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Civic Federation, which supported taxing retirement income last year, opposes graduated income tax amendment now

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* Press release

This election cycle, Illinoisans have been presented with the option of amending the state constitution to allow for a graduated income tax. As proposed, the amendment represents a disappointing repeat of Illinois fiscal history. The enacted rate structure is far from best economic practice, the significant shift in the state’s tax code is not part of a comprehensive plan and the proceeds will provide very little assistance, if any, to struggling local governments and pension funds. Accordingly, the Civic Federation opposes the proposed Illinois constitutional amendment to allow for a graduated income tax.

While the Civic Federation is not opposed to the concept of a graduated income tax and understands the state’s need for more revenue, the rate structure enacted by the General Assembly is anything but ideal. Low income Illinoisans will continue to bear roughly the same tax rate as their middle and upper-middle class counterparts. As the Federation has long cautioned, the flat rate at the top of the structure is unusual and could cause tax avoidance behavior and increase revenue volatility at a time of economic uncertainty. Additionally, nothing in the package protects any one group of taxpayers from being overburdened now or in the future. A better rate structure would further reduce rates for the lowest income bracket(s), maintain only marginal rates and restrict the highest and lowest rates to within a certain percentage spread. The General Assembly’s structure meets none of these standards.

Since the tax rates were enacted 16 months ago, the General Assembly has not delivered on a number of opportunities to streamline and modernize state government. For years, the Federation has publicly encouraged the General Assembly to work toward consolidation of Illinois’ 7,000 local governments, modest changes to pension benefits and rationalization of the property tax system, among others. However, significant measures to cut costs or create efficiencies have not been enacted to accompany a significant change in the way Illinoisans will pay taxes. While the Federation has long recognized that cuts alone will not solve Illinois’ financial crisis, the lack of comprehensive plan to begin tackling it once-and-for-all is a disappointment.

Finally, the state will not share any but a miniscule portion of the proceeds of the proposed graduated income tax with Illinois’ many struggling local governments. An initial plan to share $237 million of the billions in proceeds was whittled down to $100 million, the future of which now remains uncertain. Another $100 million had been set aside for supplemental payments to Illinois’ five pension funds, but was not included in the state budget even if the amendment passes and in any event falls far short of a real solution.

While attractive in the abstract, the graduated income tax amendment and its accompanying rate structure are far from a panacea for Illinois’ many financial challenges. Further, the Federation remains concerned that with an influx of revenues, lawmakers may consider their work finished and abdicate their responsibility to make the hard decisions that would actually complete the work of the state shoring up its finances. For these reasons, the Civic Federation is unable to support the proposed graduated income tax amendment.

The governor has been saying that opponents of his “Fair Tax” have historically supported taxing retirement income, even though many opponents are now warning that taxing retirement income is a very real possibility if the tax is approved. Pritzker is right to a point. Not all groups have backed taxing retirement income, but the Civic Federation did, indeed, propose taxing the income just last year, as well as some services.

Also, if you click here, you’ll see that billionaire Ken Griffin is a Civic Federation trustee. Griffin is bankrolling most of the opposition to the graduated income tax proposal.

…Adding… Press release…

Vote Yes For Fairness Chairman Quentin Fulks released the following statement in response to the Civic Federation:

“Yet another organization made of the wealthiest people in the state has announced its opposition to the Fair Tax, which isn’t surprising considering they’re the select few our current tax system benefits. Members of the Civic Federation would rather keep the burden on our middle and lower-income families and implement a retirement tax on our seniors instead of finally paying their fair share.

“It’s clear that despite their rhetoric today, the wealthy only care about protecting their own bottom line, even when that means denying 97% of Illinoisans a tax cut. They continue to advocate for policies that allow them to keep building their wealth on the backs of hardworking families, while opposing any effort to bring relief to millions of struggling Illinoisans. The Fair Tax will set things right, and allow everyone an opportunity to get ahead.”

See the Civic Federation’s call for taxing retirement income here. The Civic Federation’s opposition to the Fair Tax comes just weeks after a similar announcement from the Civic Committee, which has also advocated for taxing retirement income and for increasing the flat tax by 20%.

…Adding… Lissa Druss,spokesperson for the Coalition to Stop the Proposed Tax Hike Amendment…

More and more are joining our bi-partisan coalition of middle-class families, retirees, small business owners, and family farmers because after two tax hikes over the last ten years and an $8 billion deficit, now is the worst time to trust Springfield politicians with another tax increase.

posted by Rich Miller
Tuesday, Oct 20, 20 @ 11:41 am

Comments

  1. === is not part of a comprehensive plan and will provide very little assistance ===

    in other words, if Pritzker would make a retirement tax part of his graduated income tax to bring in more revenue, we would support it.

    Comment by Thomas Paine Tuesday, Oct 20, 20 @ 11:46 am

  2. So it doesn’t help enough, so they’d rather not help at all, and they make up a strawman by saying that “allowing” the GA this “victory” we would stop them from doing anything else.

    Ok, thanks for your “thoughts”.
    Next[exclamation mark]

    Comment by Perrid Tuesday, Oct 20, 20 @ 11:47 am

  3. There is NO honesty to the discussion on the opposition of the “Fair Tax” if civic type organizations are in favor of what the fear is if the “Fair Tax” passes.

    This isn’t hypocrisy.

    Hypocrisy only exists if you believe in what the initial premise.

    The Civic Federation here is showing no honesty to thought in either instance.

    If you’re voting against your own best interests, Ken Griffin thanks you.

    Comment by Oswego Willy Tuesday, Oct 20, 20 @ 11:47 am

  4. I get all the Civic Whatever groups mixed up, but weren’t these the guys just recently saying that it didn’t raise taxes high enough?

    Comment by Skeptic Tuesday, Oct 20, 20 @ 11:57 am

  5. === it didn’t raise taxes high enough?===

    Both the Civic Federation and the Civic Committee have essentially said this now. So, you’re right. lol

    Comment by Rich Miller Tuesday, Oct 20, 20 @ 12:01 pm

  6. The logic behind this decision is, to put it bluntly, strained

    Comment by Nick Tuesday, Oct 20, 20 @ 12:18 pm

  7. === it didn’t raise taxes high enough===

    That’s not how I read their position. It seems to me like they would support a broader shared sacrifice if Pritzker and the GA did more to seriously address the structural debt and growing unfunded liabilities before going back to the well, again, for additional revenue in income taxes. Increasing taxes ad finem can’t be the only answer.

    Comment by Boone's is Back Tuesday, Oct 20, 20 @ 12:19 pm

  8. Boone’s,

    By shared sacrifice do you mean state pensioners should take pennies on the dollar, or some other “magic” trick to wipe out state debt?

    Comment by Retired and Still in Illinois Tuesday, Oct 20, 20 @ 12:33 pm

  9. “make the hard decisions that would actually complete the work of the state shoring up its finances”

    The state has made lots of “hard decisions” already, like pension reform, budget starvation and brutal cuts to social services, state employee concessions, etc. The rich have made zero concessions that are not borne more or less equally by everyone else under the flat tax.

    Comment by Grandson of Man Tuesday, Oct 20, 20 @ 12:37 pm

  10. The problem is income tax is only part of the problem. Property taxes should be talked about as well. We need to get rid of all the independent taxing bodies and have a single tax to support everything. Until then someone will be mad.

    Comment by Publius Tuesday, Oct 20, 20 @ 12:44 pm

  11. The Civic Federation: Making the Perfect the Enemy of the Good Since 1893.

    Comment by 47th Ward Tuesday, Oct 20, 20 @ 12:46 pm

  12. ==I get all the Civic Whatever groups mixed up, but weren’t these the guys just recently saying that it didn’t raise taxes high enough?==

    Could you also be thinking of the Metropolitan Planning Council? Not only are they in favor of the Fair Tax (as part of “narrowing the racial wealth gap”), but they also announced Oct. 9 that they are also in favor of “wanting more.” Including pension reform, shared services, school consolidation, and more rigorous state construction contract selection. Sounds like the MPC is full of Blago/Quinn administration, and Biss campaign, alums.

    https://www.metroplanning.org/news/9943/MPC-Statement-on-the-Illinois-Fair-Tax-Amendment

    Comment by Chatham Resident Tuesday, Oct 20, 20 @ 12:48 pm

  13. GOM nails it.

    =Both the Civic Federation and the Civic Committee have essentially said this now. So, you’re right. lol=

    More and higher taxes. Go it.

    These guys need to collectively see a psychiatrist. They are suffering from multiple personality disorder.

    Comment by JS Mill Tuesday, Oct 20, 20 @ 12:49 pm

  14. ==The governor has been saying that opponents of his “Fair Tax” have historically supported taxing retirement income==

    Except for AARP, so have the proponents.

    Comment by City Zen Tuesday, Oct 20, 20 @ 12:49 pm

  15. === The Civic Federation here is showing no honesty to thought in either instance. ===

    Exactly. Total lack of intellectual honesty from an otherwise credible organization. Most days, the Civic Fed produces thoughtful and informative analysis. Today, it assumed the role of hack - fabricating an argument against the tax rates which, of course, could be modified with an act of the legislature, to obfuscate its true motive.

    Illinois media should ask the Civic Fed just how much cash Griffin and his ilk handed over to convince the Civic Fed to sacrifice its own reputation on his/their altar.

    Comment by Bud's Bar Stool Tuesday, Oct 20, 20 @ 1:10 pm

  16. ===By shared sacrifice do you mean state pensioners should take pennies on the dollar, or some other “magic” trick to wipe out state debt?===

    Retired, um no, but they should stop advocating for the fantasy of the continuation of the status quo. For instance, bringing back the 6% end of career salary spike… while asking for the passage of this amendment… is what I’m talking about.

    Comment by Boone's is Back Tuesday, Oct 20, 20 @ 1:27 pm

  17. ==Illinois media should ask the Civic Fed==

    …what graduated tax rate structure they would support.

    What if the state could constitutionally chain the top bracket to the bottom bracket by 3%. Meaning after the Fair Tax passed, the rich would still pay 3% more, but any rate hike in the future would mean a rate hike for everyone (assuming it was the top bracket).

    In other words, a “fair” tax that still makes tax hikes difficult in the future. Would the Civic Fed support that?

    Comment by City Zen Tuesday, Oct 20, 20 @ 1:30 pm

  18. Like the BGA, carrying water for their wealthy donors.

    Does the Civic Federation disclose their relationship with Griffin? (If they have, I haven’t noticed.) Isn’t that a pretty big problem for a reform-minded, good government group?

    Both the BGA and Civic Federation have waded deep into partisan waters here, right up to parroting talking points. Hard to maintain your nonpartisan bonafides when you choose sides in the most partisan ballot referendum in anyone’s memory.

    Comment by Roman Tuesday, Oct 20, 20 @ 1:35 pm

  19. ===If they have, I haven’t noticed===

    It’s literally on their website, which I linked. C’mon.

    Comment by Rich Miller Tuesday, Oct 20, 20 @ 1:36 pm

  20. == the rich would still pay 3% more, but any rate hike in the future would mean a rate hike for everyone (assuming it was the top bracket).==

    Boy you just can’t let a day go by without trying to stick it to poor and middle class taxpayers in some way, can you? If you ain’t already a republican politician, you sure should be

    Comment by Lester Holt’s Mustache Tuesday, Oct 20, 20 @ 1:49 pm

  21. === For years, the Federation has publicly encouraged the General Assembly to work toward consolidation of Illinois’ 7,000 local governments===

    Oh brother.

    If you consolidate units of government what do you save?

    If three units of government have four workers each and we consolidate them into one unit of government that one unit of give now has three time the work and needs the labor of twelve people. You accomplished nothing.

    Comment by Da Big Bad Wolf Tuesday, Oct 20, 20 @ 1:55 pm

  22. I agree in principle with reducing the number of government units, but that won’t save as much money as you’d think. Whether the township is plowing snow or the county, the snow still needs to be plowed. And good luck consolidating rural high schools that have been “historic rivals”.

    Comment by Soccermom Tuesday, Oct 20, 20 @ 2:06 pm

  23. ==Boy you just can’t let a day go by without trying to stick it to poor and middle class taxpayers in some way, can you?==

    Already looking to raise those rates, huh? Don’t show your hand too early.

    Comment by City Zen Tuesday, Oct 20, 20 @ 2:19 pm

  24. ===Raised my rates by about 2% and they want me to approve CA based on 0.05% reduction???===

    So you would rather another 1% rate increase over a 0.05% reduction?

    Comment by From DaZoo Tuesday, Oct 20, 20 @ 2:56 pm

  25. Their position makes no sense. The rates are set by state law. The constitutional amendment just changes the constitution to allow for a graduated income tax. If you don’t pass the amendment, you can’t change the rates.

    Comment by Three Dimensional Checkers Tuesday, Oct 20, 20 @ 3:16 pm

  26. To translate: Since it’s not ideal, we oppose improving from what we have now …

    Comment by RNUG Tuesday, Oct 20, 20 @ 3:18 pm

  27. ==The constitutional amendment just changes the constitution to allow for a graduated income tax.==

    It also removes the clause that says the state can only have one tax on income.

    Surprising posters here haven’t bothered to review the actual amendment. Changes are easy to track: additions are underlined and removals are strikethrough.

    Comment by City Zen Tuesday, Oct 20, 20 @ 3:22 pm

  28. Most states tax retirement income so that everyone is helping to pay for the infrastructure and water and streets and everything being used by all citizens. I know there is no appetite to try and tax retirement income but if you did then it would expand the tax base significantly and help with the debt issues. Keep in mind the number of retirees is only going up with baby boomers.

    Comment by Maximus Tuesday, Oct 20, 20 @ 4:04 pm

  29. I am so tired of hearing that this will tax Retirement and Social Security. That’s BS that everybody from AARP to Unions are trying to tell people.

    Comment by Nameless Tuesday, Oct 20, 20 @ 4:09 pm

  30. Do not understand why the retirees are always attacked.

    There were $9.291 billion in such ‘tax expenditures” Retirement exemption was $2.235 billion or 24% of the total. Want to truly broaden the tax base then include everything and lower the tax rate.

    Yea, like that is going to happen.

    Look it up on this site: https://illinoiscomptroller.gov/financial-data/find-a-report/tax-expenditure-report/fiscal-year-2018/

    Comment by Unconventionalwisdom Tuesday, Oct 20, 20 @ 5:02 pm

  31. If this tax proposal were to be voted on today it is my opinion that it would not pass. It seems to be it is going somewhat more negative for its supporters despite massive ads.

    But a lot of mail in votes have already occurred and may not be fully counted until two weeks after the election. Perhaps those earlier votes will help it pass.

    Just like everybody else, it is all conjecture on my part.

    Comment by Unconventionalwisdom Tuesday, Oct 20, 20 @ 5:06 pm

  32. ==It also removes the clause that says the state can only have one tax on income.

    Surprising posters here haven’t bothered to review the actual amendment. ==

    Surprising you mention this without (apparently) realizing that that provision was included in the constitution only to prevent an end run around the flat rate provision (it’s in the constitutional debates), so it is no longer needed. And what harm do you think it would prevent if they left it in?

    Comment by Whatever Tuesday, Oct 20, 20 @ 5:16 pm

  33. Being for a tax on retirement income is not “attacking” retirees. It’s simply a recognition that they should pay their fair share for the top notch services we get from state government. They ain’t free you know, and there is no room to cut spending. Time for everyone to pay more, not just the rich.

    Comment by Captain Obvious Tuesday, Oct 20, 20 @ 6:53 pm

  34. I always like me some Quentin Fulks truth. Rich dudes, your hiding behind the working class in Illinois is about to end. Regardless of your un-American lies.

    Comment by PublicServant Tuesday, Oct 20, 20 @ 8:15 pm

  35. Perhaps whoever drafted this should have anticipated the arguments against it. Not exempting retirement income was done for a reason. Telling me what something really says does me no good if i cant read it.
    A rogue legislature in a lame duck session could open up this can of worms.

    You can all jump on me but there are very few coincidences in state government. Only after something is passed do you often see the real motivations and why things did or did not get addressed.

    Comment by anon Tuesday, Oct 20, 20 @ 9:22 pm

  36. @Captain Obvious

    Then why just ‘focus’ on retirees when there are $7 billion in other tax exemptions.

    Your attempt to deflect the issue I stated rings hollow.

    Comment by Unconventionalwisdom Tuesday, Oct 20, 20 @ 11:07 pm

  37. ==It also removes the clause that says the state can only have one tax on income.

    Surprising posters here haven’t bothered to review the actual amendment. ==

    I thought it was taken out so they could do the tax calculation just like the Feds. Income up to the first $10k is one rate, the next $90k is a second rate, etc. Keeping that sentence in, you could only tax people at one and only one rate depending on income amount. It changes the way the tax is calculated.

    Comment by From DaZoo Wednesday, Oct 21, 20 @ 12:55 pm

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