For a progressive income tax.

Why do I have a youtube video of the Zombies singing She’s Not There on a post about a progressive income tax for Illinois?

You go try and find an image that goes with a post about a progressive income tax.

And this song was a favorite of mine in 1965.

I have only met State Representative Lou Lang from Skokie once. He came to our IEA Region endorsement hearing in 2012 following the General Assembly’s vote on Senate Bill 1 pension theft.

Lang didn’t wait for us to say a word about his vote for the bill. He tore into us for not electing more Democrats to the Illinois House and Senate.

“Jesus Christ,” I said to the other IEA members at the endorsement hearing after Lang left the room. “He has a veto proof majority and he thinks that’s not enough.”

He was right, of course. It wasn’t enough.

We voted not to endorse him, as we voted not to endorse anyone that year who had voted for pension theft. Lang couldn’t care less. He is the Deputy House Leader and he has been re-elected to his seat for 30 years after originally being appointed to fill a vacancy.

He doesn’t need IEA money. He gets tens of thousands more from the state’s gambling industry than teachers could ever afford to give him.

I bring up Lou Lang now because he is the guy behind the latest legislative attempt at a progressive income tax.

If you have been reading this blog for a while then you know that I have been writing about this since before 2012 when the Center for Tax and Budget Accountability issued their report on the subject.

The idea is simple.

Currently we have a state in financial crisis because we tax income low and flat.

No matter if you work at McDonald’s or are a member of the Pritzker family, you pay the same rate of tax on your income.

For that reason, and because Governor Rauner is holding the state’s finances hostage to his union-busting agenda, people are hurting.

When an advisory referendum was put on the Illinois ballot in 2012, 2.2 million voters said yes to taxing the rich.

That was half a million more than the number of voters who voted for the millionaire Rauner to be governor over the pension busting incumbent Pat Quinn.

Lang’s progressive tax bill has been voted out of committee and is headed for the House floor. It is doubtful that he would be acting if not for the backing of his Speaker.

Lang says it would lower taxes for 99% of families in the state and place the heavier burden on those that make the most.

Lang thinks the change could raise an additional $1.9 billion in revenue. What the state really needs in the opinion of some revenue experts I have talked to is anywhere from three to eight billion.

But a change in the constitutional prohibition of a fair tax is a start.

Placing the state’s tax burden on those that don’t have any money has never made any sense.

Will the Senate and the House agree on a common proposal, or is this just more game playing?

The Lang bill must pass by super-majorities in both chambers by May 7th to appear on the November ballot when another super-majority of voters is needed.

16 thoughts on “For a progressive income tax.

    • You are right Mike. It doesn’t raise enough. I updated the post to point that out. But what it does do is change the constitutional prohibition of a graduated tax structure. Although tax rates are included in Lang’s bill, once the constitutional language is changed, nothing but politics prohibits changing the rates again.

    • MN taxes every penny of retirement income. Are retired teachers willing to pay over 6% state income tax on their pension income? Are grandmothers living on Social Security willing to pay 5% on their meager payments? Because that’s the MN model. Funny how this fact is conveniently absent from everyone who says IL should adopt the MN model.

      • Anon, because of you know the Google it’s easy to check when people lie to make a point. Most on SS in MN don’t pay income taxes on SS. See
        http://www.house.leg.state.mn.us/hrd/issinfo/sstaxes.aspx
        MN does tax pensions but almost no one would pay 6% because the average pension is so low. Also, MN has no pension protection clause in its constitution. Personally, I would be willing to pay tax on my pension if and when the state ever becomes current on it owed payments into the various pension systems.
        See http://www.house.leg.state.mn.us/hrd/issinfo/penexcl.aspx?src=20
        for an explanation of how MN taxes pensions.

      • Why should retirement income be treated any differently than income from any other source? Is it equitable that the senior citizen greeter at Wal-Mart pays more in Illinois state income tax more than a retiree living off their pension or 401k?

      • It is more than a little ironic that the moment I post about millionaires paying essentially no income tax compared to their wealth (I mean what is 3.75% percent of Ken Griffin’s income compared to what he gets to keep) I inevitably receive comments calling for taxing retirement income. The average teacher retirement check in Illinois is under 50K with no Social Security. I’m with Mike on this deal. If the state pays the retirement systems the $110 billion they owe then they can tax the crap out of my pension check. What do you say? Deal?

      • Mike – I stand corrected. So grandma wouldn’t have to pay taxes if she lived on Social Security alone. But she would if she was also living off grandpa’s relatively meager survivor pension benefits to supplement that Social Security income.

        A $60,000 pension would have an effective tax rate of 6% in MN (married joint). I would wager many state workers who retired recently and spent a career in the public sector exceed that amount. Not to single out public sector as taxing retirement income taxation includes private sector as well.

        I’ll stand by my original comment that folks who bring up MN taxation never mention taxing retirement income like MN does. These two separate MN comments prove that point.

      • I live in Mn. I am fine with pensions being taxed so long as the state also keeps the promises it paid to employees to pay for the pension amount that they earned.

        I’m also a huge fan of progressive income taxes at the state and federal levels. My wife and I have both have middle class jobs. I’m fine with us paying a somewhat higher rate of taxes than those people who are earning very modest incomes.
        Minnesota is far from perfect but we have been able to do important things with families and students in part because we agree with Oliver Wendell Holmes, “Taxes are the price we pay for civilization.”

      • Those in Illinois who are all excited about taxing my pension often have a change of heart when they discover that a state tax on retirement will mean theirs too. Social Security, annuities as well as state pensions. In Illinois there is not the political will for such a thing. A non-starter.

      • Dear Anon,
        Retirees have already paid the state for decades. Public retirees not only have paid taxes all their working lives, but paid for the highways, school buildings, bridges, and all sorts of other public works out of our pension funds. We paid in every paycheck. The state skipped their payment and spent it on other things. After the state changes to the graduated tax and pays back the money they already owe public retirees in full, they will have enough revenue to balance their budget without having to put a new tax on retirees.
        Anon

  1. Much is made of not have a budget in this state, but Illinois will spend just as much without a budget as with one, in the vicinity of $34-$38 billion The reason for a budget is?
    Illinois should have a progressive tax rate but we are at the point it just is not enough. Something has to be done on the spending side of the equation. The yellow flag of concern should have gone up when all of the states around us were growing in jobs and economic activity and Illinois actually lost jobs, and this is from a very low post recession baseline.
    You hate the guv, but he will do more good for the state than Madigan in the long run.

    Clyde

  2. Yes, Minnesota does have a progressive state income tax. Minnesota also provides additional $ to traditional districts & charter public schools that serve high % of students from low income families and students who do not speak English as a first language. I’m glad we do both.
    At the same time, neither of these things solves all the problems. But they help.

  3. “Why should retirement income be treated any differently than income from any other source? Is it equitable that the senior citizen greeter at Wal-Mart pays more in Illinois state income tax more than a retiree living off their pension or 401k?”

    And why should Warren Buffet pay a lower tax rate than his secretary?

    Walmart greeters are criminally underpaid and because of that many are eligible for the earned income tax credit, food stamps, low-income housing and other benefits which would not be needed if they were paid a living wage.

    Again, I would be willing to pay tax on my pension if and when the state ever becomes current on its owed payments into the various pension systems.
    See http://www.house.leg.state.mn.us/hrd/issinfo/penexcl.aspx?src=20
    for an explanation of how MN taxes pensions. Also included is a good history of why pensions have been exempted from taxes in the past.

  4. Fred, you definitely were writing about a progressive tax earlier than 2012. I began writing about it in July, 2011:

    …The tax system in Illinois is inefficient. “The tax system itself is influencing economic activity” (CMAP) by taxing goods that are consumed rather than the consumption of resources. Furthermore, the tax system is also inequitable because “lower-income taxpayers typically spend a higher percentage of their income on tangible goods than higher-income people.”

    Illinois income tax uses a single rate structure that results in low-income wage earners paying more taxes than the wealthy. As stated by the Institute of Taxation and Economic Policy (ITEP November 2009), Illinois is among ten states in the nation with the highest taxes paid by its poorest citizens at 13 percent.

    In 2007, the top one percent of wage earners in the U.S. (with an average income of just under $2 million a year) paid 6.4 percent in total taxes while the bottom 20 percent of wage earners (with an average income of just under $11 thousand a year) paid 10.9 percent in taxes (ITEP).

    Creating a progressive tax structure and taxing services would help rectify the tax inequities in Illinois. They would provide needed revenue to balance the State’s budget and the resources to reduce the unfunded liabilities created by past General Assemblies.

    http://teacherpoetmusicianglenbrown.blogspot.com/2011/07/spread-burden-of-taxes-and-address-tax.html

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s