Taxes

GMA Visits Quincy Voters

Josh Kalven — Mon, 29 Sep 2008 08:46:35 -0700

Last week, ABC's Good Morning America visited Quincy, IL as part of their "50 States In 50 Days" series. Their reporter dropped in on a BBQ contest and found a variety of sentiment regarding the two presidential candidates. Watch it:

In discussing the candidates' tax plans, the reporter emphasizes that Barack Obama would raise taxes on 184,000 small business owners. That sounds like a lot. But it should be noted that this figure represents just 1.4 percent of all households reporting small business income, according to the Tax Policy Center.

As part of this series, USA Today also talked to voters on Chicago's South Side. You can check out that article here.

CPS' Duncan Renews Call For State Income Tax Hike

Angela Caputo — Sat, 20 Sep 2008 09:58:13 -0700

As state lawmakers head back to back to Springfield Monday for an overtime session to tackle ethics reform, Chicago Public Schools chief Arne Duncan said they ought to add one more thing their to-do list: Take responsibility for funding public schools.

The Chi-Town Daily News reports that on Thursday Duncan called on state legislators to approve a “modest income tax hike” to generate more money for education:

“Keep it simple,“ Duncan said at a hearing in Oak Park convened by the Illinois House of Representatives Elementary & Secondary Education Committee. “We cannot solve every problem facing the state with a single new revenue source. Focus first on education and capital -- kids and jobs. Once we address these issues, Illinois can tackle other issues.“

City officials, in July, decided against raising property taxes on behalf of CPS. Instead, they opted to pull $100 million from reserve accounts to get the cash-strapped system through the current school year.

Duncan's voice adds depth to State Sen. James Meeks' recent calls for state officials to make reforming the school funding system a top priority. So far, it appears the message is falling on deaf ears. Determined not to let that happen, Meeks' announced yesterday a plan to take the debate to a broader audience by attracting 6,000 school funding reform advocates to protest at Wrigley Field during the Cubs' Oct. 1 playoff game.

With the state budget already in turmoil -- and a credit crunch underway -- Crain's reported yesterday that school officials ought not get their hopes up that legislators will soon find consensus on a state income tax hike:

[T]hat requires approval by the governor and General Assembly, and they continue to squabble about just about everything. With its own revenues weakening, state government has begun to implement hundreds of millions of dollars in cuts. Some may be avoided if the state draws down excess cash in special-service funds, but such one-time revenue raisers are frowned upon by fiscal experts.

Dick Morris Back To His Old Tricks On WIND

Mose Buchele — Tue, 01 Jul 2008 09:09:51 -0700

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:

Internal mp3

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. He also repeated the claim that illegal immigrants make up about a quarter of the uninsured in America:

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MORRIS: What I talk about in this book at some length is that Obama's plan for health insurance involves covering all illegal immigrants with federally subsidized health insurance. And part of the reason I'm worried about that is partly the huge cost it would entail. When he says there are 47 million uninsured Americans -- 10 to 15 million of those are illegal immigrants.

If this claim rings a bell, it's because Rep. Mark Kirk similarly exaggerated the number of illegal immigrants without health insurance back in May. But as we noted, a recent study (PDF) by the National Institute for Health Care Management put the number of uninsured illegal immigrants at approximately 5.6 million. Indeed, contrary to Morris and Kirk's assumption that all undocumented workers lack coverage, many receive health insurance through employer-sponsored programs or purchase it themselves.

Durbin, CAP Blast McCain's Tax Plan

Adam Doster — Thu, 26 Jun 2008 13:01:41 -0700

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.

On Taxes, Obama Imperfect -- But McCain Abysmal

Adam Doster — Mon, 23 Jun 2008 12:19:19 -0700

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.

Had McCain’s tax proposal been in place in 2006, both families would have done incredibly well–saving even more than they did under the existing Bush plan. John and Cindy McCain would have walked away with $373,429 in their pocket, while the Barack and Michelle Obama would have saved $49,392.

Under Obama’s plan, both families would have saved, but substantially less. The McCains would have enjoyed an estimated savings of $5,641, due to the lower tax rates; the Obamas registering a $6,124 savings.

In 2006, the McCains earned over $6,000,000. The Republican nominee thinks folks like him should be entitled to an extra $373,000. This in the face of the $530 billion war he has steadfastly championed. As Ezra Klein writes:

[T]here's no way that reporters will stitch "$373,000" into the DNA of this election. But they should. McCain is running for president, during a war, despite a deficit, amid a likely recession, on a plan that gives him and his incredibly rich family almost $400,000 in tax cuts. It's absurd.

Absurd doesn't begin to describe it.

The Windy Citizen's TIF Map

Adam Doster — Tue, 17 Jun 2008 08:24:40 -0700

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)

Steve Greenberg's Tax Hike Hyperbole

Adam Doster — Fri, 13 Jun 2008 13:44:55 -0700

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:

Internal mp3

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?

Essentially, the 2001 and 2003 tax cuts pushed by a Republican-controlled Congress and signed into law by President Bush included a provision sunsetting the cuts on December 31, 2010. Unless future Congresses extended them, the tax rates would return to their previous levels. It's important to remember that the sunset provision allowed the GOP leadership to obscure the real cost of the cuts and therefore enlist more legislative support, as The Washington Post reported on May 24, 2003:

Indeed, by "sunsetting" all the tax cuts well before the bill's official 2013 expiration date, congressional tax writers took a measure that otherwise would have cost the Treasury more than $800 billion over the next decade and crammed it into a $350 billion price tag that could garner just enough support to pass the Senate.

While Democrats have said they will extend the tax cuts that benefit the middle class in their newest budget, they decided not to re-up the majority of Bush's cuts targeted at the country's wealthiest residents. And for good reason: according to the Center for American Progress (pdf), the hugely regressive cuts will have cost the U.S. $2 trillion by 2010 and contributed to our massive deficit.

But more to the point, letting legislation written by your opponents expire is not the same as deliberately raising taxes. It's intellectually dishonest to conflate the two. If Republicans were so worried about future "tax increases," they should have convinced more legislators to make those cuts permanent during Bush's first term.

Chicago's Shrinking Middle Class

Adam Doster — Thu, 12 Jun 2008 11:31:47 -0700

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.

In April, Pew released a massive survey that found fewer Americans than at any time in the past 50 years now believe they're moving forward in life. To be sure, each presidential candidate is hitting on these themes, claiming their economic policies better address rising insecurity. A new analysis by the nonpartisan Tax Policy Center suggests one presidential candidate's plan falls well short:

An analysis of both campaigns proposals by the Washington-based, nonpartisan Tax Policy Center found that for people with incomes between $66,354 and $111,645, Obama's proposals would cut their taxes by more than $1000, compared to around $300 under McCain's plan. But for Americans with incomes above $603,402, Obama would raise their taxes dramatically, by more than $115,000 a year, while McCain would cut them by $45,000.

(h/t Gapers Block)

The McCain/Ozinga Tax Plan

Mose Buchele — Wed, 07 May 2008 16:48:41 -0700

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.

Senate Rejects Graduated Income Tax Bill

Josh Kalven — Tue, 29 Apr 2008 14:47:28 -0700

The Senate voted down SJRCA 92 this afternoon. The chamber split 19-35 on the constitutional amendment. More details from the Tribune:

The Senate defeated a bid to give Illinois the chance to have an income tax rate with a sliding scale Tuesday afternoon.

Senators voted against putting on the November ballot the question of whether Illinois should have the power to implement a graduated tax rate to replace the current 3 percent rate for all citizens regardless of income.

Republicans unleashed stinging arguments against the proposal, saying it is tantamount to a tax increase.

Sen. Michael Frerichs (D-Gifford), the sponsor, dismissed arguments that his proposal represented higher taxes, saying it only gives voters the chance to allow a graduated income tax rather than be restricted only to the flat rate.

He suggested the state should have the flexibility to set different rates for people at different income levels.