The amendment went down to defeat for two overriding reasons—one analytical, the other more emotional. The first was that the proposed tax increase was not connected to any steps that would address the structural problems in Illinois finances. Illinois has the nation’s worst bond rating, largely because of its enormous unfunded pension liabilities. But Governor J. B. Pritzker, after taking office in 2019, has proposed no serious pension reforms. Nor has he pursued a deregulatory agenda that would lead to higher economic growth rates that might service these liabilities. And worse still, in connection with the referendum, he did not agree to use a substantial portion of the additional revenue flowing from the progressive tax rates to pay down these liabilities. Instead, much of the new revenue would have been spent on new programs or expanding old ones. His promise to use a mere $100 million of the new lucre to pay down pension liabilities was an insult to Illinois taxpayers who would see another $4 billion extracted from their pocketbooks. Read Full Article »
Are Democrats Cornered in Illinois?
One
of the most surprising results of the 2020 election was the defeat, in Illinois, of a state constitutional amendment to permit a progressive income tax. The Graduated Income Tax Amendment would have eliminated the Illinois constitutional requirement that tax rates remain flat across incomes. Its defeat is likely the most important political event for the state since I moved here 18 years ago. The proposed change in the state constitution was an effort by the dominant Democratic Party to continue its model of high taxes and high spending to support the base of its political muscle—public-sector unions. The party retains control of the legislature and the governor’s office, but it is politically cornered. Legislatively, it faces a choice between a reform agenda that would undermine its political base or a substantial tax increase on every working citizen.
The amendment went down to defeat for two overriding reasons—one analytical, the other more emotional. The first was that the proposed tax increase was not connected to any steps that would address the structural problems in Illinois finances. Illinois has the nation’s worst bond rating, largely because of its enormous unfunded pension liabilities. But Governor J. B. Pritzker, after taking office in 2019, has proposed no serious pension reforms. Nor has he pursued a deregulatory agenda that would lead to higher economic growth rates that might service these liabilities. And worse still, in connection with the referendum, he did not agree to use a substantial portion of the additional revenue flowing from the progressive tax rates to pay down these liabilities. Instead, much of the new revenue would have been spent on new programs or expanding old ones. His promise to use a mere $100 million of the new lucre to pay down pension liabilities was an insult to Illinois taxpayers who would see another $4 billion extracted from their pocketbooks. Read Full Article »
The amendment went down to defeat for two overriding reasons—one analytical, the other more emotional. The first was that the proposed tax increase was not connected to any steps that would address the structural problems in Illinois finances. Illinois has the nation’s worst bond rating, largely because of its enormous unfunded pension liabilities. But Governor J. B. Pritzker, after taking office in 2019, has proposed no serious pension reforms. Nor has he pursued a deregulatory agenda that would lead to higher economic growth rates that might service these liabilities. And worse still, in connection with the referendum, he did not agree to use a substantial portion of the additional revenue flowing from the progressive tax rates to pay down these liabilities. Instead, much of the new revenue would have been spent on new programs or expanding old ones. His promise to use a mere $100 million of the new lucre to pay down pension liabilities was an insult to Illinois taxpayers who would see another $4 billion extracted from their pocketbooks. Read Full Article »
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