Photo by Dermot Connolly
Members of a panel discussion on the proposed graduated income tax included (from left) state Sen. Bill Cunningham (D-18th), Illinois Department of Revenue Director David Harris, Orland Park Mayor Keith Pekau and state Rep. Justin Slaughter (D-27th)
By Dermot Connolly
Local elected officials voiced their opinions on the graduated income tax proposed by Gov. J.B. Pritzker at a town hall meeting co-sponsored by the Orland Park Area Chamber of Commerce and the Small Business Advocacy Council in Orland Park on Tuesday morning.
A referendum on Illinois ballots in the Nov. 3, 2020, general election will allow Illinois voters to decide whether the state constitution should be amended to allow the graduated income tax to go into effect.
“We’ve generally stayed away from political topics. But this issue is important for us. The SBAC is a non-partisan group. They are active and they are looking out for small business owners. They are looking out for all,” said OPACC President Mike Hardek, explaining why the chamber got involved in the issue.
Participating in the panel discussion were state Sen. Bill Cunningham (D-18th), Orland Park Mayor Keith Pekau, state Rep. Justin Slaughter (D-27th), and Illinois Department of Revenue Director David Harris.
Harris, a Republican from Arlington Heights who served 18 years in the state House of Representatives, said he was happy to be appointed to his current position by the Democratic governor.
He explained that the current flat tax rate is 4.95 percent. The higher graduated income tax, or “fair tax” as its proponents call it, will only kick in at more than $250,000 annually in taxable income. He pointed out that only three percent of the 6.1 million taxpayers are above $250,000.
“If you make less than $250,000, you might see a slight decrease in your state income tax,” said Harris.
He stated that under the graduated tax plan, there are various levels of taxation. According to published information, the first $10,000 earned by single and joint filers earning less than $250,000 would be taxed at 4.75 percent. Income between that and $100,000 would be taxed at 4.9 percent. From there, up to $250,000, the rate would be 4.95 percent.
For single filers from $250,000 to $350,000, and for joint filers up to $500,000, the rate would be 7.75 percent, which increases to 7.85 percent for single filers reporting $350,000 -- $750,000 in income, and joint filers from $500,000 to $1 million.
Under the new structure, single filers earning more than $750,000 and joint filers earning more than $1 million would be taxed at the top rate of 7.99 percent.
“We think it is very reasonable. As the governor said, it will not be the solution to all of Illinois’ financial problems but it puts us on a more solid financial footing,” said Harris.
“(When Pritzker was elected) we had $16 billion in bills we owed to vendors, we were running up bills of $11 million a day -- $2 million a day in interest. We owed $900 million in interest alone. We have to get away from that,” said Harris.
Cunningham, whose district includes many southwest suburbs, from Evergreen Park to Orland Park, and Slaughter, whose district also includes a section of Orland Park, expressed support for the graduated income tax, while Pekau opposes it.
“I voted to put in on the ballot. It will be really good for the people who live in my district. About 98 percent will see their taxes either stay the same or go down,” said Cunningham. “Seeing the (budget) triage that we perform every year, we have to have a solution. We have a structural deficit that is built into our budget. Despite the fact that we have 10,000 less employees than in the 1990s, the state continues to spend more than we can take in. At the end of the day, it will be up to the voters. If we don’t (pass it), further cuts to services and probably an increase to the flat tax will be needed so everyone will be affected.”
“I felt it was really important to have a local voice because these taxes affect local governments as well as residents,” said Pekau, who got applause from the audience for his stance against it.
“The state of Illinois has a spending problem not a revenue problem, Taxes were raised from 3 percent to 5 percent and we still have a deficit. The state can’t be trusted to keep their word,” said the mayor.
He pointed out that municipalities are also receiving a reduced share of state income taxes in the form of the Local Government Distributive Fund, which was supposed to be 10 percent but is now at 5.75 percent.
“We received $5.5 million last year, but if we had the full 10 percent, we would have gotten another $4 million. That would have paid for a lot of improvements to roads and parks,” said the mayor. “Progressive taxes will slow growth and revenue needs to expand. The people have a choice to give the state a blank check. It is our last chance to say enough is enough.”
Slaughter said 99 percent of his constituents would benefit..
“And the sky is not falling. California has the highest income tax in the country and high-income people move there every day. What we need to do is stabilize our budgets and I think the graduated income tax will do that,” said Slaughter.
Harris said LGDF payouts could be eliminated entirely if the graduated income tax is not approved.
Pekau suggested adding another constitutional amendment to address the pension obligations. But Cunningham said any referendum stripping pension protection would violate the U.S. Constitution.