The guv tries to make taxes fairer, confuses people
January 24, 1991
The State of Illinois does not levy property taxes, but such is the ignorance of the electorate that high local taxes are blamed on Springfield. Which is partly true; the state criminally underfunds public schools, which leave local taxpayers to pick up the slack, but that’s because the same people who balk at paying property taxes balk even more at paying higher state income taxes.
Any politician at any level who tries to talk sense to people about property taxes is taking her career into her hands. Ask Gov. Jim Edgar.
The pundits agree: Jim Edgar's first term will be about taxes. The state's cash balance was so low at his swearing in that the there is talk about stalling payment to creditors; I suspect that one of the reasons the inaugural festivities were paid for by Republican campaign committees was that the caterers wouldn't take a state check. Nearly $300 million in new money is needed for planned new prisons and other mandated new programs—this just to continue to do what the new governor considered a ”lousy” job of running the state.
Millions in new money also could be spent on drug rehab, pension contributions, infrastructure investments, and nutrition, prenatal care, and similar preventative public health programs. Illinois needs dollars, in short, yet the only money-raising proposals so far hinted at by Edgar are what one statehouse correspondent contemptuously dismissed as nickel-and-dime tax and fee increases.
As I often do when I need to get smart quick, I consulted Illinois Issues magazine. The magazine is to Illinois' governing elite what Pravda used to be to the Soviet politburo. Dull but authoritative, its biases perfectly mesh with those in power, which means its articles are as revealing in what they assume as in what they report. In the January issue for example Charles Wheeler III, the veteran reporter who runs the Chicago Sun-Times' statehouse bureau, avers that the state is under "tight fiscal constraints." This, like much statehouse wisdom, is true without being quite accurate. The state is not smack up against constitutional limits on its taxing power, as its municipalities used to be chronically. The constraints on its revenues are political rather than fiscal.
Specifically, I refer to the so-called "property tax revolt." This "revolt" is in fact a tame affair—no public demonstrations to speak of, no mass refusals to pay, just some whining letters to editors and a few incumbents voted out of office for reasons that may or may not have been connected to taxation levels. Nevertheless, our lawmakers are scurrying to offer truce terms; Edgar's staff reportedly is already at work on a property tax reform measure to provide relief for what Wheeler describes, in perfect statehouse-speak, as "beleaguered real estate taxpayers."
To what extent our property taxpayers are beleaguered, or by whom, is seldom made clear. The rise in local levies is the work of local officials whom these same helpless taxpayers elect—and re-elect. And if Illinois property owners are being forced into delinquency in higher than usual numbers because of local tax burdens, it is not being reported. Illinois taxpayers are among the least taxed (measured as a percentage of income) of any industrial state. While Illinois relies rather more on property taxes than many other states, it is hard to call those taxes onerous compared to sister industrial states like New Jersey, at least as measured as a percentage of assessed value.
If property taxes are the crux of the tax debate, school taxes are the crux of the property tax debate. Anti-tax sentiment is keenest in the booming collar counties of Chicago, where a public school teacher can make upwards of $60,000 tax-paid a year. School taxes in many such communities often account for 80 percent of the total local tax bill. Property tax relief in the opinion of such education-minded citizens doesn't mean spending less on their schools; it means paying less for them by making someone else pay more.
Statewide, our spending for schools is not extravagant. Illinois Issues statehouse bureau chief Michael Klemens analyzed state school spending since 1969–70 for the January issue, with interesting results. Total spending was way up, of course, although inflation-adjusted spending for local schools actually dropped by 15 percent in the last 20 years, mainly because there are many fewer kids in the system than there used to be. Inflation-adjusted spending per pupil in the last 20 years has gone up hardly at all.
"Resentment" would be a more accurate word to describe the political dynamic of tax reform than "revolt." it is significant that the tax revolt should rise in those parts of the state where life is pleasantest and residents have the most. The "revolt" is in large part a judgment about the aims as well as the amount of local spending, a lament in fact that spending on urban-type problems should be necessary, because it confirms that the suburban idyll is at an end.
The strict segregation by class of our suburban communities fosters civic selfishness. (The only thing everyone is willing to pay for in Illinois is the one thing everyone in Illinois uses, and that is roads.) One political beneficiary of the tax revolt is new DuPage County chairman Aldo Botti, who ousted a longtime incumbent by promising the residents of Illinois's wealthiest county that they could spend less on roads and flood control and environmental regulation and schools while suffering no drop in the quality of life. "We've been indoctrinated," Botti told Illinois Issues, "to believe that you have to have tax increases to have good government." The latter is indeed a cruel lie—as long as you have some poor town out-of-state where you can ship your garbage, as Botti proposes to do, rather than raise DuPage County taxes to pay for recycling programs.
Our property tax system is indeed unjust, but not because people who own property must pay it. Renters pay property taxes too, but renters, unlike home owners and businesses, are not allowed to write off that part of their housing costs that covers mortgage interest and taxes. (Special exemptions granted politically powerful homeowners like old people only add to that inequity, since local governments simply raise the rates on non-exempt property such as apartments.)
One obvious remedy for the over-reliance on the property tax would be to fund local schools from a more broad-based revenue source such as the state income tax. The ex-Gov. Thompson dared to suggest just that, as his plane was leaving Springfield. But Wheeler speaks for the statehouse establishment when he says that such an intelligent reform "must be ruled out." Because it would be unfair? The flat-rate state income tax is a regressive levy that takes a bigger bite of the disposable income of lower-income Illinoisans than of the rich. (The Chicago chapter of the League of Women Voters has called for a graduated state income tax to remedy just that inequity.) No, the real reason a switch to the income tax must be ruled out is that the Illinoisans who own the most valuable property also enjoy the highest cash incomes, and can be expected to oppose any reform that might result in their having to pay even more in income taxes than they do now in property taxes.
Illinois is not the only state facing these dilemmas. Nationally, a few writers have called eloquently for a return to a "caring society" or a resuscitation of our barely beating "civic heart." Compassion is worth less than common sense, however. As Wheeler says, "It is hard to imagine how real progress can be made without investing state dollars that aren't likely to be there." Exactly. ●