A graduated income tax would be fairer and more efficient than the present flat-rate income tax and could sufficiently increase revenues to solve the State’s structural budget deficit, say members of the Community Renewal Society, as do some State legislators.
A graduated income tax – which would be progressive, as compared with the present flat-rate income tax – was the subject at a town hall meeting held on April 16 – just two days before most federal and state income tax returns were due – at the First Congregational Church meeting house on Chicago Avenue.
The meeting was sponsored by the Glencoe Union Church, the Glenview Community Church, the Unitarian Church of Evanston, and the First Congregational Church of Evanston, all of which are members of the Community Renewal Society (CRS), which was formed in 1882.
The progressive income tax proposal advanced by CRS is one of six planks in its 2015-16 platform: “Protect Illinois’ Families” by increasing State revenues with a fair tax.
“We hope to get a Constitutional amendment for a fair tax,” said Dennis Wilson, a member of CRS and of the Unitarian Church of Evanston.
A statewide referendum is needed for a change to the State Constitution.
Representative Lou Lang (D-Skokie) – along with State Representatives Robyn Gabel (D-Evanston) and Laura Fine (D-Glenview) – is one of the sponsors of a House Joint Resolution about a graduated income tax that could come to a vote early next month. The joint resolution, according to the synopsis on the Illinois General Assembly website, proposes a Constitutional amendment that removes the provision that “a tax on income shall be measured at a non-graduated rate” and replaces it with a tax that “may be a fair tax where lower rates apply to lower income levels and higher rates apply to higher income levels.”
The deadline for the State legislature to approve a referendum question for the November ballot is May 7.
A supermajority – 60% – in each house is needed to place the referendum question on the November ballot. In order to become effective – thus changing the State Constitution – the question must be approved by either 60% of the voters who voted on the question or by a majority of those who voted in the election.
“It’s smart tax policy. This is the way the federal government does it. Of the 41 states that have income taxes, this is the way it works in all of them except Illinois,” Rep. Gabel told the RoundTable.
“Our revenue grows more slowly and doesn’t keep pace with expected expenditures. … We are the fifth-largest state in terms of gross domestic product (GDP) and 33rd in State spending. We are 47th in funding human services. Education, health-care, human services and public safety are areas everyone recognizes are important. … A fair tax would help us tremendously.”
Rep. Fine said, “We keep talking about turning the State around, moving in a new direction. This should be part of the conversation.”
Rep. Gabel said she felt the proposal for the referendum “has quite a bit of support.” Rep. Fine said she has received several calls of support from her constituents.
On April 15, Rep. Lang introduced legislation that proposed specific tax rates for a graduated income tax, should the referendum effect a Constitutional change. Under that legislation, tax rates for individuals or for married couples filing jointly would be 3.5% on incomes of $200,000 or less, 3.75% on incomes between $200,000 and $750,000; 8.75% on incomes between $750,000 and $1.5 million, and 9.75% on incomes of more than $1 million.
The Budget Impasse
The budget stalemate between Republican Governor Brue Rauner and Democratic legislators led by House Speaker Michael Madigan and Senate President John Cullerton has dragged on for nearly 10 months.
Spending for social services and education, among other things, has been reduced drastically, and many of the most vulnerable residents of Illinois are bearing the burden of those cuts.
Ron Howell, a member of the board of CRS and a youth minister in the Metropolitan Community Church, and Sue Loellbach, Director of Development for Connections for the Homeless, spoke about the impact of some of those reductions in spending.
To understand the effect of these spending cuts, one must distinguish “between numbers and people’s real lives,” said Rev. Howell. “The State is not doing its job. It has an obligation to fund education, public safety, health and human services. … The governor is saying to the Chicago Public Schools, ‘Declare bankruptcy and I will help you out.’
“Chicago State University has shortened its spring semester. Students are unsure if their credits will transfer or if they will have a school to go to in the fall,” Rev. Howell said.
“We’re all fighting for the same small piece of pie – and trying to redistribute it to more and more places,” Rev. Howell said. “We need new revenue, and it should not be the burden of those who are the most vulnerable.”
Ms. Loellbach said about $275,000 of Connections’ budget comes from the State. That represents about 10% of the annual operating costs. The cuts from the State, she said, “did not close us. It did not shut us down. We are still alive, but we are less [than we were].
“Our governor is using this as an experiment, to see how many social service agencies can survive: If they survive, they don’t need State money.”
The cuts suffered by Connections and many other social service agencies “are going to have a truly destructive long-term impact,” said Ms. Loellbach.
Because they had received no State aid for the homelessness prevention program since February of 2015, Connections had to close it, Ms. Loellbach said. The program annually served more than 300 people or families at risk of losing their housing with grants of $2,000-$3,000 to pay the arrearage and offer case management for one or two months. That program, she said, “is the most efficient way to prevent homelessness.”
Connections also suffered cuts in its supportive housing program. The supports and the housing are critical to keeping people housed, she said, adding, “We’ve had to cut back on case management and health and education services,” all of which had been supported by State funds.
Ms. Loellbach also described the nine-month suspension of Connections’ shower services (story on page 18). “The immediate impact of not having access to showers is pretty obvious. But long-term, it makes it hard to engage, to seek out other services. People stay homeless longer. They’re suffering.”
Reverend Ann Rosewall, pastor of First Congregational Church, described the deterioration of a chronically homeless man who used to come to the warming house/lunch program sponsored by local churches but who is now increasingly turned away because of his belligerence.
Ms. Loellbach said the cost to the community in social, emergency, law-enforcement and other services is $50,000 a year to care for a homeless person. Further, homelessness can have a deleterious effect on children, in some cases slowing or interfering with development or health, or both.
Joseph Roberts of First Congregational Church said the stalemate and the cuts in social service funding “are an experiment in dehumanization of the homeless and mentally ill. It’s an appalling experiment.”
“A fair tax is a good solution. Those with lower incomes will pay lower taxes; those with higher incomes will pay higher taxes,” said Rev. Howell. “‘Fair’ is the key word. ‘Fair’ means paying according to one’s resources.”
The meeting ended with an exhortation to call State legislators and ask them to vote to place the referendum question on the November ballot.