Brady 'false' on fair tax, says BGA
GOP senator conveniently confuses middle-class, low-income taxpayers
By Ted Cox
The Better Government Association has called out a leading Republican state senator for suggesting Illinois tax hikes have led to an “exodus of middle-income families.”
The BGA studied Sen. Bill Brady’s appearance at the City Club of Chicago last month. It zeroed in on his opposition to the “fair tax” proposed by Gov. Pritzker, which cleared the General Assembly this spring and is set to go before voters in the November 2020 general election in what’s expected to be a tight referendum, in that it needs a supermajority of 60 percent approval to amend the state constitution to allow a graduated income tax.
Brady said he opposed the progressive income tax “because we could find no safeguards for middle-income families,” in that the tax rate could be hiked on middle-income taxpayers. But, although Brady expressed a preference for what he called the state’s current “flat and fair tax,” that too can lead to a middle-class tax hike — if taxes are raised on all residents.
Pritzker and the General Assembly have made it clear that the initial tax brackets they have already passed keep the tax rate level at 4.95 percent or cut it slightly for those earning less than $250,000. Those earning more than that will pay more, up to a top tax bracket of 7.99 percent for $1 million earners, which is expected to bring in $3 billion in added revenue — which is why Brady refers to it as a $3 billion tax increase, even though it figures to cut taxes or leave them level for 97 percent of taxpayers.
Where he really got in trouble with the BGA, however, is when he insisted, “The last income-tax increase in the state of Illinois, we saw the largest exodus of middle-income families.”
Opponents of the progressive income tax have liked to allege that it will lead to taxpayers fleeing Illinois. But, as the BGA points out, “a link between state populations and tax-policy changes is far from clear.”
The BGA catches Brady telling a fib in that the last Illinois tax increase to 4.95 percent was passed two years ago over then-Gov. Bruce Rauner’s veto, but a breakdown on population figures has yet to be delivered since 2017. The most recent year for which population data are available is 2016.
The state did increase the tax rate from 3 percent to 5 percent under Gov. Pat Quinn early in the decade, before rolling it back to 3.75 percent in what turned out to be an ill-advised peace offering to Rauner at the start of his administration. Rauner nonetheless went on to force a two-year budget impasse on legislators, while in the meantime losing the much-needed extra revenue from the higher tax rate.
The BGA just happens to have done an earlier study on how that tax fluctuation affected Illinois residents. Illinois has indeed lost population over the last half of the decade, but what the BGA study found was that, contrary to predictions from tax opponents, rich residents did not flee the state when taxes rose. In fact, upper-income taxpayers thrived. The middle class also grew.
As the BGA recently repeated: “The number of filers reporting adjusted gross income between $50,000 and $100,000 grew slightly during the four years that earlier tax hike remained in effect. Growth was even greater among those reporting incomes between $100,000 and $200,000, roughly approximating what might be considered upper middle class.”
It added, “In fact, the only income group that shrank in size was the one composed of filers reporting annual income below $50,000.” It was poor residents who were forced to leave the state after the previous tax increase under the flat rate.
A Brady spokesman told the BGA that he “meant to reference low-income rather than middle-income families” in his remarks at the City Club. But the BGA wasn’t buying it, rating Brady’s remarks “false.”
A simple mistake? An innocent error? Not when when Brady made it clear in no uncertain terms that he believed the graduated income tax “must be defeated” when it goes before voters next year. His remark that the tax brackets in a progressive tax offered “no safeguards for middle-income families” were targeted to those who consider themselves “middle class,” typically up a majority of voters, and his accusation — wrong, as it turned out — that under a tax hike “we saw the largest exodus of middle-income families” has to be seen as equally strategic, perhaps more so in that it was patently false.
That’s the kind of obfuscation and muddying of the waters voters can expect from opponents of the fair tax over the next 16 months.