Without the Fair Tax, are there actual fiscal ideas?

 

Bill Knight column for 2-18, 19 or 20, 2021

 These are taxing times; times when we face not just a public-health crisis, but higher taxes – or lower levels of public services.

Or both.

Nationally, Republicans who backed the 2017 Tax Cuts and Jobs Act are responsible for federal taxes going up sometime in 2021.

That measure originally lowered taxes to some degree for many, but it had a hidden feature, an automatic tax hike every two years starting this year, increases that in six years will touch virtually everyone except those at the top of the economic ladder.

Since the law was complicated, debated and analyzed more than three years ago, it’s understandable if it’s been forgotten. A refresher: Back then, the law was drafted and approved (with zero Democrat votes) despite the nonpartisan Congressional Budget Office (CBO) forecasting it will increase the budget deficit by $2.2 trillion over a decade.

Nobel Prize-winning economist Joseph Stiglitz in the New York Times recently wrote, “Republicans – who suddenly lost their grasp on their self-described fiscal conservatism – saw a chance to give their rich friends and corporations a big thank you for campaign contributions.

“But the tax cuts they promised these donors produced projections [of] budget deficits,” he continued. “To reduce that stomach-churning amount, they had to phase-in higher taxes on ordinary Americans.”

Now, according to the CBO and the bipartisan Joint Committee on Taxation, taxpayers with incomes of $20,000-$30,000 could owe another $365 this year. Keep in mind that the Federal Poverty Level for a family of four is $26,200, so that $365 will come from folks already having a hard time.

In Illinois, the sleight-of-hand was performed by the expensive campaign to defeat the Fair Tax amendment and the predictable consequences, financially and politically.

Shortly after November voters defeated that measure – to substitute a progressive income tax based on individual income for the current “flat tax” that has everyone pay the same, apart from their wealth – Gov. J.B. Pritzker warned of possible future spending cuts to deal with fiscal woes without that new revenue.

The governor warned that “middle class, working class and poor families will likely suffer from cuts to public safety, education, human services and environmental safety – and the potential layoffs will make the economic recession worse.”

This week, however, Pritzker said he’s presenting a budget proposal to lawmakers that doesn’t increase overall state spending or raise the flat-rate income tax (4.95%). The General Assembly will debate the budget, and many will mostly posture.

For instance, Illinois House Minority Leader Jim Durkin, who opposed the Fair Tax, has blasted Democrats for having previously passed a “budget based on hypothetical revenue and false promises.”

The state has had financial problems for decades, under Democratic and Republican legislatures and governors, from billions in unpaid bills to pension obligations plus the ongoing essential services taxpayers rely on, from schools to state police.

The Fair Tax’s opposition claimed that voting against the referendum was casting a ballot for No New Tax, which was false. Besides, though a progressive tax system would be better, future challenges may be so significant that fewer services or higher taxes could be necessary. But whose?

After Fair Tax’s defeat, perhaps everyone’s.

Here are questions for the victorious anti-Fair Tax crowd of Big Business and their Springfield mouthpieces: What services do you favor cutting? If that prospect is unpopular with the people you’re supposed to represent, what new revenue do you instead propose (revenue that Fair Tax would have provided, studies showed)?

And drop the worthless comments about “kicking the can down the road,” trimming vague “waste,” or the unconstitutional betrayal of pensioners. Be specific.

As for new revenue, relying on gambling and marijuana seems inadequate. Come up with something promising and feasible.

So, Rep. Durkin and GOP colleagues pandering to the anti-tax (something-for-nothing) mindset: Ideas?

What programs would you abolish? Who would you fire? Do you favor eliminating townships that serve rural areas, or social-service agencies vital to cities? Which bridges and roads would you ignore? Which age group will be “de-funded” – children at risk? Schoolkids? College students? Seniors at home or in group settings?

Or are you just against everything, celebrating when regular citizens are struggling, disappointed or angry because you can exploit that for political gain?