Pope Francis tells us, "Reality is greater than ideas." Parents know this. Before parenthood, we had ideas for raising children. Then came reality. We learned to respond to the real and complicated needs of each child.
Those engaged in the discussion around Illinois’ state budget and taxes need to learn Pope Francis’ lesson. Case in point is BND's April 13 editorial concerning efforts to change the constitutional mandate that Illinois have a flat income tax. Illinois is one of only four states whose constitution requires a flat tax and one of only eight states with a flat income tax. Thirty-six other states have graduated income taxes like that being proposed by the Responsible Budget Coalition.
The BND editorial names a reality that Illinois schools are hurting from the state underfunding them. The editorial then moves to the idea that we shouldn't be paying so much in state worker pensions. While I’m not an expert on our pension problem, I do know that in 2015, a bi-partisan Illinois Supreme Court ruled unanimously that previously negotiated pension agreements are binding. It’s a nice idea to change those agreements. In reality, we cannot.
How do we move forward? We must first have the humble desire to learn from different viewpoints. Corollary to this is the responsibility to speak truthfully, letting our words and numbers be clear without dual misleading meanings. Without making a judgment on intent and without going into lengthy detail, I would like to suggest BND’s April 13 editorial was an example of words and numbers misleading us.
Second, we must be educated on terms. A progressive, or graduated, income tax means everyone pays the same income tax on the first number of basic human need dollars earned. Higher rates are paid on income earned beyond certain thresholds. The coalition is proposing that the first $200,000 of joint household income be taxed at 4.7 percent, a lower rate than we pay now. We suggest that the highest income tax bracket be a rate of 9.85 percent on income earned beyond a joint household income of $1.5 million. If our flat tax constitutional restriction were changed, a graduated income tax could lead to 99 percent of Illinoisans paying less income tax while gaining an extra annual $2 billion in state revenue. This would come from asking the super wealthy to pay a little extra of their surplus income.
A third suggestion is to learn from others’ reality. An often suggested idea is that if we made the super rich pay a little extra in income tax, they might leave the state and take jobs with them. In 2011, an economically hurting Minnesota enacted a graduated tax similar to the coalition's suggestion. Rather than a drop in jobs, Minnesota saw a drop in the unemployment rate, a rise in median household income and creation of new jobs.
The reality of our state budget is complex. There needs to be give and take. However, the giving should come more from those who can afford it and less from those who are struggling. Let’s engage in the dialogue realistically, honestly, and with a willingness to learn.