Daily Debunk: Taxes are too damn high!

But on who, points out former Democratic governor candidate Daniel Biss

Former Democratic governor candidate Daniel Biss agrees that Illinois taxes are too high, but he pointedly asks, too high on whom? (One Illinois/Ted Cox)

By Ted Cox

The Lincoln Forum and the Union League Club of Chicago held an online debate Wednesday on “The Graduated Income Tax: It’s Time to Decide.” The moderator, Wintrust Bank founder Ed Wehmer, who wasn’t exactly moderate on the issue, raised the matter of a Wall Street Journal editorial this week charging that Illinois would sink to 47th in the nation on the size of its overall tax burden if it adopted the Fair Tax proposed by Gov. Pritzker.

Are the taxes too high? Wehmer wondered.

This might appear at first to be a gotcha moment, but Daniel Biss, the former state senator and Democratic gubernatorial candidate now running for mayor of Evanston, actually agreed.

“There are a lot of people in Illinois whose taxes are too high,” he said. But just who are they?

Who are the people bearing the burden of what the Wall Street Journal Editorial Board — also not exactly moderate on the matter — already ranks as the 36th heaviest nationally with the state’s reliance on a flat-rate income tax?

“The purpose of this amendment is to say that there lots and lots of people, millions of people in Illinois, who are unfairly burdened by this system,” Biss said. “If we want to change that, we have to change the structural cause of that problem, and that got written into the constitution 50 years ago,” with the requirement for a flat tax.

Having already called that “50 years of error,” Biss went on to say, “If we’re concerned about the impact of our tax system on the people who I think most observers are most concerned about — which is to say, middle-class families, people who are struggling to get into the middle class, small businesses — voting yes is a solution to that problem, not an exacerbation of that problem.”

Quentin Fulks, executive director of Vote Yes for Fairness, chimed in, pointing to a recent study from the Institute on Taxation and Economic Policy, a national nonprofit, nonpartisan think tank that works on state and federal tax policy.

The study found what should already be obvious: that the burden of a regressive flat tax falls heavier on a low-income or middle-class family than it does on someone earning more than $250,000 a year. “Tax laws that collect higher shares of taxpayer income from those with lower incomes exacerbate income inequality,” it stated. “In Illinois today, after state and local taxes, a family making less than $21,800 has 85.3 percent of their income remaining post-taxes while a family with more than $537,400 has 92.6 percent of theirs. Tax laws that perpetuate these inequities year after year make it even harder for families already struggling to get by with low, stagnating wages.”

Fulks emphasized the study’s other major finding: that the regressive income tax has historically worsened income inequality, especially by race. Going back to compare the last 20 years with how that might have been different under a graduated income tax, the study determined: “Black and Hispanic Illinois taxpayers with taxable incomes less than $250,000 pay $4 billion more in taxes over the 20-year period studied under a flat tax than they would under the Fair Tax. These tax differences reduced the standard of living for these families and exacerbated income and wealth gaps, while enabling the wealthiest Illinoisans to accumulate an additional $7.5 billion in wealth due to these tax subsidies.”

Because the well-to-do aren’t paying their fair share, the study argues, they’re in essence being subsidized, having taxes they should be paying paid by others, and they use that extra money to build wealth over time, worsening income inequality.

“Is it fair that a grocery-store clerk pays the same tax rate as a billionaire?”

Quentin Fulks of Vote Yes for Fairness (Zoom)

“Is it fair that a grocery-store clerk pays the same tax rate as a billionaire?” Fulks said. He argued that adopting the Fair Tax Amendment on Nov. 3 would “put us on a path to put this right.”

Fulks pointed out that California has a top tax rate of 13 percent, well above the top proposed Illinois tax bracket of just under 8 percent for those making more than $1 million a year, and it has a considerable budget surplus to go with it (at least before the pandemic hit). As most everyone knows by now, the Fair Tax Amendment would allow a graduated income tax in Illinois, with the rates set so that 97 percent of taxpayers pay the same or less, while only those earning more than $250,000 a year would see tax rates rise.

“We’re asking 3 percent of the state’s taxpayers to step up and pay a little bit more,” Fulks said, because they can afford it, and can afford to ease the unfair tax burden placed on the vast majority of taxpayers by a regressive flat tax.

We’ll be returning to that debate in the days and weeks ahead. There was indeed another side to it, and they said some things that need to be debunked before Nov. 3.