By: Mark Glennon*
As Chairman of a group called Vote Yes For Fairness, Quentin Fulks is a point man in favor of the progressive income tax increase that’s on the ballot for voters in November.
Opponents are misleading you, he claimed in a Friday Chicago Tribune article, when they say a yes vote would grant “new power to levy taxes when the opposite is true.”
He went on:
And despite the fearmongering opponents are relying on, only small businesses making more than $250,000 a year in profit will pay more under the graduated tax, which means at least 95% of small businesses in Illinois will either pay the same or less in taxes.
It’s Fulk’s who is misleading.
To see why, it’s essential to understand something that much of the public is still confused about.
Understand that raising taxes progressively is a two-step process. First, voters will be only be asked in November whether to change the Illinois constitution to permit higher income tax rates for different income groups. A yes vote would mean Springfield could set whatever rates it wants, on any income group, whenever it wants. Today, in contrast, the constitution requires that income taxes be set at the same percentage rate for everybody.
That’s all voters will be asked: Yes or no, should progressively higher rates be allowed, changeable at any time?
But to actually raise taxes, a law has to be passed by Springfield — the General Assembly and the governor. They’ve already done that, setting new, higher rates for higher earners that will go into effect on January 1 if the ballot referendum wins.
But once the constitution is changed, Springfield would then be free to increase those rates on any income group at any time, with no constitutional limits set.
That’s why Fulks is misleading when he wrote that only those making more than $250,000 a year will pay more under the graduated tax. He leads you to think those initial rates are part of what you will be voting on. In fact, those rates are about as permanent as the initial subscription fees Comcast offers you. You are at their mercy once you sign up.
That’s what opponents of the progressive tax fear, and it’s why they’ve labeled the ballot referendum a “blank check.”
They are right to be afraid, first, because of experience in other states that have progressive income taxes. Many of them tax the middle class as heavily as the top new rates that the wealthy in Illinois would immediately pay under the law already passed by Springfield. We gave you the facts last week here.
Second, we know that the new revenue that would be collected from the initial “teaser” rates doesn’t come remotely close to closing Illinois massive budget hole or paying for all the promises made by those in power. Those numbers, too, are in our article last week. A yes vote would unleash Springfield to fill the remaining hole with higher rates on the middle class.
And as for Fulks’ claim that the amendment wouldn’t give Springfield new power to levy taxes that it doesn’t already have, why, then, do we need the amendment? Of course it does.
Year after year, for decades, Illinois voters have been duped into agreeing that higher taxes will solve the state’s financial problems. Demand reforms that fix the underlying problems instead of tax increases. Recognize the progressive tax proposal for what it is – just another tax increase, initially on high earners, attached to a blank check they want you to sign at the ballot box.
*Mark Glennon is founder of Wirepoints.
A set of state lawmakers want to extend CPS’ current school closing moratorium to February 1, 2027 – the same year CPS is set to transition to a fully-elected school board. That means schools like Manley High School, with capacity for more than 1,000 students but enrollment of just 78, can’t be closed for anther three years. The school spends $45,000 per student, but just 2.4% of students read at grade level.
Hopefully, all media will get the message, in Illinois, too.
Ted joined Tom Miller of WJPF to talk about Illinois’ highest-in-the-nation property taxes, why lawmakers don’t want to touch the tax’s cost drivers, just how much Illinoisans’ tax burden has grown over the decades, why Gov. Pritzker failed to meet his promise to reform property taxes, and more.
Not only that but taxes on Social Security , retirement pensions and investments will be taxed by our ” hnest ” ( hahahaha) Illinois congrrss.
The 2020 Miami Report released this summer states that an average of 950 people move to Florida every day and a majority come from high-taxed areas like New York, Boston, California and Chicago, according to the New York Times.
Florida residents pay no state income or estate tax and receive a homestead exemption of up to $50,000 on a primary resident and a three percent annual cap on home assessments.
Taxes are going to Double every 5 years for generations to come.
The HUGE PENSIONS are not stopping.
Retire at age 45 with $150,000 a year with 3% increases and there are tens of thousands of them.
Kiss Illinois Good Bye, it is a financial goner, DOA.
Buy a luxury home in Florida on what you save in Income taxes.
Illinois ” Land of Slavery”
The politicians have lied to us every time they’ve raised taxes “to fund the pensions & pay th bills”. How many more times are the voters in this state going to believe them? We’re being asked to give them carte blanche with our money now, without EVER having to ASK us, for the rest of time.
Fact checks are bais, plain and simple. Should be able to sue inaccurate fact check sites for reporting false information themselves. Furthermore they could be generated from places out of our own Country.
Fix the darn problem instead of more taxes! It’s the amendment to allow for pension reform that we need, not one for more taxes!
Agree and what is even more telling is Springfield’s refusal to take any action either recently and over decades to strengthen the Constitution’s requirements for sound fiscal management. I would wager the wealthy would not leave in droves if the proposed amendment also contained language to responsibly address the State’s fiscal crisis.
The constitution says we can’t lower the retirement benefits (pension reform) without a constitutional change.
However there’s nothing in the constitution preventing the state from LOWERING PAY BY 10% and using that to help fix their pensions.
Get Ready for a mass exodus of the rich out of Illinois.
It is already happening, but it will speed up.
Only the poor and the ignorant will live in Illinois in a few short years.
The greed of the cops, teachers and firemen have made taxes go up so high no one wants to live there any longer. Kiss Illinois taxes good bye, welcome Florida Luxury homes on the tax savings. All the rich cops, teachers and firemen flee Illinois for Florida right now.
Illinois ” Land Of Slavery”
Don’t blame the misappropriation of funds by the politicians on the teachers, and first responders who PAID nearly 10% of their income into their pensions. It not the fault of these workers that the politicians, instead of putting the money where it belongs, used it for their pork projects for decades, and now the pensions are underfunded.
It is these same groups who have and continue to fund the same politicians who for decades used their money for pork projects. You get what you pay for.
Strategically the public sector unions have contributed ZERO to 100% JB funded ($50 million)–Vote Yes for Fairness media/ advertising pr campaign but instead contribute $millions$ of union dues to friends of Madigan and related dem machine political fund raising funds. Thereby allowing fair tax promoters to paint the picture in the public eye that’s is not the public sector unions behind fair tax when in fact they will be the main beneficiary of revenue from fair tax (if passed). But some how promoters portray fair tax being about victimized little guy vrs Ken Griffin types. There is NO tax relief… Read more »
That is factually inaccurate. Teachers do not pay more than 2% of salary, but often zero, as pension contributions.
Look up “pension pick-up”. Title is an offensive and condescending deliberate obfuscation; this is the practice of taxpayers paying the pension contributions on behalf of the teachers.
Teachers in Illinois pay between zero-to-2% maximum toward their own pension contributions.
Insult to injury, taxpayers must also pay the federal TAXES on the pension pickups that are paid on behalf of teachers.
It is stunning how long this deeply believed untruth–that teachers actually contributed meaningfully to their own pension entitlements—has been perpetuated.
Retiree, most teachers get 100% of their contribution picked up by their district, and pay nothing towards their pensions. Many more get partial pickups, including CPS where teachers pay only a small portion.
3 reasons that ” pension pickup” is more devastatingly destructive than is readily apparent:
1. It artificially keeps teachers salaries appearing “low” because it is not reported as ‘salary’.
2. Taxpayers must also pay the taxes on these teachers’ earnings (pickups) (on behalf of teachers): this exports local taxpayers’ money to federal coffers.
3. It helps teachers bypass maximums the rest of American earners are bound by: 401k and IRA contributions annual maximums.
Teachers’ extravagant pensions could not be accomplished by any other class of earner putting retirement savings into 401k or IRA given those max limits.
And 4) Teacher’s have no skin in the game — whether the economy works is of no consequence to them. It’s no wonder so few have any conception of basic economic principles like scarcity and that many are socialists.
Only partly true. The change in life expectancies increased the actuarial costs enormously. Most public pensioners will receive more than double what they paid in
I do blame you for the predicament you find yourself in. You are the one who chose to be a bystander and spectator in funding your retirement. You chose to blindly trust Big Government and the corrupt union to fund your retirement. You foolishly thought they cared more about your retirement than you did. You chose to deny math and common sense to swallow the obvious lies the union and politicians fed you. Now that your retirement is underfunded you claim everyone but you has a duty to fix your mess. As others have pointed out, you lie when you… Read more »
With all due respect to the several intelligent commenters here who have pointed that teachers often do not contribute the full 10% towards their DB pension, the real issue here is not whether the teachers have contributed 10%. The issue is how much money in total needs to be contributed every year by employee and employer to support these pensions. The problem is that even 10% plus another, say 10%, from the employer doesn’t even come close to being enough to support the gold plated pensions these teachers receive. If you work for 30-35 years and then collect a DB… Read more »
Tom, you are right. Look for our Tribune editorial coming on Wednesday saying that.
Your analysis seems to assume most teachers reach the stage of a 30-35 year career. That’s not the case at all. While I can’t quote you the statistics precisely something like 1/3 of those who start quit before even vesting toward a retirement Income. Then, another similar group quits before the time length mentioned, meaning they accrue less retirement benefit rights and sometimes way less than those who stay much longer. Finally, most retired teachers have known some colleagues or teaching relatives who died either while part of the active teaching force or with only a few months or a… Read more »
James, I understand that many teachers never teach until retirement age. The problem is the ones that do are given pensions that are simply unaffordable, particularly because they are the ones who have their salary spiked in the last several years before retirement. I have correctly portrayed the gold plated pension of a teacher who retires at 55. By the way the life expectancy of a 55 year old female is 29 additional years, so I was off by 1 year. That life expectancy does in fact take into account the retirees that pass away earlier than average, that is… Read more »
I agree with about everything you’ve said here, but you clearly weren’t saying that you were cherry-picking the longest-career and implied suburban Chicago area teachers in your original posting. Still, you are cherry picking to bolster your argument. That said, the average retiree’s annuity is what’s actuarially important at any given moment rather than the extremes at either end. I’d have to leave it to the wonks to dive into the figures for the average length of time a retiree draws such an annuity, but again my guess is that your repeated 30-year reference is not the norm overall. That’s… Read more »
Tier I vesting requirements:
5 years creditable earnings age 62;
10 years creditable earnings age 60;
20 years creditable earnings age 55.
Know that sick days can be banked to reflect as much as 2 years creditable earnings.
Yes, that’s all true to my memory of such things. But, you’ve reminded me of something that applies to those who have short careers in teaching. Your eventual retirement annuity is based upon your actual earnings of sometimes decades ago rather than being updated to reflect the interveing years of inflation as is the case for Social Security based years of earnings. So, if your highest-four years of earnings as a teacher were literally decades ago and averaged, say, $30,000-40,000 that’s the basis for your annuity along with the multiplier applied to your years of service (2.2% for each year?)… Read more »
Lifetime expectancy assumptions have been too low,, consistently andsignificantly, since social security began.
Age 55 retiree living to 85 (30 years of drawing benefits) under today’s actuarial assumptions will have to break an 80- year trend of rising life expectancy in order to not be a gross underassessment.
I think this is the crucial point that all misdirection is directed towards…if only taxpayers understood it, and compared/contrasted their own at-risk private retirement savings rules and conditions with those of public sector teachers… Your observation can be quantified by calculating the present value of a lifetime annuity with 3% cola using a risk-free discount rate of return like the 30 year bond yield (to reflect the value of taxpayer guaranteed entitlement). What percentage of similar salary would a non-public employee need to save within a 10 year or 20 year period to accumulate that amount of savings? And does… Read more »
There is no amount of taxation that can pay for the exorbitant, risk-free pensions the teachers and others foolishly think they are entitled to
It’s not about the 3% earning over $250,000. It’s about the 11% that fall in the $100,000-250,000 tax bracket. That’s the first group that’s gonna feel the pain if this passes because a tax hike on them only impacts a small percentage of taxpayers and there’s a 3 percentage point gap between them and the next bracket. Then they will create a new tax bracket from $75-$100K and give it higher rates AND raise all the rates on the brackets above it because only 30% of tax filers earn above $75,000. It’s pretty easy to raise taxes on a “minority”… Read more »
That’s a good way to put it. Beat on one minority group at a time.
It’s a good strategy. The only way to beat it is for each targeted group to leave the state.
I just left. Sep 29. I have spent less than 40 days in the state this entire year. Sick of the corruption. JB is one of the more corrupt governors we have had given his property tax cheat status going in.
Yep. I can see the commercials in 2022 now if this passes: “Most taxpayers* will NOT see a tax increase” and in the fine print at the bottom of the screen will be *only those earning over $50,000 will see higher rates.” And they’ll be telling the truth.
Let’s be blunt. Wirepoints is always informative, including today’s article about the progressive tax. Wirepoints is also failing in it’s primary mission to guide Illinois back to fiscal sanity. It hasn’t helped Illinois because Illinois doesn’t want help. Too many residents have a vested interest in keeping the status quo. They don’t care how high taxes go because they are on the receiving end. The residents that aren’t on the receiving end are mostly too complacent to change states. Thanks to you all, extreme liberalism and corruption rules Illinois and probably always will….. and it’s your fault. The solution is… Read more »
By your logic, police should be defunded and military disbanded.
What you are saying is abandon any fight against bad actors, seek safety and comfort elsewhere.
What happens when everyone runs out of elsewheres?