Illinois farmers see little that is fair about Pritzker’s ‘fair tax’

Illinois farmers see little that is fair about Pritzker’s ‘fair tax’

During the thick of the COVID-19 pandemic, the Illinois Farm Bureau twice made it a priority to tell members to oppose Gov. J.B. Pritzker’s progressive income tax hike. Their opposition is about values and principles.

The Illinois Farm Bureau strongly opposes a progressive state income tax, but the objections are less about money and more about the character and values of Illinois’ 72,000 farmers.

Be fair. Work hard. Reap what you sow.

Those ideals were what Illinois Farm Bureau President Richard Guebert Jr. and Vice President Brian Duncan talked about when each made time during spring planting and amid COVID-19 wreaking havoc on farms across the country to write op-eds opposing the tax question on the Nov. 3 ballot.

“If the constitutional amendment is approved in November, the government will impose varying tax rates based on how successful you are as an individual or as a corporation,” Duncan wrote.

Success has been elusive lately. Farmers faced a trade war, with U.S. tariffs hitting Chinese steel and China retaliating against U.S. agriculture products. Prices recovered just in time for COVID-19 to again send commodity prices falling: Hog and beef prices were both down more than 30% and soybeans down 10% since Jan. 14, when the COVID-19 pandemic hit hard in Wuhan, China.

But Illinois’ real pain point has been corn, which dropped 15% driven by a decline in ethanol demand and prices. Corn accounts for a little more than half of the $19 billion a year in Illinois agricultural product sales.

Next up, as farmers try to recover from the coronavirus recession, they will face Illinois politicians wanting a new tax.

The bureau president’s opposition started with Gov. J.B. Pritzker calling it the “fair tax.” Guebert said fairness means treating everyone the same, not treating some people differently based on an arbitrary government standard.

“The new tax structure is supposed to pay for our public schools, social services, public safety, and the list goes on and on,” he wrote. “However, we know it will be spent in two places: our state’s exorbitantly high pension costs and debt obligations. The government created these two problems, not us taxpayers. We, taxpayers, have done our jobs; we are law-abiding, taxpaying citizens. We should not have to pay to fix the politicians’ mess.”

He said the tax revenue declines from the coronavirus pandemic are likely to be used by proponents as further justification for the tax hike. He said not to be fooled.

“Rather than spend time on policies that raise taxes, Illinois’ politicians should focus on enacting policies that force our government to live within its means, just like all households across the state. They should focus on making life better – not worse – for working people by reducing income and property taxes, adding jobs and growing our economy.”

Illinois agriculture does grow the economy: While farm products put $19 billion a year into the state economy, the real boost comes from processing those products. Illinois has 2,640 companies that process foods, which add $180 billion to the state economy and employ nearly 1 million Illinoisans.

But farmers themselves are projected to have little margin during the next few years. “Given trend yield projections and current price projections, farms will have recurring losses in financial position over the next five years,” wrote two University of Illinois economists who modeled 1,700-acre farms in central and northern Illinois.

The central Illinois farm would have lost nearly $18,000 last year were it not for the Trump Administration’s Market Facilitation Program, intended to offset losses from the trade war, and future profits depended on the amount of the subsidies. The northern Illinois farm did worse because of lower yields and in future years was “projected to have serious declines in liquidity.”

But the models also show how volatile and unpredictable a farmer’s income can be. The central Illinois farm showed an income of $175,508 for 2018, but then an income of $2,404 for 2022.

Farm stress” thanks to near-record debt, rising bankruptcy rates, low margins and the inability to control the things that determine their futures has lead to a suicide rate among farmers that’s 1.5 times higher than other occupations. That number could be low, because some suicides are masked as farm accidents.

In 1959 there were 164,000 Illinois farm operators. That number now is 75,087.

It cost the average Illinois farm $184,000 to raise a crop in 2017, the latest farm census by the U.S. Department of Agriculture. The government paid an average of $48,589 toward that crop. With all that investment, the average farm income was $69,418. Take out the government subsidy, and that’s $20,829 for a year of work and risk and debt.

Pritzker has promised that Illinoisans making less than $250,000 a year will not see a tax hike under his progressive income tax plan. But tax promises are made to be broken in Illinois.

Removing the state’s constitutional flat income tax protection makes it far easier to hike taxes on the middle class and retirees going forward – as well as imposing new types of income taxes. Todd Maisch, president and CEO of the Illinois Chamber of Commerce, raised concerns about this issue in committee testimony, saying it “allows [for] taxation of certain kinds of income a second or third time.” Maisch referenced carried interest and agriculture as two examples of income that could be subject to special additional taxation should voters approve Pritzker’s progressive income tax amendment.

In a bond offering document published April 29, the state made a point to note that the new income tax rates are subject to change, reading, “The State provides no assurances as to whether the Income Tax Amendment … will be implemented or subsequently amended.”

Is it fair to add stress and uncertainty to a family farm that may see income become $2,400 in a few years?

Not to the remaining 72,000 Illinois farmers.

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