When an Illinois lawmaker tries to 'win' a tax, guess who loses?

Posted3/19/2023 1:00 AM

We hear a lot of talk about businesses leaving Illinois. But addressing the problems that cause them to leave? Not so much.

There is an urgency to fixing the problems that force business owners to make the difficult decision to leave. State leaders need to understand their job is to ensure employers who want to stay and invest in Illinois can do so. Apart from its uncertain tax and economic climate, Illinois is a great place to do business thanks to an educated workforce and Chicago's position as the hub of the Midwest.


So it's troubling when you hear state lawmakers are again pushing failed policy ideas such as the progressive income tax, which voters clearly said they don't want in 2020. It would certainly make our business climate worse.

In early February, Illinois state Sen. Robert Martwick, D-Chicago, filed a bill again trying to establish a progressive income tax structure in Illinois. His plan would create eight brackets that tax income from 4% to 6.95%.

"If you really believe in something, you don't give up after one loss," Martwick said. "It's the right thing to do."

Business owners already said "no" to the so-called "fair" tax. They spoke out against it -- in one case, despite pressure from Gov. J.B. Pritzker. But Martwick insists on resurrecting the progressive tax campaign, offering voters more of what they already said they don't want.

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Illinois voters did not trust state politicians with a taxing power that would have allowed lawmakers to change the rates at any time. Distrust is warranted: In the past 34 years, Illinois politicians twice imposed "temporary" income tax hikes. Both times they became permanent and both times failed to fix state finances, pay down pension debt or control property taxes.

Higher business taxes mean less funding to create jobs, hire employees and expand. Plus, the costs just get passed on to consumers. Experts, from Nobel Prize winners to former chairs of the Council of Economic Advisers, have said higher taxes hurt economic growth. Higher marginal tax rates reduce small business employment, employee wages and growth.

Martwick, and other pushers of the progressive tax, should know this. As a spokesperson for Illinois Senate President Don Harmon said after the president met with Martwick to discuss the potential of putting a progressive tax back on the ballot: "The idea -- the policy -- is one the Senate president has long supported. At the same time we all saw the results and the message voters sent."

Some Illinois senators get it and sponsored a resolution opposing a progressive income tax. They offer hope that Illinois politicians' habit of not listening to business owners' concerns can be changed -- and that maybe, instead of more taxes, Illinois will implement real solutions that fix the state's long-term problems.


Fortunately, the policy solutions Illinois really needs aren't a mystery. All it takes is lawmakers willing to act rather than relying on wishful thinking.

The problem: Illinois owes $140 billion in state pension debt as of fiscal year 2022, and local governments owe about $70 billion. That pension debt has driven Illinois' property taxes to second-highest in the nation.

The solution: Lawmakers should let the people vote to amend the state constitution so the growth rate of future pension benefits stops careening uncontrollably, wrecking state finances and services and Illinoisans' wallets.

Lawmakers twice in recent years asked voters to change the Illinois Constitution in ways that hurt taxpayers and the state economy. Time to let them vote on a pension amendment that could clear the way for future reforms without hurting any existing benefits, has popular support and passed with bipartisan support when lawmakers tried to implement it a decade ago.

Illinois needs economic progress. An improved business climate will do that. Rehashing an ineffective plan that voters rejected? Again, not so much.

• Matt Paprocki is president and CEO of the Illinois Policy Institute, a Chicago-based think tank that promotes smaller government and free-market principles.

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