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* The Tribune once again demands that Gov. Pat Quinn sign the Chicago pension reform bill…
• The widely hailed state pension reform bill Quinn signed in December doesn’t rely on property taxes. But it relies heavily on the income tax — the tax Quinn is trying to keep at a high rate. So at the same time he knocks Emanuel for raising the issue of higher property taxes to cover local pensions, Quinn is reaching into a different taxpayer pocket and demanding high income taxes … to cover state pensions.
• In January, Quinn signed a Chicago Park District pension reform bill that relies in part on borrowing to reduce the district’s pension liabilities. Park District officials don’t deny they likely will turn to property taxes to pay off the bonds.
• A pension bill now zooming through the General Assembly addresses Cook County’s pension funds. Pushed by County Board President Toni Preckwinkle, the bill would require the county to pay more into its pension funds going forward. Preckwinkle isn’t saying where she’ll come up with the money in the county budget. But she hasn’t ruled out property taxes. “Everything is on the table,” she has said repeatedly.
So if Preckwinkle’s bill gets to Quinn’s desk, will he block it, too, out of deep (and newfound) concern for property taxes?
The difference between income taxes and property taxes is that income taxes are (except when people go broke before tax day) based on the ability to pay. Property taxes are not. And, of course, the Tribune has railed and railed and railed against the higher income tax level, so it’s being as hypocritical as Quinn is here: Allow a possible property tax hike to pay for city pensions, roll back the income tax hike which pays the state’s pension obligations.
Other than that, it’s difficult to argue with the rest of the editorial’s logic.
* Related…
* Mark Brown: Quinn on tax question: Exasperating? Yes. Deceptive? No: But the accusation that Quinn’s support for a tax increase breaks some promise to the people of Illinois, who had elected him in 2010 on a campaign platform that notably INCLUDED his support for an income tax increase, is off base.
posted by Rich Miller
Thursday, May 29, 14 @ 10:10 am
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When “@StatehouseChick” had a tweet explaining why the editorial board supported Bruce Rauner as “Simple. Change”, it’s hard to think that the editorial board has credibility in understanding how taxes effect whom and why…
Unless you are simple-minded, and just want change for change, and offer Rauner the Op-Ed page at any time, being a shill is not that hard I guess.
Comment by Oswego Willy Thursday, May 29, 14 @ 10:18 am
It’s impossible to use Quinn and “logic” in the same sentence.
Comment by Cassiopeia Thursday, May 29, 14 @ 10:18 am
Municipalities have limited options regarding generating revenue as compared to the state. Can a city or county levy an income tax?
Comment by dupage dan Thursday, May 29, 14 @ 10:20 am
The Tribune, and many others, are intoxicated by the success of no-income-tax Texas in growing their job market. But the trade-off is higher property, sales and business taxes.
Comment by Nonplussed Thursday, May 29, 14 @ 10:21 am
Who knew the state pension bill was “widely hailed?”
Comment by wordslinger Thursday, May 29, 14 @ 10:22 am
===Can a city or county levy an income tax?===
NYC?
Comment by Oswego Willy Thursday, May 29, 14 @ 10:22 am
Letting the income tax increase expire just took any hope the state had of a “police powers” crisis argument in the pension law suite and stuck a fork in it. If the court rules on the law suite prior to any tax increase, then what the heck could the state be talking about…”we have a crisis, but we are cuttin taxes”. Well I suppose they could argue they are trying to improve the busines climate to eventual bring in more dollars…again shows the state has all kinds of levers to pull.
Comment by facts are stubborn things Thursday, May 29, 14 @ 10:30 am
@nonplussed
=But the trade-off is higher property, sales and business taxes.=
Only if the state is unwilling to enact policies that eliminate unnecessary “discretionary” spending, base capital spending on “needs” vs “wants”, allow local schools to pay fair market value for construction and maintenance work and reduce the unecessarily high cost per student of Illinois public education. While they’re at it they cvould also dramatically reduce obligations for penions for new employees and shift them to local schools and municipalities.
This could actually save the locals money since it would actually provide some restraint on over inflating late career salaries to unfairly bloat state funded pensions.
Comment by Arizona Bob Thursday, May 29, 14 @ 10:35 am
Perhaps I should be more specific. Can a municipality or county levy an income tax, in Illinois? If so, why not? I haven’t heard of anyone in Chicago discuss such a thing. But, then, I haven’t been watching all that closely.
Comment by dupage dan Thursday, May 29, 14 @ 10:39 am
===Can a municipality or county levy an income tax===
Not under current law.
Comment by Rich Miller Thursday, May 29, 14 @ 10:41 am
Maybe Quinn is trying to keep a low profile on pension cuts right now. With the court ruling that SB1 is likely to be unconstitutional, he would look more silly signing on to bills and have them all knocked down 1-2-3.
Comment by DuPage Thursday, May 29, 14 @ 10:43 am
===I haven’t heard of anyone in Chicago discuss such a thing.===
Ever heard of the “commuter tax?” I’m pretty sure that’s been discussed. I don’t think it’ll happen any time soon, but there is a reason your W2 forms include an extra one for local income taxes.
Also, didn’t Bruce Rauner’s hero Mitch Daniels sign a law to allow Indianapolis to levy an income tax?
Comment by 47th Ward Thursday, May 29, 14 @ 10:54 am
Rich is correct. This was answered during a recent Senate Approp II hearing. Senator Trotter introduced a bill to move the entirety of the LGDF to ISBE and it was held due to a lack of support. The question was asked if a local governmental body can institute a personal income tax and both a staff attorney and an IML lobbyist noted that such a local governmental body cannot levy such a tax.
Comment by Team Sleep Thursday, May 29, 14 @ 10:54 am
So Chicago and/or Cook County has little means to enact any law that would allow them to levy a tax on folks that would be more fair due to the “ability to pay” logic that was presented. Illinois gets to use that but not the city or county. Then they can be demonized for wanting to levy a regressive tax. Perhaps the city or county should raise the sales tax. Now that isn’t regressive, is it? Oh, wait…. never mind.
Comment by dupage dan Thursday, May 29, 14 @ 10:58 am
=== Also, didn’t Bruce Rauner’s hero Mitch Daniels sign a law to allow Indianapolis to levy an income tax? ===
Why are the actions taking place in “NYC” or Indiana of any value in this discussion, except as a tiresome distraction?
Comment by dupage dan Thursday, May 29, 14 @ 11:00 am
===except as a tiresome distraction?===
Somebody brought up municipal or county income taxes, to which you replied that you’d never heard of such a thing mentioned in Illinois. I pointed out that I’d heard it mentioned and discussed before, then added that, IIRC, Mitch Daniels signed legislation allowing for local income taxes in Indiana.
Bruce Rauner lists Mitch Daniels as one of his role models for the kind of Governor he’d like to be. Bruce Rauner hasn’t laid out a budget plan yet. How much of Mitch Daniels does Bruce Rauner want to imitate?
I guess that might be a tiresome distraction. To some, it might be a fair question.
Comment by 47th Ward Thursday, May 29, 14 @ 11:08 am
Chicago used to have a business head tax which the Mayor got rid of. His top legislative priority in the special legislative session handed an $85 million annual tax break to CME, a portion of which would be shared with the City.
Can’t touch those folks downtown, but it’s okay to raise property taxes in the neighborhoods and to slash the retirement income of city workers who pay property taxes and live in those neighborhoods.
Mayor and Trib are on the same page, and it’s the wrong page.Hard for Quinn to be a man of the people if he aligns with those folks
Comment by truthteller Thursday, May 29, 14 @ 11:08 am
Chicago used to have a payroll tax that was repealed at the end of last year. What happened to that?
Comment by Nonplussed Thursday, May 29, 14 @ 11:11 am
Sorry Trurthteller, missed your post.
Comment by Nonplussed Thursday, May 29, 14 @ 11:12 am
This is insane that suddenly it’s in fashion to say property taxes aren’t based on ability to pay. There’s an incredibly simple logic to the idea that people who have property that is more valuable probably also have more money. Yes that doesn’t means it’s true every case,but same thing with income taxes. One person might make $75k but have lots of kids, credit cards, ex wives, etc.
Comment by mcb Thursday, May 29, 14 @ 11:12 am
47th Ward. Dupage Dan needs many people to be distracted for about 5.5 more months.
Comment by Nonplussed Thursday, May 29, 14 @ 11:13 am
=Can a municipality or county levy an income tax=
Many, many do including several in indiana and ohio…never hear this from most that spout Illinois’ system. It is completely ignored.
http://taxes.about.com/od/statetaxes/a/City-Income-Taxes.htm
Comment by nothin's easy... Thursday, May 29, 14 @ 11:15 am
I think Chicago had an employee head tax for a few years. Businesses did not like it because unlike an income tax, they had to pay it even if they were already operating at a loss.
Comment by DuPage Thursday, May 29, 14 @ 11:15 am
nothin’s easy: Like Rich said, the GA would have to authorize Chicago to levy an income tax
Comment by Nonplussed Thursday, May 29, 14 @ 11:18 am
The Tribune is part of the PR apparatus that seeks to shift the tax burden for rich people to the middle class. Always has been.
Comment by Carl Nyberg Thursday, May 29, 14 @ 11:22 am
=== I guess that might be a tiresome distraction. To some, it might be a fair question ===
Please point to where “someone” mentioned municipal or county income taxes before I made my first comment. I can’t find that in either the post or the comments.
It had only just occurred to me as I was reading the post that I have never heard of an Illinois city or county income tax - compared to other types of taxes and how un/fair they may be, so I inquired. Then I get the NYC response. After I clarified my question, I got my answer from Rich.
I then attempted to point out that the city and county are being tagged with a label as taxing folks unfairly since they use property taxes (among other, equally regressive means) to raise revenue. It seems to me that they are boxed into a corner with regards to the lack of that option. So, I commented on it and asked the question. At no time has anyone addressed the issue of fairness with regards to the options. Maybe you could do that now that you have had your say? Or maybe you would support an income tax for cities or counties so they can apply a more fair tax on their residents.
Comment by dupage dan Thursday, May 29, 14 @ 11:27 am
Easy there Dan. Sorry, I should have given you credit for raising the local income tax issue. Now that we’re completely off-topic and in the weeds, I’ll just add that if Cook County or Chicago added an income tax, it would apply to all those who earn income in Cook or Chicago, not merely residents. So your neighbors in DuPage would pay Chicago/Cook taxes too. And yes, I think that’s fair, but I suspect you’d disagree.
Comment by 47th Ward Thursday, May 29, 14 @ 11:34 am
I have little doubt that Bruce Dold penned the Tribune editorial, it is his typical style. Mr. Dold in his editorial does not examine in the least the reality of the bill he wants Governor Quinn to sign. It’s a big emergency you see as the editorial states: “Chicago needs relief, now, from its pension obligations. Emanuel’s bill, which the city negotiated with the labor unions and which already passed the House and Senate, provides relief.” But does it solve the problem? Will the City actually increase property taxes sufficiently to keep the city funds solvent for a prolonged period of time?
The bill in question is SB 1922 http://www.ilga.gov/legislation/98/SB/PDF/09800SB1922ham006.pdf SB 1922 says that City retirees will no longer receive a compounded 3 percent Cost of Living Adjustment (COLA) additions to their payments every year, instead receiving an addition of one-half of the Consumer Price Index-Urban, or a simple three percent, whichever is lower. Also, both city employees and city employers will be increasing their contributions to the fund. Employees will be contributing 11 percent of their annual salary to their pension fund by 2019, instead of the current 8.5 percent. The percentage of salary contributed will increase by 0.5 percent every year from 2015 to 2019.
The City of Chicago is required to contribute funds based on a multiplier schedule. In 2016, the city will pay 1.85 times the total contribution of municipal employees toward the fund and 1.6 times the contribution by laborers. By 2020, the city will contribute 3.05 and 2.8 times the total contribution of municipal employees and laborers, respectively. After 2021, they will contribute an amount based on an approved actuarial schedule with the goal of reaching 90 percent funding by 2055.
The problem with the scheme is getting adequate property tax revenue for the City to meet its obligations especially in years 2020 and beyond.
Republican State Rep. Jeanne Ives, from Wheaton, during the floor debate on the bill back in April said Chicago taxpayers aren’t seeing a complete picture of how Chicago’s pension bailout is going to cost. When you consider the unfunded liabilities in all of the city’s retirement funds, property taxpayers could be staring at dramatic increases in their tax bills. Our West Point educated representative spoke the truth in her usual forthright manner.
Effectively looked at from the whole perspective Chicago’s rate could look very much like the rate being paid in communities like Wheaton or Evanston in order to meet the obligations established in SB 1922 and bills to come.
Governor Quinn has no solution for Chicago, except trying to hand out $500 to property tax payers which is not likely to happen this November when supposedly the actual income tax rate issue will reappear in the legislature. But Dold and the Tribune also will not call out Mayor Emanuel and future Mayors for not sufficiently raising the property tax rate to meet the requirements of SB 1922. When has the Chicago Tribune publicly fought for a tax increase in the City? The truth is Mr. Dold just like Governor Quinn doesn’t want to be on the hook for forcing a large property tax increase on residents of the City. The Tribune is as duplicitous as the Governor is on this issue.
Comment by Rod Thursday, May 29, 14 @ 11:39 am
- dupage dan -,
I Commented “NYC?” as kinda- sorta a mock, that here in Illinois, we don’t have that option. Rich was far kinder than me.
It comes down to property versus income, and adding Muni income tax in Illinois, that could be trouble…
Comment by Oswego Willy Thursday, May 29, 14 @ 11:43 am
47th ward - nope, I wouldn’t necessarily disagree. I had an “aha” moment while the issue was being fleshed out in Rich’s comments. Those bad real estate taxers, and all that. I really was trying to get my head around the issue. All the Indiana and NYC stuff was “in the weeds” stuff to me. Folks who reside in Illinois but make their living in another state have to grapple with income tax issues, I believe. Why would it be any different in Chicago for dupage dan et al?
My point then, as now, is about how the revenue is raised and how cities and counties must rely on regressive taxes to solve the overwhelming pension issue whereas the state can appear to take the high road and target income taxes. Quinn has shot down those efforts and, correctly, pointed out that increasing property taxes to pay for that would be unfair. I just wanted to note, after receiving confirmation, that without the option, it was unfair for them to be so painted. Nothing weedy about it.
Comment by dupage dan Thursday, May 29, 14 @ 11:49 am
Signing either bill would be a mistake for Quinn, just as supporting either bill is a mistake for Chicago area legislators.
Chicago and Cook County voters can draw a straight line from their reduced pension benefits to Quinn and state legislators. Or they can draw a straight line from their increased property taxes to the City Council or County Board.
Comment by Formerly Known As... Thursday, May 29, 14 @ 11:51 am
“* Mark Brown: Quinn on tax question: Exasperating? Yes. Deceptive? No: But the accusation that Quinn’s support for a tax increase breaks some promise to the people of Illinois, who had elected him in 2010 on a campaign platform that notably INCLUDED his support for an income tax increase, is off base.”
Quinn said that he would veto any income tax hike that would reach his desk that was over 1%. Mark Brown did not answer every question.
I would accept keeping it at it current level for now because of Illinois current situation but to not admit that Quinn either lied or if you give him the benefit of the doubt, he changed his mind is misleading.
Comment by Jacob S Thursday, May 29, 14 @ 11:55 am
“The widely hailed state pension reform bill Quinn signed in December doesn’t rely on property taxes. But it relies heavily on the income tax”
No, it relies heavily on taking away/reducing pension benefits that were promised to employees 40 years ago when they accepted the job with those benefits. The job has been performed, now the promised pension benefits need to be received.
Comment by Rusty618 Thursday, May 29, 14 @ 1:21 pm
I appreciate the clarification and push back…really, from both you and 47th ward. I understand the difficulties in enacting such a tax, not even seriously suggesting it. I just find it interesting, especially since all concerned are in the same party, that the pension problem in Chicago and Cook Cty are being characterized the way they are.
Being a person who understands (somewhat) the labyrinthine nature of Illinois gov’t/tax policies due, in large part, to paying attention here, I hardly think most folks who pay scant attention to these issues except to read campaign literature and watch 15 second sound bite campaign ads really have a grasp the nature and scope of governance in this state. The learning curve is way steep.
Comment by dupage dan Thursday, May 29, 14 @ 1:29 pm
Nonplussed: Illinois state law does not allow municipalities to levy income taxes; but, that was not the question to which the comment addressed. Many states (Indiana and Kentucky bordering Illinois) do have municipal and county income taxes. Major reporting outlets run stories about, or ads claiming, Wisconsin, Iowa, Missouri, Indiana, Kentucky, etc. have “lower state income taxes” without ever mentioning the burden of local government income tax levies and other costs unknown to most. Illinois is a better environment for business than people attempting to regain power will admit - until, of course, after they get into office.
Comment by nothin's easy... Thursday, May 29, 14 @ 4:04 pm
47th Ward — how do you know that a GA authorized income tax would apply to all who earn income (i.e., work in the city or County) as opposed to just residents of the City or County? That’s a big leap.
Comment by Lycurgus Thursday, May 29, 14 @ 6:04 pm
The idea behind the so-called commuter tax was to tax the earnings of those who work in the City but live in the suburbs. It’s all hypothetical until there is a bill.
http://blogs.chicagotribune.com/news_columnists_ezorn/2014/04/city-income-tax.html
Comment by 47th Ward Thursday, May 29, 14 @ 8:34 pm
States tax non residents who earn money in their prospective states.
The USA taxes Earnings in foreign countries of citizens.
Comment by Jacob S Thursday, May 29, 14 @ 9:28 pm
Didn’t have time to weigh in until now. Everyone, city, county, etc. should put their desire for pension changes on hold until the current law suit is resolved; otherwise it is highly likely they will be back having to re-do it after forking out payment for losing a law suit.
Plus Quinn should be against any changes at the local property tax level right now. He’s most likely going to have to shove a portion of the TRS and SURS pension payments onto the local taxing districts and he doesn’t want them to have already tapped out the property taxpayer. I will concede that it won’t be any change for CPS since they already have responsibility for Chicago teachers.
Comment by Anonymous Thursday, May 29, 14 @ 10:07 pm
Oops … don’t know exactly what happened but - Anonymous - Thursday, May 29, 14 @ 10:07 pm was I …
Comment by RNUG Thursday, May 29, 14 @ 10:24 pm