Once, at the old Marshall Field’s, I tried on a cheap Calvin Klein suit that was advertised as on sale for $299.99, marked down from $600.
“This doesn’t seem like a $600 suit,” I told the salesman. The fabric pilled, and the shoulders were too broad.
“It’s not,” he said. “That’s a promotional price.”
The store was practicing a retail trick known as a “false reference price,” in which an item is marked above its actual value, before being marked down again, so the customer thinks they’re saving money.
I’m sure JB Pritzker has never sold suits for a living. I don’t think he’s ever held a job, actually. But that’s exactly what he and his colleagues in Springfield are doing with their claim that the progressive income tax is a bargain for most Illinoisans.
You’ll remember that in 2017, the Democrats raised the state income tax from 3.75 percent to 4.95 percent, as part of the budget they passed over Gov. Bruce Rauner’s veto. Now, they’re lowering it to 4.75 percent for all income up to $10,000, and 4.9 percent for income from $10,000 to $100,000.
The result, they say, is that 97 percent of Illinoisans will pay less in state income taxes. Maybe so, but we’ll all be paying more than we were in 2016. (Pritzker’s Fair Tax Calculator will tell you exactly how much of a cut you’ll get from the current rate.)
Pritzker’s tax plan is particularly ungenerous to the poorest Illinoisans. Of the 33 states with a graduated income tax, only three levy a higher bottom rate than Pritzker is proposing. Maine starts at 5.8 percent, Minnesota at 5.35 percent, and Oregon at 5 percent.
Most states begin at a far lower rate. For a married couple filing jointly, California levies only 1 percent for the first $16,446 of taxable income (and makes up for it by hitting millionaires at 12.3 percent.) Iowa starts at 0.36 percent for the first $1,598.
Granted, Illinois has for decades imposed a flat tax that hasn’t captured the income gains at the top of our state. That’s left us in worse financial shape than states that instituted a graduated tax years ago. To dig out of that hole, we’re all inevitably going to have to pay more than we might have otherwise.
The wealthiest Illinoisans, in particular, will see a major hike: If you earn more than $1 million a year, all your income will be taxed at 7.95 percent. But the thousandaires, compared to 2016, aren’t getting a break at all — they’re getting a very slight markdown from an inflated price. After all, “everybody gets a tax cut” is a better slogan than “soak the rich.”
If Illinois voters approve a constitutional amendment for a graduated income tax, the rates will be adjustable. Theoretically, the bottom rate could go down if the measure improves the state’s financial situation.
But that’s awfully theoretical. When was the last time you got a tax cut from a Chicago politician?
1 week ago