Although it has been coming for a while, the change to the Illinois constitution ending the flat tax and enacting a progressive income tax is suddenly getting some much needed attention.
Over the past week I have received lots of questions from friends and readers about it.
What I am hearing is that there is broad support for it in Chicago, but it is having trouble downstate, the suburbs and south of I-80.
Part of the problem is that the billionaire boys club with members like Ken Griffin, aided by the Illinois Policy Institute, have spent their millions spreading more lies about the amendment than a days worth of Trump tweets.
For most working people there is no downside to ending a flat income tax. Working people won’t pay more. The wealthy will pay more.
The current flat income tax of 4.95% on someone earning $50K is a way bigger hurt than it is on someone earning $250K.
And to pay for services, local governments have to rely on property taxes, sales taxes and other local taxes to make up for the short fall on what the state can provide on its limited revenue.
Retirees who don’t pay a state income tax do have to pay those local taxes.
Passing the amendment will not magically open the door to other constitutional changes. This is a big lie that the IPI is spreading and it has traction among retirees who are either afraid of having their public pensions cut or having their pensions taxed by the state.
It has traction because retirees have seen the same Democrats who tried to cut their pensions now support the amendment. I can’t blame retirees for being suspicious.
But Democrats were wrong about cutting pension benefits and are right about a progressive income tax.
And the Illinois Policy Institute never gave a crap before about our pensions except for a desire to cut them.
Rule number one is to ask what the IPI thinks and then do the opposite.
Working class retirees are concerned about having their pensions and social security taxed, as they should be.
There is nothing in the progressive income tax amendment that addresses taxing retirement benefits. The legislature doesn’t need a constitutional amendment to tax retirement benefits. The legislature could just pass a bill. No politician in the state has presented a bill to tax retirement benefits. The governor opposes it.
The legislature can’t just tax public pensions. If they were to put a tax on retirement benefits, everybody’s retirement benefits would be taxed. Nobody in Springfield has the spine to face the anger over that.
It’s not going to happen.
But that doesn’t keep the anti-progressive taxers like the IPI from spreading the lie that if the amendment passes retirement benefits will be taxed.
As Jonathan Swift said, “A lie can travel halfway around the world while the truth is still putting on its shoes.”