janitor is retired or not.
Comment by City Zen Wednesday, Mar 29, 17 @ 2:07 pm
Though Rauner no longer works at GTCR, he told the Tribune in a 2014 interview that his finances were still deeply intertwined with his old company. He said at the time that his income was greatly dependent on capital gains and fees for managing multibillion-dollar GTCR investment funds.
“I’ve been a very large owner in every GTCR fund over 32 years,” Rauner said. “I also have other personal investments, some of which generate ordinary income of various types, some of which generate capital gains, some of which generate interest income.”
As in other years, Rauner’s 2014 returns reflected no regular business income that could be subject to high tax rates. He has acknowledged to the Tribune that fees charged by GTCR to manage investment funds are routinely waived and converted into a stake in the firm’s own investments. That bookkeeping maneuver is used to allow top GTCR managers to count what they receive from such income as lower taxed capital gains rather than higher taxed income.
http://www.chicagotribune.com/news/local/politics/ct-bruce-rauner-income-tax-returns-met-20151016-story.html
Comment by Liberty Wednesday, Mar 29, 17 @ 2:09 pm
Janitors? That’s so 1981.
Comment by Oh Boy Wednesday, Mar 29, 17 @ 2:20 pm
Stock market income generally means either capital gains or dividends. It’s essentially the same thing as the proceeds from a regular worker’s 401-K.
Comment by Keyser Soze Wednesday, Mar 29, 17 @ 2:23 pm
Investment income is generally taxed lower because it has already been taxed at the corporate level.
Now if they really mean is they want to close the carried interest loophole that benefits private equity investors above other investors, then they should say that.
Comment by A Jack Wednesday, Mar 29, 17 @ 2:33 pm
Capital gains tax rates benefiting wealthy are protected by both parties
https://www.washingtonpost.com/business/economy/capital-gains-tax-rates-benefiting-wealthy-are-protected-by-both-parties/2011/09/06/gIQAdJmSLK_story.html?utm_term=.3720a0e1b71a
“For the very richest Americans, low tax rates on capital gains are better than any Christmas gift. As a result of a pair of rate cuts, first under President Bill Clinton and then under Bush, most of the richest Americans pay lower overall tax rates than middle-class Americans do. And this is one reason the gap between the wealthy and the rest of the country is widening dramatically.”
Comment by IllinoisBoi Wednesday, Mar 29, 17 @ 2:38 pm
What they need to do is stop exempting from Illinois tax items that are taxable at the federal level: pensions, Social Security, traditional IRA distributions, 401k distributions, non-combat military pay. And get rid of popular giveaway schemes - it’s the Department of Revenue, not the Department of Refunds - for example the state EITC, which isn’t enough to help anybody but which the state can’t afford. But I won’t wait up.
Comment by Excessively Rabid Wednesday, Mar 29, 17 @ 2:41 pm
That would be one sure way that we would have to blame someone other than the 17 billionaires in Illinois for all of our problems.
Comment by Lucky Pierre Wednesday, Mar 29, 17 @ 2:45 pm
“No government other than the state may impose a tax on income.” So no Federal taxes? Those rebels. : )
Comment by A Jack Wednesday, Mar 29, 17 @ 2:46 pm
I voted no — this is just the old Progressive “All your income and savings are belong to us” notion, in a new bottle.
Comment by Curmudgeon Wednesday, Mar 29, 17 @ 2:58 pm
Income is income.
Why should someone with an investment portfolio get taxed at a lower rate than someone who actually works for a living?
It costs money to go to work every day while it costs nothing to watch investments grow and cash the annuity checks.
Retirement investments should be excluded from this with age and capped portfolios.
Comment by Chicago 20 Wednesday, Mar 29, 17 @ 3:13 pm
Well I don’t necessarily agree with the plan I do have to give credit to the work that was done on this. It’s an effort to invigorate Illinois and that’s more than what I’ve seen for quite some time. We’re a blue state and I don’t think we’re going to get past this, somehow and someway these changes are going to occur.
Comment by cgo75 Wednesday, Mar 29, 17 @ 3:16 pm
Sorry but raising taxes won’t “invigorate” this state or any business except for moving companies.
Comment by Downstate Illinois Wednesday, Mar 29, 17 @ 3:23 pm
Yes, because I don’t currently have any investment income. I am always in favor of increasing any tax I won’t personally have to pay.
Comment by Downstater Wednesday, Mar 29, 17 @ 3:26 pm
This would certainly “stimulate” the exodus of people that worked and saved for retirement from Illinois as well as enhance the “Dem’s” owned/indentured voters.
Comment by Harpy Wednesday, Mar 29, 17 @ 3:30 pm
I agree Downstate…..but that’s not the opinion of most in Illinois.
Comment by cgo75 Wednesday, Mar 29, 17 @ 3:31 pm
You need to add in the real estate tax burden to compare effective rates. in the Northern burbs the rates run 3% to 5% of home value. Most residents here already have an exit plan.
Comment by Civilspk Wednesday, Mar 29, 17 @ 3:35 pm
==income is income…it costs money to go to work every day while it costs nothing to watch investments grow and cash the annuity checks…Retirement investments should be excluded from this==
Wow, you are all over the place with this. I thought income is income?
Comment by City Zen Wednesday, Mar 29, 17 @ 3:37 pm
They lead the State into the abyss and then say trust us we can fix it, not following for it again. The Democrats have had their turn and all they want to do is more of the same, time to change course and dump their Speaker.
Comment by Arock Wednesday, Mar 29, 17 @ 3:42 pm
Paterakis, the only one that wants to make sure the rich pay their share. Progressive tax over $1mil. No need for pension taxes or stock tax increases. I will be avenged!!!
Comment by Alexander Paterakis - Your friendly neighborhood Candidate Wednesday, Mar 29, 17 @ 3:43 pm
Terrible idea. In addition to what others have said about preferring progressive rates and the high rates it would take to make up for the federal rate difference, one thing I have not seen pointed out is the pain we will feel if the feds reduce/eliminate that difference after we have become dependent on that extra revenue.
Comment by thechampaignlife Wednesday, Mar 29, 17 @ 3:51 pm
Voted no. Their explanation sounds like a poor attempt to cover up the fact that they got federal and state tax matters mixed up. Until they were called out on it, I’ll be no one ever thought of taxing investment income higher than wages. If they had, they would have said that in their principles.
Comment by Whatever Wednesday, Mar 29, 17 @ 3:54 pm
- Anon - Wednesday, Mar 29, 17 @ 1:37 pm:
Nicely written, and as Republican I agree with just about all of it.
Except for this part:
I don’t understand why anyone deserves to be a billionaire.
I believe everyone deserves a CHANCE to be a billionaire. And that is the basic difference between a D and R.
Comment by allknowingmasterofracoondom Wednesday, Mar 29, 17 @ 4:30 pm
I am of the opinion that what we need is a graduated income tax with tax rates that are fair but not punitive. Having an especially high rate for investment income is simply punitive and discourages investment. That is no good for anyone. Investment builds jobs.
Comment by Skirmisher Wednesday, Mar 29, 17 @ 5:12 pm
- Investment builds jobs.
“This economic claim is 180 degrees out of alignment with reality. The point of investment is to eliminate jobs.”
https://www.forbes.com/sites/baldwin/2013/03/18/dumb-idea-investment-creates-jobs/amp/
Comment by Chicago 20 Wednesday, Mar 29, 17 @ 5:38 pm
They need to pass a bill for a graduated income tax instead of amending the State Constitution.
Comment by Mama Wednesday, Mar 29, 17 @ 5:52 pm
These guys live in an alt universe. Illinois leads the nation in population loss and someone thinks penalizing citizens who own stock would be a plus. It’s hard to be respectful when reading stuff like that
Comment by Sue Wednesday, Mar 29, 17 @ 6:10 pm
== They need to pass a bill for a graduated income tax instead of amending the State Constitution. ==
Actually, they need to pass an amendment the 1970 Constitution to allow a graduated income tax to be presented to the voters in the 2018 election. Until then, they need to boost the flat income tax to between 5% - 6% to start the State on the road to recovery.
Comment by RNUG Wednesday, Mar 29, 17 @ 8:09 pm
=== - Mama - Wednesday, Mar 29, 17 @ 5:52 pm:
They need to pass a bill for a graduated income tax instead of amending the State Constitution. ===
You are simply clueless.
Comment by Cadillac Wednesday, Mar 29, 17 @ 8:46 pm
Income is income……uh….unless its a State pension. Can’t tax those now, can we? Most retirees that don’t get a State pension live off of investment income. Cap gains and dividends taxed as income is bad enough, any higher and all the retirees are gone.
Comment by Anon Wednesday, Mar 29, 17 @ 8:59 pm
=== - Anon - Wednesday, Mar 29, 17 @ 8:59 pm:
Income is income……uh….unless its a State pension. Can’t tax those now, can we? Most retirees that don’t get a State pension live off of investment income. Cap gains and dividends taxed as income is bad enough, any higher and all the retirees are gone. ===
Exactly.
Comment by Cadillac Wednesday, Mar 29, 17 @ 9:06 pm
== Income is income……uh….unless its a State pension. Can’t tax those now, can we? Most retirees that don’t get a State pension live off of investment income. Cap gains and dividends taxed as income is bad enough, any higher and all the retirees are gone. ==
That is a bit disingenuous.
Illinois doesn’t tax ANY retirement income. Not pensions, government OR private. Not Social Security. Not 401K’s. Not IRA’s. Not Deferred Compensation Plans. If you have your investments inside ANY federally recognized retirement instrument / account, it isn’t taxed by the state … period.
If you are retired in Illinois and paying state income tax, then you are earning non-retirement income from either a job or non-retirement savings. And if all your “retirement” savings are in non-retirement accounts, you only have yourself to blame; you had a poor financial / tax advisor.
The fact Illinois taxes NO ONE’S retirement income is why it will never change; too many votes against taxing grandma’s Social Security. The other problem is the various proposals to just tax retirement over $50k or whatever level is that analysis by IDOR and COGFA show it isn’t worth it; very little money for the effort.
Comment by RNUG Wednesday, Mar 29, 17 @ 11:44 pm
Wonderful, I save some extra money by living within my means in order to invest for my future with my earned money that has already been taxed and now the answer is to take even more from me because I was responsible. I have had enough, 2.5 years to go and I’m out of this state.
Comment by ejpp Thursday, Mar 30, 17 @ 12:29 am
- ejpp - Thursday, Mar 30, 17 @ 12:29 am
This poster NAILED IT. I have said this type of thing for years. Take 2 people who earn the same, first one spends everything and then some while the other saves and invests. The second one is “lucky and rich” and must share his savings with the first one.
I voted NO.
Comment by Late to the Party Thursday, Mar 30, 17 @ 5:11 am
The arguments for taxing investment income at a lower rate than labor income are not credible. Both capital income and ordinary income from IRAs and labor income should be taxed at the same rate - at least at the federal level. Returns historically in stocks are well above interest income in a bank so people won’t suddenly stop investing if capital income and non capital income are treated equally in the code. Some context thoug would help: how do other states with progressive income tax tax labor vs capital income?
Comment by ethanol74 Thursday, Mar 30, 17 @ 5:31 am
I do agree that pension income should be taxed, albeit progressively. The poster earlier above is correct.
Comment by Ethanol74 Thursday, Mar 30, 17 @ 5:34 am
Pass this and I am going to invest in a moving van company and I will be the first customer. My trucks will be busy and I will create many jobs and all those job holders will live in a neighboring state. Wake up folks, we cannot continue to over tax those who have paid their fair share over the years.
Comment by the old man Thursday, Mar 30, 17 @ 8:20 am
“Until then, they need to boost the flat income tax to between 5% - 6% to start the State on the road to recovery.”
They did that for three years and we still saw people fleeing the State, job growth at a rate slower then surrounding states. and still didn’t eliminate the debt as intended. Start with charting a new course with reforms, eliminate redundancy in government,prioritize and then increase taxes only after you implement change. That is what will show business that Illinois can climb out of this abyss. Get rid of gerrymandering so the citizens of Illinois feel they have a voice and mostly a choice that stands a fighting chance at election time.
Comment by Arock Thursday, Mar 30, 17 @ 9:16 am