Officials discuss Pritzker’s tax proposal

http://bit.ly/2GwTo7y

by KEVIN GROSS

State Representative Robert Martwick (D-19) and other officials discussed Governor J.B. Pritzker’s “Fair Tax” proposal during a tax reform town hall meeting on April 8 at the Copernicus Center, 5216 W. Lawrence Ave.

Martwick joined state Representative Jaime Andrade (D-40), Cook County Commissioner Bridget Degnen (D-12) and Cameron Mock, senior fiscal advisor at the Governor’s Office of Management and Budget to discuss how the plan could save money for 97 percent of residents while raising revenue to close the state’s approximately $3 billion budget deficit.

“Keep in mind, we’re the 8th most unfairly taxed state in the country,” Martwick said. “More than in 42 other states, we make the poor and middle class pay more and the rich pay less.”

Under the graduated income tax plan, income up to $10,000 would be taxed at 4.75 percent, at 4.9 percent in increments for income of $10,001 to $100,000, and at 4.95 percent in increments for income from $100,001 to $250,000.

Tax rates would then increase to 7.75 percent for income increments of $250,001 to $500,000, at 7.85 percent for income from $500,001 to $1 million, and at 7.95 percent for people earning more than $1 million. Currently, the state’s income tax rate is 4.95 percent.

“We’re not actually increasing the total tax of someone earning over $250,000 to 7.75 percent. It’s only the increment over $250,000 that they pay 7.75 percent,” Mock said. As an example, he said a person earning $260,000 would pay an “effective tax rate” that rises to just above 5 percent, not 7.75 percent, because tax rates for their first $250,000 of income wouldn’t rise.

“This is the same way that the federal government and 33 other states do their tax policy, it’s a graduated tax structure where only the increment of dollars over these brackets is taxed at the new rates,” Mock said.

Also under the proposal, a new $100 per-child tax credit would apply to people earning less than $80,000 or joint filers earning less than $100,000, while the 5 percent property tax relief credit would increase to 6 percent.

Corporate tax rates would also increase from 7 to 7.95 percent, while individuals’ capital gains would be taxed at the standard income tax rate.

Officials said that the proposal would raise about $3.4 billion in new revenue, which is necessary because current revenues aren’t enough to address the state’s budget deficit, projected to be about $3.2 billion in the next fiscal year.

Martwick said a flat tax rate that would close the budget shortfall would be about 5.95 percent, which he said would hurt lower- and middle-class taxpayers more than a progressive income tax.

Martwick said that the “first responsibility of government when facing shortfalls is to look for cuts, not raise taxes.” However, Martwick said that too many cuts have already been made to “inessential” positions and that further cuts could come from state education funding, infrastructure repairs or other “essential” programs.

“We’ve heard that 97 percent of people under this fair tax will get a cut. How many of you believe that?” Andrade asked the 25 residents in the audience before the presentation. No one raised their hand.

When another resident asked how long it would take to pay off the state’s debt if the proposal were passed, Martwick said about 30 years.

“But the debt was 40 years in the making,” he said. “To pay off $150 billion (in accumulated debt), it will take time.”

A resident asked what guarantees that new tax revenues would go toward debt payments versus being spent on other projects, to which Martwick admitted “that is an assurance we really can’t have.”

Mock addressed concerns that the state’s wealthier, higher-taxed residents would leave the state by citing a Better Government Association study that found “millionaires don’t change the place they live in due to changes in state tax rates,” and that most people leaving Illinois are lower to middle income residents.

The tax plan would require an amendment to the state constitution. The General Assembly would have to pass a bill via a three-fifths vote to put a referendum question on the November 2020 ballot for 60 percent of Illinois voters to approve. Pritzker has asked lawmakers to pass the referendum measure before the end of the current legislative session, which ends in May. The new tax rates would be enacted in separate legislation and would take effect in 2021.

“It’s a normal part in the negotiation process for legislators to withhold their support, even if they intend to actually intend to vote for it,” Martwick said after the presentation. “As we get closer to the final vote, and the governor begins visiting with groups of representatives and addressing their concerns, I think we’ll rapidly move up to 71 (votes in the House).”

Martwick and Cook County Commissioner Kevin Morrison will hold a similar town hall meeting about the tax proposal from 7 to 8:30 p.m. Thursday, April 18, at Union Ridge School, 4600 N. Oak Park Ave.

05-Z,01-All No Sub,02-Pol,19-Legal,16-Econ,24-ILGA,26-Delivered,E Rob Team

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via Nadig Newspapers – Northwest Side Local Newspapers http://bit.ly/2dPFKfz

April 25, 2019 at 05:50AM

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