Pritzker ‘fair tax’ could hike taxes on typical Lake County family by up to $1,400
While progressive tax proponents champion their “tax on the rich,” middle-income families in Lake County – home to the state’s highest property taxes – could see a big tax hike under income tax models praised by Illinois Gov. J.B. Pritzker.
Illinois Gov. J.B. Pritzker has mentioned Wisconsin and Iowa as models for a fairer income tax, but the typical family in Lake County could pay as much as $1,419 more in state income taxes each year were Illinois to adopt one of those states’ rates.
The state income tax would increase by $825 on the median Lake County family with two children earning $102,528 if Illinois adopted Wisconsin’s rates. The hike would be $1,419 if Illinois adopted Iowa’s rates. That family isn’t rich by Lake County standards, they are in the middle and could see a state tax increase of 18 percent or 30 percent under the systems Pritzker admires.
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Pritzker wants to scrap the state’s constitutionally protected flat tax in favor of a graduated, or “fair,” tax structure. In his Feb. 20 budget address, Pritzker pointed to Iowa and Wisconsin’s tiered income tax rates as models for Illinois. While he has framed this system as a “tax on the rich,” middle-income Lake County families would get hit with heavy hikes under both models.
Lake County residents could see large increases after Illinois’ leaders decide what taxation is “fair.” In 2017 those leaders decided it would be fair for all Illinoisans to shoulder the largest permanent income tax hike in state history, which came after they in 2011 decided it would be fair to impose the previous record income tax hike.
And in a state in which residents pay among the highest property taxes in the nation, Lake County residents stand out as the state’s hardest hit. In 2017, the average property tax bill was $8,900 in Lake County, where homeowners have seen property taxes rise by more than $1,100 per capita since 1996, adjusting for inflation.
The cause of Lake County’s high property taxes? The same burden Pritzker faces at the state level: unsustainable pension costs. Since 1996, more than 50 cents of every property tax dollar raised for public safety services went toward pensions – not services. And nearly 100 municipal retirees in the county are pension millionaires.
Pritzker said in his budget address that Illinois “can accomplish” a progressive income tax with “a more competitive rate structure than Wisconsin and Iowa.” But his meaning is unclear: A recent Tax Foundation study recommended that Wisconsin make its tax code more competitive by replacing its progressive income tax structure with a flat tax. Both North Carolina and Kentucky have swapped their states’ progressive income taxes for a flat tax in recent years. Connecticut is the only state in the past 30 years to add a progressive tax and it seriously damaged their middle class, job market and poverty rates.
While state lawmakers may think a $1,419 tax hike is “fair,” Lake County families likely disagree. What’s worse, a revised income tax structure will do nothing to address what state sources report as a $134 billion pension debt – a ratings agency estimates it is more like $250 billion.
The only way to restore the state’s fiscal health, and offer Lake County residents true tax relief, is through serious pension reform.
Pritzker should show leadership by shifting focus toward amending the state constitution’s pension clause. He should end efforts to take away one of Illinois’ only competitive advantages: its flat income tax.
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