Once Again, Press Ignores the State’s Billions in Unpaid Bills in Covering ‘Soak the Rich’ Proposals
As I noted on Saturday, the idea that a state with about $6 billion in overdue unpaid bills would choose to raise taxes and apply the money to new spending is appalling. But when it comes to describing a state’s finances, ”appalling” and “Illinois” have belonged in the same sentence for so long, it’s hard to remember when that wasn’t the case.
Part of the reason that such proposals gain traction is that the press only occasionally reminds its readers, listeners and viewers of the past-due balance situation. As Democratic House Speaker Michael Madigan’s proposal to increase the income tax on incomes above $1 million by 60 percent (from 5 percent to 8 percent made legislative headway and Govenor Pat Quinn surprised absolutely no one by backing the idea of making supposedly “temporary” income tax increases imposed three years ago permanent, both the local Chicago Daily Herald and the Associated Press predictably failed in this regard.
The Daily Herald piece by Marty Hobe (with AP contributing) pretended that raising more and simply spending it would “stabilize” the state’s finances:
Illinois House gets millionaire tax plan moving
Illinois lawmakers chose to advance an additional income tax on millionaires over a broader shift of taxes toward the wealthy Thursday, setting the tone for months of debate over how much people should pay to help the state stabilize its finances.
The House revenue committee voted 6-4 for Speaker Michael Madigan’s plan to add a new 3 percent tax on income of more than $1 million, sending the measure to the full House where it could be debated as early as next week.
Let’s stop there for a moment.
The true definition of a “millionaire” is “a person whose wealth amounts to a million or more in some unit of currency, as dollars” (the dictionary has given into the lazy slop which passes for financial writing these days by supplying a second and completely bogus definition: “any very rich person.”). It’s not someone who happens to have a gross income of $1 million in a single year. Even ignoring the fact that the person will have about $650,000 left by the time Uncle Sam gets his take, if that person spends every last dollar of income and has nothing left, they’re not a millionaire.
Minutes later, the same panel rejected a broader graduated income tax proposal, which resembled one floated earlier this week in the Senate by state Sen. Don Harmon, an Oak Park Democrat.
The current state income tax rate is 5 percent for everyone. Harmon’s plan would have raised tax rates on incomes more than $180,000 to 6.9 percent.
The Illinois Policy Institute has pointed out that Harmon’s proposal would have increased taxes on Illinois taxpayers with annual taxable incomes as low as $22,000.
Madigan’s millionaires tax would need the support of 60 percent of lawmakers to be put on the November ballot, where voters would have to approve it.
The early vote shows a sign of life for the controversial plan a day after Gov. Pat Quinn also proposed making the state’s 2011 tax hike permanent.
The $1 billion in new money created by Madigan’s plan would be directed toward schools.
Note that Hobe ignored the 2011 “promise” that the tax increase would be temporary.
The Associated Press’s Kerry Lester also played fast and loose with the word “millionaire,” committed a frequently made error in describing the size of Madigan’s tax increase:
The proposal would tack a 3 percent surcharge on to income of $1 million, which Madigan says would raise $1 billion a year for elementary and secondary education — about $550 per student. The money would be distributed to the state’s public schools.
Sorry, Kerry. A 3 percent surchage on an existing 5 percent rate would raise that rate to 5.15 percent. The surcharge is 60 percent, taking the rate from 5 percent to 8 percent.
Back to the original point, both writers should have noted that Madigan’s soak-the-rich scheme (really a “soak those who have high annual incomes” strategy) would do nothing about the state’s scandalous past-due balance. That they did not was extremely irresponsible, and sadly typical.
Cross-posted at NewsBusters.org.