THE BLOG
07/08/2013 12:33 pm ET Updated Sep 07, 2013

Tribune blasts progressive tax plan; debate is on!

The issue of whether Illinois should ditch its 43-year-old flat-rate income tax system for a new system in which tax rates rise according to a taxpayer's income is not a new one.

In 2010, it was a major component of then-Comptroller Dan Hynes' failed bid for the Democratic nomination for governor. For years, groups like the Center for Tax and Budget Accountability have said Illinois' financial woes are rooted in a flat tax system that unfairly taxes low-income taxpayers and doesn't bring in enough revenue.

It's sure to be a major point of debate in the developing 2014 gubernatorial election. Democratic candidate Bill Daley already has made his support of a progressive tax system part of his platform.

It's often said that no issue gets action in Springfield until the Chicago Tribune deems it worthy. On Sunday, the Tribune editorial board deemed the push for a progressive tax worthy of attention - and scorn.

From the Tribune's July 7 editorial:

Democratic lawmakers who approved that 67-percent income tax rate increase on their night of infamy, 1/11/11, stuck themselves with three awful problems. For which they're plotting a solution that would suck additional billions of dollars into Springfield -- and would aggravate the anti-business tax climate that has helped Illinois achieve America's second-highest unemployment rate.

Their plan -- as with the 2011 vote, every sponsor is a Democrat -- would replace Illinois' flat-rate income tax with a progressive schedule. As with federal taxes, higher-income families would pay at higher rates. The sales pitch is "fairness."

To which you should look Democratic legislators in the eye and ask: So this isn't about lifting even more money out of taxpayers' pockets? You guarantee this would be revenue-neutral for Springfield?

But if you want an answer, wear good running shoes so you can chase your fleeing legislators. Because imposing a progressive tax rate scheme on this economically teetering state is all about lifting more money from Illinois employers -- especially small business operators and farmers -- and from other taxpayers too.

Like many of us, the Tribune is upset with the tale of mismanagement that is Illinois' financial history for, give or take a few years, the last 13 years. In 1999, the state had a budget surplus of more than $1 billion. Its unfunded pension liability was about $15 billion. Today we are $6 billion behind in paying our bills (estimated to be $7.5 billion a month from now), the unfunded pension debt is nearly $100 billion and we're close to paying one-fourth of all our tax dollars to the public pension systems.

But it's not just the Chicago Tribune editorial board raising questions about this emerging issue.

A letter to the editor in the Peoria Journal-Star on the same day as the Tribune editorial raised serious questions. Writes David Hirtz of Chillicothe:

"To be clear, this plan does not entail just soaking the rich at the top of Illinois' income ladder. Teachers, for example, would find themselves targeted. The average teacher in Peoria School District 150 makes $55,838. Two married teachers would earn enough to push their income into the proposed 7.5 percent bracket, twice what they're scheduled to pay in 2015 when current law reverts the rate to 3.75 percent. Some 85 percent of Illinois taxpayers would wake up to a higher tax bill from Springfield."

As the rest of the country moves to fully recover from the Great Recession, Illinois remains mired in its remnants. Our unemployment rate of 9.1 percent remains the highest in the region and second highest in the nation (tied with Mississippi and ahead of only Nevada). It's generally accepted that Illinois' growing pension debt has created uncertainty in its tax outlook which is impeding business and job growth.

Meanwhile, our lawmakers have been unwilling and unable to pass a solution to the pension crisis that is nearly universally recognized as the foundation on which Illinois' horrendous financial condition is built.

Compounding the pressure for them is the knowledge that on Jan. 1, 2015, the personal income tax rate in Illinois is scheduled to fall from the temporary 5 percent we've paid since 2011 down to 3.25 percent. That will cut state revenue by more than one-third, an amount that wouldn't be nearly so threatening if lawmakers were willing to embrace serious pension reform. Which, of course, they have not been thus far.

So when a group of lawmakers emerges stating that the problem is that Illinois government simply doesn't have enough revenue, they ought to expect a reception like that of the Tribune.

A progressive tax system is not on its face a bad idea. It's in use in 34 states and by the federal government already. But attempting to make a change like this at the very time state government is proving its utter ineptness in basic financial matters? And after having raised the flat tax from 3 to 5 percent? That's another story.

Reboot Illinois has made the progressive vs. flat tax issue one of our main areas of focus ever since our website went online in November 2012.

Illinois can't consider changing its income tax system unless a majority of voters approve. That vote could come in November 2014 if any of several bills now before the General Assembly are passed.

With that in mind, here is a collection of pieces Reboot Illinois has published on the issue. We think they'll help you have informed opinions as this issue is debated in the months to come. More importantly, they'll help you make an informed choice at the polls in November 2014 should a progressive tax amendment end up on the ballot.

"New 'fair tax' resolutions, same old questions," Reboot Illinois editorial, June 2013

"Flat income tax? Progressive tax? No state income tax? A nationwide overview," Reboot Illinois infographic

"Illinois' flat tax system: Outdated, unfair," Ralph Martire, Center for Tax and Budget Accountability, December 2012

"Progressive tax is code for 'tax increase,'" John Tillman, Illinois Policy Institute

"Amendment sponsor: Progressive tax is fair tax," State Rep. Naomi Jakobsson, D-Urbana

"Progressive tax punishes business for success," David From, Americans for Prosperity

"Supporters of progressive tax have a long road ahead," blog post, Reboot Illinois editor Matt Dietrich, March 2013