Daily Debunk: Who pays?

Rather than pay their share under the Fair Tax, the wealthy are trying to make everyone pay more

The Fair Tax Amendment debate basically comes down to who pays more: everyone or those who can afford to pay a little bit more? (Shutterstock)

By Ameya Pawar and Ted Cox

Bruce Rauner and other divide-and-conquer Republicans typically try to chisel off parts of the state to take the blame for needed reforms. A change in the school funding formula benefiting all low-income school districts amounts to a “bailout” for Chicago Public Schools. Bolstering unemployment, food stamps, and other social services only aids “welfare queens.” Downstate Illinois “subsidizes” Chicago and the suburbs, when actually the opposite is the case.

Generally, we reject that approach because we’re one state, One Illinois, and what benefits one benefits all. But perhaps it’s time to turn the tables and allow that, this time, there is something to the dynamic. The Fair Tax Amendment is an either/or: either the wealthy pay their fair share, or we all pay more.

Opponents of a graduated state income tax suggest that’s somehow unfair. While the tax brackets established by the General Assembly allow 97 percent of Illinois taxpayers to pay less or the same than the current 4.95 percent flat tax rate in the shift to a progressive income tax, the top 3 percent earning more than $250,000 a year pay more, up to a top bracket of just under 8 percent for those netting more than $1 million.

The rich are fighting this with everything they got, suggesting that if the top 3 percent take a hit this time with a progressive tax, next time it could be any other 3 or 10 or 20 or even 49 percent of taxpayers, perhaps the middle class.

But that’s just scare tactics. The state is going to need money to balance the budget, especially in the pandemic, and as Comptroller Susana Mendoza said earlier this week the estimated $3.4 billion to be raised by the graduated income tax is going to be critical. She echoed Gov. Pritzker, in his first budget address, in stating that, if higher taxes on the wealthy don’t take effect, the regressive flat tax is going to have to be raised on everyone to make up the difference. Pritzker suggested a hike from 4.95 to 5.95 percent, basically about 20 percent, a figure recently repeated by Lt. Gov. Juliana Stratton.

As Mendoza said this week: “It’s not a threat. It’s not a punishment. It’s just the reality of it.”

And here’s the reality from where the wealthy sit: they’d rather everyone pay 6 percent in taxes than have themselves pay 8 percent.

At the end of the day, what this all comes down to is we can all pay a lot more or we can make the rich pay their share. That’s what the vote on the Fair Tax Amendment is about.

Consider that the wealthy already received a $1 trillion tax cut from the Trump administration three years ago. Consider that it’s not true that higher taxes on the wealthy will produce “tax flight.” Consider that increased funding for public education and infrastructure actually encourages people to move here and stem the so-called Illinois exodus. Consider that a hike in taxes under a flat tax would cut consumer spending for the middle class, and especially among low-income working families, and exert a stiff drag on the recovery from the COVID economic collapse.

Those making more than $250,000 in that economy should pay more because they can afford to pay more. That’s what a progressive income tax — employed by a vast majority of states as well as the federal government for more than a century — is about. Plain and simple, it’s time for Illinois to adopt it.