Important factors about taxes

Jeremy Groves
Posted 5/25/19

Regarding the guest column published Wednesday about Illinois’ “Fair Tax” proposals, while there are many very true comments in this column, there are some very important factors that are left out. And as an educator and researcher in the area of taxation, I feel are very important to keep them in mind when voters go to the polls.

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Important factors about taxes

Posted

Dear Editor,
Regarding the guest column published Wednesday about Illinois’ “Fair Tax” proposals, while there are many very true comments in this column, there are some very important factors that are left out. And as an educator and researcher in the area of taxation, I feel are very important to keep them in mind when voters go to the polls.
No one wants to pay taxes, but it is the cost of a civilized society. Arguing whether a tax of any type is “fair” is akin to debating whether Brussels sprouts taste good; it depends on the person. Most surveys show that Americans view income tax systems where rates increase with income as being the fairest approach. What is typically viewed as a bad idea is locking tax systems into place using a constitution; a lesson learned at the federal level when the first income tax was ruled unconstitutional because the income collected from each state was not proportional to the population share of the state.
As for the specific arguments made in the column, it is true that Illinois is in desperate need of property tax relief, however, there is much misinformation about the form this “relief” would take. The only way that homeowners will see lower property tax bills is when the State of Illinois decides to spend money on education.
The national average for state funding to schools is about 46 percent and among the states that boarder Illinois, state funding ranges from the lowest in Iowa at 68 percent to a high of 76 percent in Indiana; compare this to about 25 percent in Illinois, and that is in a good year.
Evidence of this can clearly be seen on your property tax bill where education spending makes up at least half of the taxes owed. If residents truly want lower property taxes, Illinois is going to have to collect more revenue and spend it on education. No other method will work as property tax freezes or caps dictated by Springfield will only push down education quality even further.

It is also true that one must dive deeper into advertising slogans, especially when political. In addition to the fair tax ads, we have also seen the ads arguing that approval the proposed change to the constitution which require a flat tax rate takes away the ability of voters to control taxes and allows those in Springfield to increase taxes whenever they choose; even on the middle class.
First, Springfield can already change taxes whenever they wish, as has been demonstrated in the last two increases that were passed without voter input. What the proposed change does allow policy makers to do is to target tax changes to specific income groups.
Current law protects high income earners from tax increases by requiring the same taxes to be placed on those earning minimum wage. The proposed change removes this protection for high income earners and, unlike the graduated systems in neighboring states, the threshold for the higher rates is set significantly higher.
Secondly, the proposed change does not remove the ability of voters to agree or disagree with any policy choice, tax rates included, in Springfield; we still have the ballot box.
Examples of toilets and tax avoidance are thrown in for good measure and there are examples of high-income earners avoiding taxes; however, there are also examples of the wealthy, Bill Gates and Warren Buffet for example, willing to pay higher taxes. As for the fear tactic of a mass exodus from the state, this is already happening because of the vast uncertainty caused by the recent inaction in Springfield, crumbling infrastructure, and the declining quality of education and social safety nets. While avoiding a tax by moving is possibility, taxes are not the only consideration when deciding to live in an area.
The one place of agreement is that Springfield has a serious trust problem as there have been many promises made and few kept in the past. It is true that past policies and choices in Springfield have led to many of our current problems. In an ideal world, the policy makers would earn back our trust by undoing the poor choices of the past and “unclogging” the system; however, reality does not afford us that luxury as time travel is not possible and we must all face the current financial disaster and its immediate consequences.
The inability to repair infrastructure and steep decreases in educational investing causing our elementary, middle, and high schools to lose quality teachers and our colleges and universities to lose students and high-quality faculty are just two of those immediate consequences affecting everyone; rich and poor.
So, we are left with two choices. Support the amendment, whether we want to call it fair or not, or continue with the current system which shields high-income earners with the incomes of low- and middle-class earners.
Jeremy Groves
Rochelle