Progress Illinois

Conservative author and political commentator Dick Morris was dropping more idiot bombs on WIND's John and Cisco in the Morning yesterday. In the course of telling co-host Cisco Cotto why an Obama presidency would mean an end to life as we know it, Morris offered up some egregious distortions of the Democrat's tax plan -- distortions that he earlier peddled on Fox News, as Media Matters for America noted.

Here's what Morris had to say about Social Security:

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MORRIS: Obama says he' s not going to raise taxes on the average American -- that he's just going to raise them on the wealthy. But that's just not true. If you take a Chicago police officer whose married to a Chicago teacher, their income is about $120,000 a year together. Right now they pay Social Security taxes on the first hundred. Under Obama's plan they'd pay it on all $120,000. So the next $20,000 would suddenly be subject to tax for them, and that would be taxed at six-and-a-half percent or 6.2 percent for a total of $1,300 a year -- over $100 a month for extra taxes.

Media Matters easily debunked Morris' claims that Obama's plan would raise Social Security taxes on folks in that income bracket:

Obama's plan to raise the cap on income that is subject to Social Security taxes would include a "doughnut hole" that exempts income that is over the current cap of $102,000 but less than $250,000; Obama stated in a June 13 speech of his proposal that "[a]nybody under $250,000 would not be affected whatsoever. Ninety-seven percent of Americans will see absolutely no change in their taxes under my plan."

Then came Morris' second lie -- this time about the capital gains tax:

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MORRIS: Old people who rely on corporate dividends and utility bond interest would have their dividend tax doubled [by Obama]. And anyone who owns stock -- and 52 percent of Americans do -- would have to pay double the capital gains tax.

Here's Media Matters on the claim that Obama's capital gains proposal would affect all stockowners:

Obama has said he would not raise the capital gains tax rate on individuals with income of less than $250,000. Moreover, an increase in capital gains taxes would not in any event affect most distributions from 401(k) and IRA accounts, which are taxed as ordinary income

But Morris' distortions weren't limited to the arena of tax policy.

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We've railed against John McCain's fiscally irresponsible and regressive tax plan a few times since he released the details back in the spring. Now, Illinois' senior senator is getting in on the action.

Working with the Center for American Progress Action Fund, Sen. Dick Durbin, along with Sens. Bob Casey (D-PA) and Amy Klobuchar (D-MN), unveiled a new report today that analyzes a number of McCain’s tax proposals and shows how his plan would double President Bush’s tax cuts by proposing an additional $175 billion in annual tax reductions and corporate tax breaks:

"Senator McCain's tax plan is George Bush's fiscal policy on steroids; it makes an already grim economic situation worse. It does almost nothing to improve conditions for the middle class and focuses on improving the fortunes of the most profitable corporations in the country," said Senator Durbin.

According to a press release outlining the study, McCain’s policies would leave a national debt of $12.7 trillion by the end of a two-term presidency totaling a massive 59 percent of the projected GDP in 2017, the highest level of debt since 1951.

That, my friends, is not change we can believe in.

There's a critique to be made of Barack Obama's tax plan from the left: at a time when massive public investment will be needed for many of the Democrat's primary domestic goals -- health care, alternative energy, infrastructure improvements -- the $700 billion worth of revenue his plan would raise over the next decade might not be enough to fund what his supporters hope he can accomplish. Last week, Paul Krugman blamed the "Bush poison pill" for Obama's unwillingness to challenge the Bush tax cuts as a whole:

The problem, I believe, is that even Democrats have bought into the underlying premise of the Bush years — that the best thing you can do for American families, or at least the only thing that can win their votes, is to give them a tax break.

A fair point. But let's not kid ourselves -- there is a big difference between the two presidential candidates' tax proposals. The Tax Policy Center's analysis of both plans, which we mentioned earlier this month, clearly explains the regressive nature of John McCain's approach:

The two candidates' plans would have sharply different distributional effects. Senator McCain's tax cuts would primarily benefit those with very high incomes, almost all of whom would receive large tax cuts that would, on average, raise their after-tax incomes by more than twice the average for all households. Many fewer households at the bottom of the income distribution would get tax cuts and those whose taxes fall would, on average, see their after-tax income rise much less. In marked contrast, Senator Obama offers much larger tax breaks to low- and middle-income taxpayers and would increase taxes on high-income taxpayers. The largest tax cuts, as a share of income, would go to those at the bottom of the income distribution, while taxpayers with the highest income would see their taxes rise.

Want more explicit examples? Look no further than the Center for American Progress' Wonk Room, which determined how each plan if implemented in 2006 would have affected both the McCain's and the Obama's pocketbooks specifically.

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By freezing the amount of money a district pays into city services for 23 years, tax increment financing districts (TIFs) were designed to bring economic development to poor, blighted communities that otherwise wouldn’t attract investment. But Chicago's use of the financial tool has proliferated to what some consider unhealthy levels, as the Reader's Ben Joravsky explained in 2006:

There are plenty of reasons to oppose TIFs. They’re poorly regulated and, no matter what City Hall tries to tell us, they’re driving up taxes as a result of the millions they divert. But aldermen tell me they’re forced to go along with TIFs because they’re the only game in town when it comes to funding neighborhood development projects. It’s a go-along-to-get-along system: if you want money for your own ward, you have to vote for TIFs in all the other wards.

Even though TIFs have become the only option for alderman interested in spurring development -- they now cover 30 percent of the land area in Chicago -- the city provides few details about them through maps or the internet. To compensate, the folks at The Windy Citizen did the yeoman's work of collecting what information exists and creating a detailed map of where TIFs are located and how much money has been devoted to each. Check it out here.

(H/T Gaper's Block)

During an appearance yesterday on the Illinois GOP Network's Blog Talk Radio show, Republican congressional challenger Steve Greenberg used a faulty GOP talking point to differentiate himself from 8th District Rep. Melissa Bean. He asserted that Democrats "just pushed through the largest tax increase in the history of this country, to the tune of over $600 billion," adding that Bean "drove the getaway car with Nancy Pelosi and Charlie Rangel in the back while the people’s money was in the trunk." Take a listen as he responds to a question from IL GOP Network founder Mark Johnson:

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Greenberg appears to be referring to the FY 2009 budget approved by the U.S. House along partisan lines last week. And he's not alone in his hyperbole; the day after the bill was approved, Rep. Dan Lungren (R-CA) accused Democrats of "the largest tax increase in the history of this Congress, which means in the history of this nation, which means in the history of the world." Rep. Adam Putnam (R-FL) also asserted that the budget "contains the single largest tax hike in American history."

So how did Greenberg, Lungren, and Putnam all arrive at this extraordinary claim?

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Is the middle class disappearing? Michael Lind theorized this was the case back in 2004, writing that America had "always also been an economic paradise for the middle class—at least until now." A new and comprehensive report by the Brookings Institution provides numerical support for his argument, showing that in this new era of economic stratification, the middle class is most certainly shrinking in metropolitan regions like Chicago.

According to the report, Chicagoland's middle class population -- defined as those who earn between 80 percent and 150 percent of their metro area’s median income -- declined by 14 percent between 1970 and 2005, the eighth-largest drop of the 100 metropolitan areas studied. Crain's pulls out some other interesting findings:

- Of adults 25 and older, 31.6% had a bachelor’s degree. That put Chicago roughly in line with the 30.6% average of all 100 metro areas.

- The disparity between workers at the top and bottom of the wage scale was the 10th worst of all 100 metro areas. The top 10% of employees earned 6.3 times more than the bottom 10% of Chicago’s workforce.

For those left in the middle, times are pretty tough too.

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Rather than come up with a tax plan of his own, it appears that newly-minted GOP congressional candidate Marty Ozinga decided to save time by simply copy-and-pasting the one put forward by John McCain. Indeed, Ozinga's fiscal platform, released today on his website, so closely mirrors McCain's as to be almost identical.

Cut the corporate tax rate? Check.

Repeal the Alternative Minimum Tax? Check.

Make the Bush tax cuts permanent? Check again.

(Ozinga did manage to distinguish his economic plan from McCain's in one way: he favors repealing the estate tax entirely, while the Arizona Senator supports raising the exemption to $10 million. So take that for what's worth -- which ain't much.)

Here's what the Brookings Institution's Tax Policy Center wrote about the McCain/Ozinga plan:

"These proposals would reduce federal revenues by about $5.7 trillion over ten years if they could be enacted immediately. Under a more realistic assumption that they don’t take effect until October 2009, the cost would be about $5.4 trillion [...]

Cuts the size of those [McCain] proposes will require slashing discretionary spending and entitlements, and probably even reining in defense spending. Small wonder he has backed away from his earlier pledge to balance the budget—meaning that these tax cuts, like the ones signed by President Bush, will be paid for by our children.

McCain's tax plan is estimated to cost $300 billion per year and budget experts simply aren't buying his line that it will be offset by budgetary maneuvers such as eliminating earmarks and freezing nondefense discretionary spending. "The numbers don't come close to adding up," Robert Bixby, head of budget watchdog The Concord Coalition, told The Christian Science Monitor. Check out the Center for American Progress' "McCain Tax Cut Cost-O-Meter" for a sense of how unbalanced his books really are.

As Robert Jordan and James Kvaal recently wrote in The American Prospect, McCain's plan is "all dessert and no vegetables." Meanwhile, Ozinga looks to be heading back for seconds.

We've covered the recent developments surrounding two efforts to replace Illinois' flat income tax rate with a more progressive system: SB 2288, sponsored by Sens. James Meeks (D-Calument City) and John Cullerton (D-Chicago), and HJCRA 42, sponsored by Rep. Mike Smith (D-Canton). But there's another related bill that saw some movement today: SJCRA 92, sponsored by Sen. Michael Frerichs (D-Champaign).

If approved, the measure would allow voters to amend the state constitution to allow for a graduated income tax. The bill doesn't propose a specific rate structure; presumably, if the voters laid the groundwork for such a change, the new rate system would be debated via separate legislation.

The Tribune is reporting that a Senate committee approved the bill today, thereby sending it to the Senate floor:

The Senate Executive Committee voted 7-5 to send the proposed constitutional amendment to the full Senate.

Sen. Kwame Raoul (D-Chicago) called the flat tax---which is 3 percent for individuals---unfair and regressive. He maintained putting the measure before voters would allow debate on potential changes in the state tax strucuture.

However, in order to put the question on the ballot in November, three-fifths of both chambers in the General Assembly would have to approve the legislation by May 4.

In honor of Tax Day, PBS' Now is examining regressive state tax policies -- which place a larger burden on low-income households than wealthier ones -- and how they affect income inequality

According to data (pdf) they cite from the Center for Budget and Policy Priorities and the Economic Policy Institute, Illinois doesn't stack up too well. A few key stats:

- The gap between Illinois’s richest and poorest families is 13th largest in the nation.

- The richest 20 percent of families have average incomes 7.5 times as large as the poorest 20 percent of families. This ratio was 6.3 in the late 1980s.

- From the late 1990's to the mid-200os, the average income of the poorest fifth of families decreased by $1,588, from $19,928 to $18,340 while average income of the richest 5% of families increased by $36,730, from $196,934 to $233,664

Good thing we have that constitutionally-mandated flat income tax!

(h/t David Sirota)

Happy tax day, fellow Illinoisans! Curious where your federal tax dollars go? A couple of think tanks have you covered.

First is the Center for Budget and Policy Priorities, which provides succinct data and nice graphs. Defense spending tops the list at 22 percent, followed closely by Social Security (21 percent) and health care (21 percent). We also paid a whooping $237 billion -- 9 percent of the budget -- on interest for our national debt. Education and transportation infrastructure (mostly all on roads, not public transit) each received a scant 2 percent.

The centrist folks at Third Way crunched the same data (pdf), but focused their analysis on what a typical working age household would pay ($13,112 in federal income and payroll taxes). The results aren't too pretty, either. Your average middle class Americans household spent $593.48 on the war in Iraq, an additional $2,008.01 on defense, and $1,085.29 worth of interest on the national debt, which has grown steadily because of President Bush's senseless war and penchant for tax cuts to the wealthy.

On a related note, Rep. Jan Schawkowsky, along with nine other House Democrats, blasted the Bush Administration for their blank check in Iraq this morning.  From Schakowsky's remarks:

Americans are sending in their taxes today, and they think their money is going to Washington, but it’s really on its way to Baghdad.

So far, the war in Iraq has cost $ 526 billion—$16,500 for the average family of 4. And there is no end in sight. And if we continue the Bush-McCain policies, the children of today’s taxpayers will be paying the bill, too.

With more and more Americans struggling to make mortgage payments, buy gas, or cover other essential needs, it is shameful that we are spending so much to pay for the failed war in Iraq ...

This tax day, at events around the country we are saying what the American people are saying: the war must end, we must stop sending all of our hard-earned money to Baghdad, and we must start investing here at home.

A few other interesting notes from the studies: Americans forked over $98.80 for agricultural subsidies but only $34.50 for environmental protection and $6.67 for renewable energy research. Those dastardly pork barrel projects only set us back $60.45, as well.