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Why Rauner really opposes a graduated income tax

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Illinois

* My weekly syndicated newspaper column…

JB Pritzker was recently endorsed by Crain’s Chicago Business. Yes, you read that right. The state’s premiere business magazine endorsed a candidate whose biggest promise is to raise taxes on the publication’s well-off subscriber base.

Gov. Bruce Rauner has called Pritzker’s graduated income tax proposal “a green light to raise taxes on everyone.”

Pritzker has infamously dodged hundreds if not thousands of questions about what the graduated rates will be and where the cutoff will be between a middle-class tax cut and tax hike on the wealthy.

“The reason Mr. Pritzker doesn’t want to answer the question.” Rauner said during the last debate, “is because he knows it’s going to crush the middle class, and he doesn’t want to admit it before the election.”

Maybe. But the main reason that people like Rauner hate Pritzker’s idea is not that it’ll necessarily make middle class families pay more taxes.

Increasing taxes on everyone is a very difficult thing to do here. A two-percentage point tax hike only passed in 2011 because the state was in extremely dire fiscal straits. Before that, the tax rate wasn’t increased by more than a half a point since the income tax was created in 1969. The rate was increased last year because a bipartisan supermajority in both chambers reacted to another extremely dire fiscal condition after part of the 2011 increase expired.

But it would be a whole different ball game with graduated rates. And people like Rauner know this all too well. The temptation for politicians to raise taxes only on “the rich” will be really difficult to resist during tough fiscal times.

Right now, with a flat tax, that can’t be done. A tax hike for one is a tax hike for all.

But if our state’s constitution is amended to allow for graduated rates, a Democratic legislature could decide down the road to slap an extra surcharge on all annual income over, say, a million dollars. And then do it again. Who would be opposed to that? Well, millionaires, of course, but there’s not enough of them to stop the Democrats.

I’m not saying that Rauner is trying to block a graduated tax for his own personal sake. He may be, but I’m not saying it. I’m saying that Rauner truly believes that wealthy people create jobs (even though his former firm created lots of wealth and very few actual jobs), and harming wealthy people harms job creation and that harms the poor and the middle class and Democrats don’t care about wealthy people, so the graduated tax must be stopped at all costs to protect the wealthy and the poor and the middle class.

At least, that’s the theory. The reality is more jobs were created in the four years after Illinois’ January 2011 tax hike than the four years after it was automatically lowered and then raised again.

Gov. Rauner warned that the 2017 tax increase passed over his veto would be a “disaster” for the state and imperil our economic and fiscal future, but he’s now crowing about recent job growth and a balanced budget.

Rauner’s loud warnings about the damage the tax hike would do were wrong, so, that undermines his similar warnings about a graduated tax.

And, if the polling is correct, the idea isn’t hurting Pritzker at all. Three polls in a row have shown Pritzker with double-digit leads. The most recent poll by the Paul Simon Public Policy Institute had Pritzker ahead of Rauner by 22 points.

One of Rauner’s many weaknesses exposed by the poll was that only 67 percent of Republicans supported him. I crunched the numbers and found that even if he captured 90 percent of the Republican vote, he’d move from his current 27 percent all the way up to… 31.5 percent. And if he then captured every single one of the undecided independents (an impossibility), he’d go from 31.5 percent to 37 percent.

The governor is spectacularly unpopular, but the current political environment is just horrible for his party. The partisan split in the Simon poll was a whopping 49 percent Democrat to 27 percent Republican.

The last off-year Democratic wave was 2006, and exit polls showed the partisan makeup of the Illinois electorate was 46 percent Democrat to 31 percent Republican. That’s close to the Simon Poll results.

The current environment simply makes it easier for a Democrat to talk about a tax hike and still win, particularly if his opponent is as unpopular as Rauner.

posted by Rich Miller
Tuesday, Oct 9, 18 @ 9:26 am

Comments

If the governor paid his fair share in taxes, he might not be in his $150,000 wine club! Think of the tastings! Think of the tastings!

Comment by Precinct Captain Tuesday, Oct 9, 18 @ 9:28 am
“A tax hike for one is a tax hike for all.”

A more dramatic way of saying that, is that the 1% are holding the middle class hostage to protect themselves.

Comment by Perrid Tuesday, Oct 9, 18 @ 9:31 am
It’s the same trickle-down garbage that the GOP has been selling forever. I don’t know how they’ve convinced half of the population that letting rich people keep even more money means that they’ll spend more money on wages and job creation.

Comment by TaylorvilleTornado Tuesday, Oct 9, 18 @ 9:38 am
Yes, this is the real reason.

One of the negatives about JB not putting his progressive tax plan (”first draft” or whatev) out there for comment is that his campaign could actually respond to the gov specifically when he says “The middle class will bear the brunt of the burden”. [which is what’s happening in the debate at this moment …]

Comment by dbk Tuesday, Oct 9, 18 @ 10:01 am
Minnesota is flourishing after an increase to the taxes of the upper income earners. Kansas is trying to recover after the no -tax nirvana experiment.

Who should we believe? /s

Comment by JS Mill Tuesday, Oct 9, 18 @ 10:03 am
How does Rauner’s theory account for NYC metro having nearly 4X more multi-millionaires than either Dallas or Houston? Or LA twice as many?

Graduated income taxes don’t seem to have driven the super-rich out of Cali or NYC metro.

Chicago has more multi-millionaires than either of those no-income-tax Utopias, and twice as many as Miami metro.

http://fortune.com/2017/07/26/cities-millionaires/

Comment by wordslinger Tuesday, Oct 9, 18 @ 10:07 am
==How does Rauner’s theory account for NYC metro having nearly 4X more multi-millionaires than either Dallas or Houston? Or LA twice as many?==

Overall population? Your link provides ratios based on overall population that are a better gauge.

Comment by City Zen Tuesday, Oct 9, 18 @ 10:21 am
–Overall population? Your link provides ratios based on overall population that are a better gauge.–

Why is that, if you can be super-rich anywhere?

You’re the guy who has multi-millionaires bailing to Florida every week. That isn’t the case.

Comment by wordslinger Tuesday, Oct 9, 18 @ 10:26 am
I have long opposed the adoption of a graduate income tax for the state. When public spending levels are set, I want everybody in and nobody out in paying for them.

However, higher taxes are needed to cover pensions, capital programs, and education. The trick will be to tie the tax increases to particular items of spending. We saw the bait and switch with the lottery. Lottery money was dedicated to education, but other state education funding was cut and diverted to other areas.

Comment by Last Bull Moose Tuesday, Oct 9, 18 @ 10:39 am
==Why is that, if you can be super-rich anywhere?==

Are you saying those high-end realtors on “Million Dollar Listing NY/LA” can live anywhere? Those open houses are going to be interesting logistically.

Otherwise, no, I cannot explain the migration patterns of all the super-rich. I concede.

==You’re the guy who has multi-millionaires bailing to Florida every week.==

Because I pointed out Ken Griffin has a pad in Florida? Is Ken more than one person?

Comment by City Zen Tuesday, Oct 9, 18 @ 10:39 am
==You’re the guy who has multi-millionaires bailing to Florida every week.==

–Are you saying those high-end realtors on “Million Dollar Listing NY/LA” can live anywhere? Those open houses are going to be interesting logistically.–

1. Silly argumentative gimmick. It’s in writing, so you don’t have to ask, you can just check.

2. I have no idea what any of that is supposed to mean.

–Because I pointed out Ken Griffin has a pad in Florida? Is Ken more than one person?–

Actually, I pointed that out. Florida native and multi-billionaire chooses to have his primary residence in Chicago, despite taxes.

You’re one-trick doesn’t work.

Comment by wordslinger Tuesday, Oct 9, 18 @ 10:52 am
Dartmouth must have a really poor economics program. Too bad the old man didn’t send him to a Phoenix community college.

Comment by Da Big Bad Wolf Tuesday, Oct 9, 18 @ 12:13 pm
And until the republicans have that ah ha(banned punct.) moment, they will continue their downward spiral. Better wake up republicans. The needle of what is driving voters to the voter booth has moved.

Comment by Generic Drone Tuesday, Oct 9, 18 @ 12:24 pm
The other reality is that small businesses, and their not especially high income owners, create 70 percent of all new jobs. The real “job creators” are helped, not harmed, by a graduated income tax structure.

Comment by walker Tuesday, Oct 9, 18 @ 12:35 pm
Walker. Do the real job creators know where the graduated income tax levels will be set at?

Comment by Blue Dog Dem Tuesday, Oct 9, 18 @ 1:01 pm
If Rauner paid his fair share in taxes he probably would better find use to his money besides buyinh elections.

Comment by Real Tuesday, Oct 9, 18 @ 1:06 pm
Rauner is in the 1% and they do their best to protect their own interest. It is time the 99% candidates start winning some elections. Pritzker is the perfect storm; he is in the 1% and believes in policies that help the 99% of the rest of us.

Comment by Illinois Resident Tuesday, Oct 9, 18 @ 1:06 pm
BDD - Everyone gets hung up on the what the actual progressive income tax rates will be. You can start with the premise that really high earners will pay a higher tax rate in this state just like surrounding states and the federal tax system. What is the problem with that?

Comment by Illinois Resident Tuesday, Oct 9, 18 @ 1:10 pm
LBM - With income inequality at record highs and a majority of people not being able to afford a $1,000 emergency, I have no problem with the rich paying a higher tax rate then everyone else and a vast majority of others paying the same rate or lower. The idea that everyone should have skin in the game when a lot of people are barely surviving and the super rich are thriving does not make any sense.

Comment by Illinois Resident Tuesday, Oct 9, 18 @ 1:16 pm
==You can start with the premise that really high earners will pay a higher tax rate in this state just like surrounding states and the federal tax system. What is the problem with that?==

Nothing, so long as there’s a corresponding 50%+ cut in property taxes just like surrounding states.

Comment by City Zen Tuesday, Oct 9, 18 @ 1:19 pm
Illinois Resident. I understand the economic spread and the belief that those who can do more, should.

State programs serve as a wealth transfer from those with more money to those in great need. The poorest can be helped by increasing the personal exemption.

I do know people who changed legal residency to avoid state taxes. I am not saying it will be a huge number.

The ultra rich can live as and where they choose. Their decisions are not driven by economic constraints.

Comment by Last Bull Moose Tuesday, Oct 9, 18 @ 1:44 pm
==As a property owner myself, I really hope the government doesn’t get to decide how quickly I must rehab my property.==

If the government gives you a discount, I think it’s only fair that the government determines how long the discount is good for. You can always choose to rehab longer, without the discount.

Comment by Da Big Bad Wolf Tuesday, Oct 9, 18 @ 2:06 pm
Nicely written article.

Comment by James Knell Tuesday, Oct 9, 18 @ 4:50 pm