THE BLOG
07/25/2013 12:24 pm ET | Updated Sep 24, 2013

Income tax debate takes center stage

SPOTLIGHT ON INCOME TAX Jan. 1, 2015, is D-Day for Illinois' income tax. That's when most of the 2011 temporary income tax increase expires, dropping our tax rate from 5 to 3.75 percent. That'll mean roughly $7 billion less in state revenue -- a decrease the state is in no way prepared to handle. (Right now, Illinois owes $4.7 billion in back bills, a figure expected to top $7 billion in a month.) The solution to many members of the General Assembly is to scrap the current tax system entirely and change to a progressive tax system in which the percentage you pay in income tax goes up with your income. The progressive vs. flat tax debate has taken center stage in Illinois media this month, and initial reviews of the progressive effort are not good. State Rep. Jack Franks, D-Marengo, voices a common theme among opponents: "In Illinois, I don't think we have a revenue problem; I think it's a spending problem. I don't think we should be asking taxpayers for more money when we don't spend what they give us wisely." We take a look at early views of the progressive tax movement in a roundup today.

JOIN THE TAX DEBATE Want to learn more about the flat tax vs. progressive tax debate? Join us and the Citizens Club of Springfield at our tax forum on Aug. 15 in Springfield. Ralph Martire of the Center for Tax and Budget Accountability and Ted Dabrowski of the Illinois Policy Institute will discuss the pros and cons, respectively, of a progressive tax system. This promises to be a spirited debate on a topic you'll be hearing a lot about between now and November 2014. Find out more here. Can't be in Springfield for the event? Click here for links to more background on the progressive tax effort.

HISTORY LESSON Illinois' income tax started at 2.5 percent and has been up and down over the years. See where it's been and where it's headed (at least according to current law) in our infographic.


CONSPIRACY? This has to be the most bizarre thing we've heard in the long-running battle over the state's pension crisis: The We Are One Illinois coalition of public employee unions wants Gov. Pat Quinn to investigate whether a prominent Chicago business group led by former Illinois Attorney General Ty Fahner intentionally damaged the state's credit rating -- possibly for their own financial benefit. It started this week with a video of Fahner boasting how he and the Civic Committee of the Commercial Club of Chicago caused ratings agencies to downgrade the state's credit rating. This all goes back to one of the unions' biggest points of contention: that the pension reform debate has been driven by corporate millionaires intent on destroying the moderate retirement security of teachers and other public employees. You really have to read it to believe it. Few episodes better illustrate the bitter, divisive tenor of the pension situation than this one.

PENSION CRISIS ROOTS Assigning blame for the nearly $100 billion unfunded pension liability has been another major point of contention in the pension reform debate. The unions blame lawmakers for deliberately underfunding pensions for many years. Not so, writes Mark Evenson in a Reboot Illinois op-ed. He blames overly optimistic expectations on investment returns by the retirement systems. "Since the year 2000, taxpayers contributed more than $21 billion toward (Teachers Retirement System) pensions which was meant to cover just the $10 billion employer 'normal cost.' Instead, it was fully consumed by the $22 billion 'Investment Returns' overestimation," he writes in a Reboot Illinois op-ed piece.

MAKE IT FAIR If our lawmakers knew they would face strong challenges every election cycle and didn't have a captive audience of hand-picked voters in their districts, they have made smarter decisions about managing the state's pension system. Instead, they carved up friendly districts that made their party affiliation far more important than their voting record at election time. We want to stop the gerrymandering that has set the tone of Illinois politics and driven the state into the financial abyss. We need your help. Find out more about the Yes for Independent Maps effort and how you can get involved. It's the biggest reform of all in Illinois government and we can't expect any help from lawmakers making it happen. Join us!

TOP 7 We've got links to the state's 5 best news and views offered up today. You'll find links to and summaries of many more in the Daily Tip-Off section of our website.

7. It's not the ideal time, but it is time to start talking about the gas tax in Illinois. (Daily Herald)
6. The Metra board has spent enough public money. They need to stop trying to spend more. (Chicago Tribune)
5. Deb Mell replacing her father as alderman shows that Chicago has a royal succession too. (Chicago Sun-Times)
4. It's up to Deb Mell to prove she earned her new aldermanic seat on her merit and not her last name. (Chicago Tribune)
3. Chicago Public Schools announced its preliminary budget and it sparked lots of protest. (Chicago Tribune)
2. Chicago Public Schools is treading water but needs the state to bail it out by passing pension reform. (Chicago Tribune)
1. A look from the Wall Street Journal on city bankruptcies and their effect on public pensions. (Wall Street Journal)