Chuck Sweeny: Politicians who say taxes won’t go up are lying

Tuesday, September 21, 2010

Politicians are lying (not a new concept) about this: They’re planning to raise your taxes next year. A lot.

On the local level, the deceptively named “tax cap” law causes people to think that property taxes can’t go up without a referendum. But as you read in Sunday’s paper, the law actually allows taxing districts that aren’t taxing at their maximum limit to raise taxes by the rate of inflation, which right now is about 2 percent. Considering that we pay taxes to nine or 10 taxing districts, that could be a significant increase at a time our property values are declining and our wages — if we have jobs — are either frozen or being reduced.

Local governments don’t have to raise your taxes, mind you, but they will, unless a locally oriented Tea Party movement demands they hold the line, and probably not even then. I predict taxes will rise substantially for Rockford residents. Here’s why:

Aldermen are refusing to deal with the city’s projected $5.4 budget deficit for 2011. They grandstand over chump change, such as whether Julia Scott- Valdez deserves more than a 5 percent raise, but aldermen never talk about
eliminating their generous health care benefits, and seven of them plus the mayor won’t even agree to a 5 percent wage reduction.

The city’s unions expect raises, and firefighters demand retention of the four-men-on-a-truck rule plus keeping all fire stations open. Because of the state’s binding arbitration system, which is rigged to favor unions, they’re all likely to get what they want.

The expansion of tax increment financing districts in the past five years hasn’t worked. Many of the TIFs are failing, and that has blown a $1.9 million hole in the general fund.

In the end, aldermen will say they “have no choice” but to enact a utility tax. The 5 percent maximum gets them a cool $11 million a year.

The state also will raise taxes, despite what most candidates for state office are saying. A 1 percentage-point income tax increase, which Gov. Pat Quinn promotes, won’t be nearly enough to dig Illinois out of its $13 billion deficit, let alone address the $80 billion long-term pension debt.

The increase will have to be at least 2 percent, which won’t be enough either, because as long as Mike Madigan is speaker of the House and John Cullerton is Senate president, there will be no reduction in the cost or size
of state government.

Finally, if Republicans and Democrats in Congress can’t agree on a plan to extend the George W. Bush tax cuts in the next few weeks — an increasingly likely prospect — our federal income taxes will go up significantly Jan. 1.

“A typical family of four with a household income of $50,000 a year would have to pay $2,900 more in taxes in 2011, according to a new analysis by Deloitte Tax LLP, a tax consulting firm. The same family making $100,000 a year would see its taxes rise by $4,500,” wrote Steven Ohlemacher last week in an Associated Press story.

“Wealthier families face even bigger tax hikes. A family of four making $500,000 a year would pay $10,800 more in taxes. The same family making $1 million a year would get a tax increase of $52,300,” Ohlemacher wrote.

I am reminded of an imaginary question on the income tax form: “How much do you make? Send it in.”