Daily Debunk: Nix the fix

Naysayers cite state’s past ‘fiscal mismanagement’ — which is exactly the problem the Fair Tax targets

Talk about “fiscal management”: former Gov. Rauner failed to achieve a budget two years running, President Trump has paid little or no taxes over most of the last decade, and Kenneth Griffin is doing all he can to fight taxes of any kind — especially the Fair Tax Amendment. (One Illinois/Wikimedia Commons collage)

By Ameya Pawar and Ted Cox

There are excuses, and then there are excuses.

Except there’s no excuse for some excuses.

That’s our incredulous response to Tuesday’s edict from the Commercial Club of Chicago arguing against the adoption of a graduated income tax in Illinois “based on the state’s decades-long history of fiscal mismanagement.”

Don’t be silly. The state’s “decades-long history of fiscal mismanagement” is exactly the problem a progressive income tax is designed to address — making the tax system more equitable while providing state government with necessary funding for essential services.

First things first, though. This borders on the argument that instituting a graduated income tax in Illinois only provides cover to raise taxes still more — when the General Assembly and the governor already have the ability to raise taxes. They can do that anytime, with the sole proviso being that legislators and the governor then have to explain those increased taxes to their constituents, which thus far has proved to be a powerful deterrent, to the detriment of those forces trying to raise critical state revenues — resulting in the state’s “fiscal mismanagement.”

The Fair Tax Amendment is on top of the ballot Nov. 3 only because it requires a change in the state constitution to even allow a progressive income tax in Illinois.

The tax brackets, set separately by the General Assembly last year, establish that 97 percent of Illinois taxpayers would pay less or the same, up to incomes of $250,000 a year. Only incomes above that would pay more, up to a top tax bracket paying a rate just under 8 percent for those making more than $1 million.

It’s common sense, but when you’re fighting common sense — and the need to achieve a 60 percent supermajority to pass the Fair Tax Amendment — any argument will do to muddy the waters and muddle voters, even if you have the use the illness to argue against its cure.

Look, as Quentin Fulks, executive director of Vote Yes for Fairness, said after the Commercial Club’s Civic Committee came out against a graduated income tax: “It’s no surprise that an organization of the wealthiest people in our state who have benefited from avoiding paying their fair share for 50 years is voicing their opposition to the Fair Tax.”

These are the same naysayers who brought you Gov. Bruce Rauner, who imposed a two-year budget impasse on the state, gutting social-service programs and doing lasting damage to public education, including the state universities — all in a desperate attempt to crush unions and “starve the beast” of big government.

As Gov. Pritzker himself said in unveiling his budget earlier this year, before the coronavirus hit: “The cynics had their years in power, (and) the people of Illinois suffered because of them.” He made it clear that his budget, committed as it was to public education and an expansion of early childhood development, was an attempt to repair the damage inflicted on state government, with social programs “hollowed out” by insufficient funding.

Keep in mind, departments that saw staffing and funding cut included the Illinois Environmental Protection Agency, protecting our air and water, and the Department of Natural Resources, resulting in state parks being shut down because the state couldn’t afford to staff them.

Budget hawks like to decry pension shortfalls and the lack of a Rainy Day Fund as “fiscal mismanagement.” Well, guess what, Pritzker’s budget set a path toward pension stability and committed to make the first contribution to that Rainy Day Fund in more than a decade — with the help of a graduated income tax, to pass, as expected, this fall.

The fact is, anti-taxers like having the state with its hands tied behind its back, which is exactly the purpose achieved by a flat tax: raise taxes on everyone or no one, with the end result that taxes rarely get raised at all, leaving public education, law enforcement, and social services having to scrape by with budgets set years if not decades before.

But all right, members of the Commercial Club — including Citadel’s Kenneth Griffin, who’s become the poster child for opposition to the Fair Tax — tell us, what are you willing to pay? When did you ever see a tax increase you would willingly accept?

It seems to us that, as a class, you’re already doing all you can to avoid paying taxes of any kind. Allow us to point to President Trump, who reportedly paid just $750 in federal income taxes in 2016, the year he ran for president, and 2017, his first year in office.

We’ll give credit where it’s due and clarify that Trump paid $750 a year, not $750 total those two years.

Not coincidentally, Gov. Pritzker too brought up Trump’s negligible tax payments in discussing the Fair Tax Amendment on Wednesday, saying, “This puts us in a better fiscal position if we pass it.”

Late last year, the Institute on Taxation and Economic Policy released a study finding that 91 Fortune 500 companies paid no taxes at all or actually got money back from the government in tax subsidies. Among those companies familiar to Illinoisans are Deere, Aramark, U.S. Steel, FedEx, Chevron, Delta Air Lines, Netflix, General Motors, Molson Coors, Starbucks, and Amazon.

Those 91 companies made $106 billion last year, but their tax balance with the federal government was $6.3 billion to the good — meaning the government actually gave them more than $6 billion in subsidies for paying no taxes. Their tax rate was calculated at negative 5.9 percent.

Deere made $2.2 billion, according to the study, but also received $558 million from the government, for a tax rate of negative 25.9 percent.

Firms making $1 billion in profits and paying no taxes included FedEx, Chevron, Delta, Honeywell International, Netflix, GM, Halliburton, Molson Coors, Starbucks, and Amazon, which posted a $10.8 billion profit and pocketed $2.4 billion in subsidies.

They've gotten still more subsidies this year through coronavirus relief programs, with the vast majority of benefits from the CARES Act going to millionaires.

So, to the nabob naysayers, we politely ask: What is it you want? What is your wish list? Because it seems to us you’ve gotten most everything you wanted, and that’s only resulted in the “fiscal mismanagement” of state government, mismanagement the Fair Tax intends to undo.