Who says you can’t tax a state into prosperity? A number of folks. But try telling newly-elected Gov. J.B Pritzker (D-Ill), he can’t.
Gov. Pritzker’s tax-and-spend approach to governing is not new. He centered his gubernatorial campaign on implementing a progressive tax system in the Prairie State to address the state’s $3.2 billion deficit. And now that he’s in office, he’s urging the Democrat-controlled state legislature to get behind his signature “Fair Tax” plan.
If enacted, the Fair Tax plan would eliminate the state’s 4.95% flat tax and would replace it with a 6-bracket progressive tax system via a constitutional amendment—with the 7.95% top marginal tax rate kicking in on income over $1 million. When Pritzker initially proposed this tax hike, he claimed that 97% of taxpayers would experience tax relief. Unfortunately for taxpayers, this is a claim he’s now walking back.
“As you know, we currently live in a system in which the taxes can be changed at any moment so there’s certainly no guarantees, but what I will tell you is that I am fighting for the plan that I put forward,” said Gov. Pritzker in a news interview in April.
While Pritzker campaigned on this proposal, the rates and brackets recently passed out of the Senate and House differ from his own. However, their intent remains the same: place Illinois taxpayers on the hook for the state’s $3.2 billion deficit.
The Senate’s bill raises the top rate to 7.99% and kicks in when income hits $750,000 instead of $1 million. The Democrat-controlled House of Representatives also voted along party lines on Memorial Day to approve the constitutional amendment and send the measure to the 2020 ballot. The rates and brackets also mirror those passed out of the Senate.
To become law, the measure must receive the approval of 60% of voters.
Illinois currently has a huge unfunded pension liability, totaling $134 billion. Pension-related expenditures consume more than 25% of the Illinois’ state budget. While it is obvious structural reforms are needed to these pension programs, Gov. Pritzker’s solution is taking the easy way out: higher taxes and more debt. While calling for income tax hikes, he has also called for issuing $2 billion in bonds to inject cash in the state’s retirement system.
What a novel idea. Paying off debt with more debt.
Unfortunately, Illinois has the lowest credit rating of any state in the country. Their rating is only one notch above being considered junk. The state’s low credit rating would force them to offer bonds to buyers at a higher interest rate, plummeting the state further into debt.
Illinois lawmakers have let down those they were elected to represent. They have failed to protect their constituents from massive tax increases or to provide much-needed property tax relief. With the measure now heading to the ballot, it is up to the voters to protect themselves.