Back in February, 65% of Illinoisans supported a graduated-rate income tax.
By Nov. 3, only 45% voted for Gov. J.B. Pritzker’s centerpiece tax policy, and it failed.
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What happened? How could the richest governor in the country pour $58 million and so much of his political capital into a pro-tax hike campaign — and fail?
It’s simple: Knowledge. During the past year, the voters of Illinois achieved information parity with their political leaders in Springfield.
Information asymmetry happens when the seller has much more information than the buyer, as with used car salesmen. They always knew more about the cars than the people who wanted to buy them, but technology has turned that dynamic on its head. I bought a minivan in October. Before I stepped on the lot, I had seen multiple photos of it, the Carfax report on accidents and repairs, and I knew the exact value of the car.
That’s information parity.
But for some stubborn reason, information asymmetry has persisted in politics. For decades, politicians have gone down to Springfield and introduced and passed legislation that has affected all of our lives — then kept hidden facts such as cost and whose crony benefited.
Much like the way better tech and information put car buyers on equal footing with car salesmen, for this ballot referendum a revolution in information on public policy leveled the playing field between Springfield and the people of Illinois.
In 2020, taxpayers got the full story on what Pritzker’s progressive tax would’ve meant for Illinois: Namely, eventual tax hikes on small businesses, retirees and the middle class.
The so-called fair tax could have led to additional taxation, particularly on retirement income, just as is the case in all 32 states with a graduated tax system. State Treasurer Michael Frerichs confirmed this during a Chamber of Commerce event during the summer. That’s why the Illinois Policy Institute joined retirees from Cook County in a free and equal elections lawsuit that exposed the bias in the progressive tax ballot language and the risk for Illinois retirees.
Retirees got the message. From July to October, awareness among Illinoisans over age 55 of the fact that the progressive tax opened the door to a retirement tax went up 30 percentage points. At the same time, their opposition to the progressive tax went up 18 points.
For more than 100,000 small businesses, progressive tax rates would have hiked taxes by up to 47%, damaging the majority of the state’s jobs. The progressive tax structure would have also allowed for the highest effective corporate tax in the nation, as high as 15.28%. Initial rates would bring corporate taxes to the nation’s second highest.
This fall’s property taxes were the final straw. Despite promises that the graduated tax would offset the second highest property taxes in the nation, no relief proposals ever materialized from Springfield’s property tax task force. Researchers at the Institute found the typical Illinois family could have expected to pay $244 more in state and local taxes next year, even with the progressive tax savings.
Illinoisans wised up to the fact that the progressive tax removed their constitutional safeguards, and that lawmakers would be able to change the graduated rates at will. The middle class saw the threat, because they knew the state’s nearly $140 billion pension debt would mean they’d be the next target for higher taxes.
Pritzker said voters were deceived into voting against his tax proposal, but the truth is he was the one trying to sell us a lemon — so unsure of his product’s reliability that even the ballot included a sales pitch. The facts were never on his side and all it took was a little truth-telling to expose the threats a progressive tax posed to the state and everyone in it. It didn’t help that as voters were considering whether to grant increased taxing power to Springfield, they watched as multiple state officials were under investigation for corruption, including the state’s most powerful politician, House Speaker Michael Madigan.
There’s healthy bipartisan skepticism of political power in Illinois and it’s aimed squarely at changing the way things are done here. Cleaning up corruption and finally fixing Illinois' broken pension system are now more important — and more attainable — than ever before.
We can’t afford to buy the broken state Springfield keeps peddling. The progressive tax is dead, and Illinoisans are ready to hold politicians to account for the mess they’ve made of the state’s finances.
This article originally appeared in the Chicago Tribune on Nov. 6, 2020.
Matt Paprocki
President, Illinois Policy
Treasurer, Vote No on Illinois Corruption
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