The lead story coming out of Gov. Pat Quinn's budget message last week centered on his proposal to make permanent the 2011 temporary income tax increase, a troubling -- if not unexpected -- development that spurred criticism on matters of both finances and public trust. But in the wake of his speech, the governor is reviving a related topic that once dominated talk in Springfield -- the notion of basing education funding on income taxes rather than on property taxes.
The notion of such a tax shift was an intriguing discussion and a perennial legislative priority until it faltered one last time in 1997, never to surface again. Until now. The trouble is that in the intervening 17 years, none of the issues that weighed against the swap -- guarantees that property taxes would be reduced, for example, or trust that the government would use the extra money for schools and allot it fairly -- have diminished and some huge new ones have been added.
Contact information ( * required )
The governor is correct when he says, as he did repeatedly last week in a meeting with our editorial board, that it would be more fair to base school funding on income taxes, based on ability to pay, than on property taxes, which as seniors know all too well, can steadily rise regardless of what happens to one's income. And, there may be some value in renewing the conversation -- if only it were a remotely possible outcome.
But it is not. Nor is it easy to envision a time when it could be, especially if Quinn gets the permission he seeks to make the 2011 income tax increase permanent. The 1997 legislative proposal provided for a significant reduction in property taxes by raising the then-3 percent personal income tax rate to 5 percent. In 2011, lawmakers "temporarily" raised the rate to that figure in order to pay bills. Now, Quinn and other Democratic leaders say, we need the money in perpetuity just to keep the books in balance.
So, if the governor's proposal is, as he says, a "turning point" to renew the conversation over funding schools with the income tax, one has to presume that the income tax rate would have to be bumped even higher. A flat 7 percent rate clearly is not politically feasible, and somehow merging property tax relief with, say, a transition to a graduated income tax seems prohibitively complex.
Quinn portrays his proposed income tax rebate as a preface to renewed discussion of the tax swap idea. Unfortunately for many if not most suburban property owners, the rebate would have very little benefit because it would barely make up for the concurrent loss of the existing property tax credit. So, we find ourselves back where we started. In fact, we're behind where we started, thanks to the level of income tax that now would be needed to seriously talk about a swap of property for income taxes to support local schools.
There is much to be said for an idea that would base the responsibility for school funding on ability to pay rather than simple property value. Alas, this one may do a little toward calming resentment toward a huge tax increase and a failed state promise, but unfortunately it is not much more than a distraction when it comes to a comprehensive conversation on how schools are funded.