Daily Debunk: A matter of trust

Comptroller Mendoza says if we can’t trust government, ‘we should trust what’s in the best interest of our own wallet’

Comptroller Susana Mendoza attends the signing of Gov. Pritzker’s first balanced budget last year, joined by House Majority Leader Greg Harris in the background. (One Illinois/Ted Cox)

By Ted Cox

Opponents of the Fair Tax Amendment insist you can’t trust government not to turn a graduated income tax against everyone eventually.

Which kind of puts reformers in a difficult position. How can they change a half century of fiscal mismanagement that produced that atmosphere of mistrust if voters won’t trust them in the first place?

Which is exactly how Illinois millionaires and billionaires and all anti-taxers want it.

“There’s so much misinformation out there,” said Comptroller Susana Mendoza on Wednesday. “And I do believe that people don’t trust their government. So I understand why people are so quick to potentially believe the false narratives that are out there. Without a doubt, people mistrust government. And the argument that ‘do you trust Springfield politicians to do right by your tax dollars’ is an argument that resonates with people. However, it’s a false argument. And that is what’s the most upsetting thing for me. I would love for 97 percent of our Illinoisans to pay less taxes. That’s exactly why we need the Fair Tax Amendment.

“We have an opportunity to fix this,” she added. “And I know you don’t trust government. I don’t trust government and I’m in government, right? But having said that we should trust what’s in the best interest of our own wallet.”

For Mendoza as comptroller, charged with paying the bills the state government has amassed, it’s a simple matter of math. She took a $16.7 billion backlog in unpaid bills under former Gov. Rauner and paid it down under $6 billion before the coronavirus hit, with the help of a bond deal Rauner resisted and the balanced budget passed last year by Gov. Pritzker. They were in the process of of renewing payments into the state’s near-nonexistent Rainy Day Fund when the backlog got down to $3 billion — a proposal mentioned by Pritzker in his budget address to open the year — when the economy collapsed in the grip of the pandemic.

That’s blown a hole of between $5 billion and $7 billion in the budget, just at a point when social services are needed more than ever. The bill backlog has climbed back up to $7.8 billion — not counting the $2.2 billion borrowed short term from the Federal Reserve in a coronavirus relief package. The $3.4 billion projected to be raised from what Pritzker has called the Fair Tax — raising taxes only on the 3 percent of top earners making more than $250,000 a year — is needed, Mendoza said, “to help us close the tremendous hole that was blown in the budget, specifically related to COVID-19.”

Mendoza added, “Whether or not the Fair Tax passes, we still have that hole to fill. Someone has to pay for it. I certainly hope that it’s only the top 3 percent of wealthiest people who help us get there.”

Foes of a graduated income tax are trying to convince Illinois taxpayers that they should simply vote against a “tax hike.” That’s because, Mendoza said, if taxes are raised on everyone from the current 4.95 percent flat tax, it still would most likely wind up being less than the top tax rate of just under 8 percent projected for those making more than $1 million a year under the proposed progressive income tax. In that, the Fair Tax opponents are preying on the 97 percent of Illinois taxpayers who stand to see their taxes lowered or remain the same.

“They’re being duped by the opposition into thinking that they’re not going to pay taxes,” she said, “when in fact the opposition wants to pay less so that they have to pay more. They’re walking into a trap that the millionaires and billionaires are setting for them.”

No wonder Citadel Investments billionaire Kenneth Griffin has contributed $47 million to a group spreading misinformation, propaganda, and outright lies on the graduated income tax. It’s been projected that he’d personally pay $26 million a year more in taxes under the plan.

“All these red herrings have been thrown out there,” Mendoza said. “It’s just not factually accurate, and they’re done with the sole purpose of giving a guy like Ken Griffin a tax break when he should be paying more so that you can get to pay less.”

Pritzker, a billionaire himself, has countered by contributing even more than Griffin has to a group combating the misinformation and backing the Fair Tax Amendment.

“That’s really the crux of this,” Mendoza said. “Do we think that guys like Pritzker and Griffin should pay more so that you don’t have to?”

To her, the answer — and the math — is simple. “It’s either going to be that 3 percent of the population that pays for it, or everybody else is going to have to pay for it,” which as a fellow taxpayer she called “the least-attractive option,” adding, “It’s not a threat. It’s not a punishment. It’s just the reality of it.”

A graduated income tax should have been adopted a long time ago, Mendoza said, in the 1970 state constitution, which instead mandated the flat tax that has led to politicians playing shell games with lottery money and pension “holidays” that has generated voter distrust.

“So we have an opportunity right now, in 2020, to correct a wrong that was committed on Illinois taxpayers 50 years ago,” she said. “It should have been a progressive tax from the get-go.

“This is a no-brainer,” Mendoza added. “We should all vote for it. I hope it passes, and if not, unfortunately, we’re still going to have to come up with a way to make up for that $3.4 billion. It just won’t be a way that is palatable to anyone in that 97 percent.”