Prairie State Wire

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My administration has begun negotiations over the fair income tax so we can finally put Illinois on course toward firm fiscal footing. As I said throughout the campaign, Illinois' flat tax system is unfair to the middle class and those striving to get there. People like me should pay more and people like you should pay less. That's what the fair tax will do.

Before I get into the details, it's important to talk about how Illinois got here, and what our choices are.

I was sworn in just 51 days ago, and the first thing I did was begin to dive into the details of the state's precarious fiscal condition. It was worse than we thought. Over the ensuing weeks our work showed that the damage done in previous years was beyond the assumed $2 billion deficit and even beyond the $2.7 billion in the Comptroller's excellent report. As our study showed, Illinois actually faces a $3.2 billion-dollar budget deficit next year, and that the prior four years had left the state with nearly $10 billion of additional late payment debt - on top of the $5 billion backlog at the beginning of the last term.  The state has been operating with a multi-billion-dollar structural deficit that has a tremendously destabilizing effect on our state's economy, businesses, jobs and the future of our working families. I don't know anyone in Illinois that thinks we can any longer just whistle past the graveyard and ignore the fiscal challenges we face. And no one thinks the right answer is to replay the last four years of gridlock and dysfunction.

So my administration has been diligently working on a comprehensive approach to solving the problem and getting our state on track to economic growth and balanced budgets.  

Instituting a fair tax as I've proposed, will improve the arc of our state's finances forever and make our system more fair for everyone.

It's wrong that I would pay the same tax rate as someone earning $100,000 - or even worse pay the same tax rate as someone earning $30,000 - which is why 33 states and the federal government use lower rates for lower earnings and higher rates for higher earnings.

As I outlined when I addressed the General Assembly, those who oppose this choice have very few options to stabilize our finances.

They might choose to cut education, public safety, environmental protection and other government services by 15 percent. That means larger class sizes, higher costs for kids going to college, more hollowing out of critical human services, and fewer State Police. Most damningly, this would lead to a very predictable increase in your local property taxes. This type of thing was tried, and it failed - resoundingly. And this approach certainly won't create good paying jobs and build the Illinois we deserve or we want for our children.

Another choice they could make is to raise taxes by 20 percent on every person in the state of Illinois. To generate enough revenue, they would need to raise the state income tax on the working poor and the middle class from today's 4.95 percent to at least 5.95 percent. For a mom making $61,000 that would mean a tax increase of $521 per year. All while the wealthy aren't paying their fair share.

There is a better, more fair way. And it protects working families. My proposal accomplishes several goals that I outlined from day one.

First, the fair tax would eliminate the budget deficit, balance future budgets and reduce the pension liability by producing revenue of $3.4 billion.

Second, under this plan, everyone who earns up to $250,000 will pay the same or less than what they're paying today. That's 97% of Illinoisans. In some cases this reduction will be very modest, and in some cases, especially for families with children, it will amount to hundreds of dollars. That's real money that working families can use for an emergency car repair, groceries to feed their kids, or child care expenses.

Third, working families are buried under a property tax system that asks them to carry too much of the load. My proposal provides much needed property tax relief with a $100 million increase in the property tax credit. A single homeowner who makes less than $250,000 will see an increase in their property tax write-off of 20 percent. A couple who makes less than $500,000 will also see a property tax write-off of 20%. To be clear, approaching property tax relief in this way benefits homeowners and doesn't jeopardize schools or local communities.

Fourth, included in this proposal is a new tax credit of $100 per child for families raising children, especially those families who most need it. Single parents earning less than $40,000 a year will get the full credit, and single parents who earn more than $40,000 will get the credit on a sliding scale up to $80,000. For two-income families, they get $100 per child up to $60,000 a year on a sliding scale up to $100,000.

Fifth, this proposal keeps Illinois competitive with our neighbors. Most families in Iowa and Wisconsin pay more in income taxes under their current tax systems than they would if they lived in Illinois under our proposed fair tax.

Now, there are those who want to scare people by claiming that this proposal will cause residents and businesses to flee Illinois. They couldn't be more wrong. They ignore the fact that people and businesses are fleeing our state now under our current regressive tax system, yet states with fair tax systems on average grow faster and create more jobs than Illinois.

It's time we stabilized our state's finances, so we can give businesses and new entrepreneurs the certainty that Illinois has its fiscal house in order.  This fair tax proposal is fiscally responsible and makes Illinois a more predictable place for existing businesses to operate, and for new businesses to start and grow.    

In the weeks ahead, we're looking forward to discussing and debating this proposal with members of the General Assembly on both sides of the aisle. I respect the right of opponents to disagree with this proposal. But they should do so in good faith with a specific counter proposal. Not pie in the sky. We should all demand that they tell you specifically what they support that will address a $3.2 billion-dollar budget deficit, pay down $15 billion of debt from unpaid bills, and protect working families.