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 Gov.
J.B. Pritzker and other proponents of his proposed $3 billion “fair tax” claim
increasing Springfield’s power to set multiple tax rates will bring much-needed
tax relief to low- and middle-income families.
That isn’t the case. The median family in Illinois is likely to pay $244 more in
state and local taxes next year regardless of any “relief” from a progressive
income tax.
That’s because the costs that are driving up state and local budgets are not
being reformed. They have led to constant tax increases during the past decade,
and more are projected that a “fair tax” will not fix.
Illinois property taxes are already second-highest in the nation. Those, plus
expected increases in consumption, based on 20-year historical averages, will
likely mean the typical family will pay an extra $244 in state and local taxes
if the “fair tax” passes.
Breaking that down, the median family earns $87,771 per year,
according to the U.S. Census Bureau. They can expect to pay an extra $106 to
state and local governments for sales and excise taxes in 2021. They will also
pay $183 more in property taxes. The “fair tax” relief promised by Pritzker
would only reduce their state income taxes by $45.
That results in $244 more taken from that median family, which pushes their
combined state and local tax burden above $10,600.
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But that estimate doesn’t account for the $150
increase in gas taxes and vehicle registration fees imposed by the
state in 2019. Even if Illinois families are able to take advantage
of expanded child and property tax credits, the increased cost of
owning a vehicle in Illinois will raise their taxes even more.
The grand total: $314 (or more, if the family
cannot claim the credits).
Proponents of the “fair tax” tout it as a way to offer tax relief to
struggling families, but the reality is average Illinoisans can
expect to pay more in state and local taxes despite the small break
offered by the initial rates. After voters give state lawmakers the
power to change those rates, a simple majority vote could raise
taxes by any amount on any group whenever state leaders want more
money.
So long as state lawmakers refuse to consider constitutional pension
and other spending reforms, Illinoisans will continuously be asked
to pay more. The longer reforms are delayed, the more likely
middle-class taxpayers will be hit with an income tax hike
regardless of whether voters let lawmakers create progressive income
tax rates.
The “fair tax” isn’t about reducing taxes for the middle-class, it’s
about eliminating the state constitution’s built-in protection
against tax hikes. It’s about opening the door for a litany of new
taxes such as city income taxes and retirement taxes.
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