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SB2288: Mike Noland’s 67% tax hike

28 October 2008 RS 14 Comments

A message from Elgin state senator Mike Noland:

On October 29th, beginning at 7 p.m., I will be hosting a town hall meeting on education funding reform and property tax relief. All voters in the 22nd District are invited to attend. Please feel free to forward this message to everyone living in Illinois’s 22nd Legislative District you believe to be a registered voter. The event will be held at the Centre of Elgin. I am using this occasion as an opportunity to hear from voters and elected officials who represent those who live in my district on the subject of SB 2288. A bill designed, among other things, to provide property tax relief in the state of Illinois. Please see ILGA Link.

Ralph Martire of the Center for Tax & Budget Accountability will be a featured guest at this event. I urge you to visit the CTBA’s website, http://www.ctbaonline.org/. Specifically, please see CTBA Presentation on the IL Economy and How it Relates to Education Funding. These two sites will provide valuable insight on the issue of education funding reform and property tax relief in the State of Illinois. As well, Elgin Mayor Ed Schock has agreed to attend and to provide his observations as a local city mayor and former U-46 school principal. Candidates for office within the 22nd District are also welcome to attend and as time permits share their views on this issue. Please let me know if you would like to be considered as a panelist for this event.

The Illinois Senate bill in question sponsored by Mike Noland, Rev. James Meeks and others is SB2288 (also see HB0750):

Amends the State Finance Act, the Illinois Income Tax Act, and the Property Tax Code. Increases the income tax rates for individuals, trusts, and estates from 3% to 5% of the taxpayer’s net income and increases the rate of income tax for corporations from 4.8% to 8% of the taxpayer’s net income. Creates an income tax credit for families with incomes below certain levels. Creates the School District Property Tax Relief Fund, and requires the General Assembly appropriate certain amounts into the Fund. Provides that grants must be made from the Fund to school districts. Requires that property taxes be abated in school districts by the amount of the grants from the Fund. Creates the Higher Education Operating Assistance Fund, and requires the General Assembly to appropriate certain amounts into the Fund. Requires certain distributions from that Fund. Creates the Invest in Illinois Fund for the purpose of funding the cost of issuance, interest, fees, principal payments, and other debt service on Invest in Illinois Bonds and requires appropriations into the Fund. Creates the Capital Strategy Board to make recommendations concerning the issuance of bonds. Contains several continuing appropriation requirements. Amends the School Code. Creates the Early Childhood Fund to support the Illinois Early Learning Standards and their use in early childhood programs and other programs. Makes changes concerning special education reimbursement for personnel. With respect to the State aid formula, makes changes concerning the foundation level of support, creation of the School Improvement Partnership Pool Fund, and supplemental general State aid. Provides that the General Assembly shall appropriate from the General Revenue Fund to the Common School Fund an Education Appropriation Minimum.

Cary District 26 passed a resolution opposing SB2288:

WHEREAS, HB750 and SB2288 propose raising the personal income tax rate from 3% to 5%, a 67% increase, and propose raising the corporate income tax rate from 4.8% to 8%; and

WHEREAS, the proposed property tax relief
(if enacted) provides only a 20% reduction on the education portion of the property tax payer’s bill, and there are no restrictions preventing an increase in local property tax rates or redirection of the property tax abatement fund; and

WHEREAS, with a slowing economy and increasing prices, an increase in taxes will adversely affect the District 26 community, families and businesses and adversely affect the tax base that supports education in District 26; and

WHEREAS, of the $8 billion estimated to be raised by SB2288 and HB750, only 7.5% will go to education, 36% will go to property tax relief, and the remaining 56.5% will go to fund state debt, road construction, state employee pensions and unpaid Medicaid bills, which do not benefit education; and

WHEREAS, the proposed increases in state funding for education under HB750 and SB2288 will only provide a small increase in the state funding that District 26 actually receives; and

WHEREAS, shifting substantial portions of District 26 revenues from a steady property tax base under local control, to a less reliable income tax base under State control, undermines the idea of local control of education; and

WHEREAS, we believe that under HB750 and SB2288 the District 26 attendance area will send more tax revenue to the state than it will receive from the state, providing less tax base to support education in District 26;

The Grayslake village board also passed a resolution opposing SB2288.

National Taxpayers United of Illinois says:

“More than $1 billion of these tax increases would be funneled to the lavish pensions and health care benefits of retired government employees, many of whom receive multi-million dollar pensions during their lifetime.” said Tobin. “There is no need to keep feeding this money-eating pension monster. Rather, state pensions should be capped at $50,000, and all new government employees hired should be required to fund their own retirements with 401 (k) pension plans.”

Notice that the bill raises income taxes 67% while providing tax credits to low income filers. This is the end of the flat income tax rate in Illinois. SB2288, as Cary and Grayslake noted is being marketed as “property tax relief” and “education reform,” but only 7.5% will go to education, and as for property tax relief, what does it matter if you’re paying your tax in the form of property tax or income tax? You may get a lower property tax bill, but you’re going to be paying 67% more in income tax.

The most surprising thing at the League of Women Voters forum last week at the Gail Borden Library was the fact that every single candidate running for state representative (Ruth Munson, Tim Schmitz, Keith Farnham, Rachel Shattuck) has signed onto this bill. Every single candidate, Democrat and Republican, said we have to “take the burden off of local property taxes.” None of them noted that that burden will now be placed on much higher income taxes.

The most distasteful thing about SB2288 is the fact that it usurps local control of education. If taxpayers keep pushing stuff up like this, eventually everything will be run from Washington DC.

Ruth Munson has emailed me saying that she does not support SB2288/HB750. I apologize to Ms. Munson and Mr. Schmitz for assuming they supported SB2288 based on their answers to the question on education funding reform. The question that was asked to them did not specifically mention SB2288 or HB750, but based on their responses, each saying either directly or in effect that we have to move away from funding education through property taxes, I made the assumption that they supported funding education through income taxes. Since SB2288 does this and is the bill now being debated, I assumed they supported this bill.

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14 Responses to “SB2288: Mike Noland’s 67% tax hike”

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  1. Momma says:

    This article is misleading and innaccurate. Tim Schmitz and Ruth Munson did NOT sign on as sponsors to this bill. At the forum, they did not even indicate support for such a bill.

  2. informed says:

    Wow, what League Event did you attend? I was there and Munson and Schmitz did not sign onto any such Bill. It was the Democrats who stated they were on board as well as supporting a tax on services. Get it right next time!

  3. RS says:

    Momma/informed, please note my correction in the post.

    SB2288 was not specifically mentioned, but they were given a question about education funding reform, and both answered that they wanted to take the burden off of property taxes or move beyond property taxes. I was there and did take notes.

    I probably used the wrong term in saying they “signed on.” By that, I did not mean sponsorship, but just support, which is why I said all of the candidate, including the challengers, had “signed on.”

    As for service taxes, both Republican candidates said they would not support such taxes.

  4. rm says:

    This evening Keith Farnham was in my neighborhood passing out literature that says he “believes we need to shift the tax burden off the middle-class, and supports the largest middle-class tax cut in state history.” How does his claimed enthusiasm for a “tax cut” align with SB2288 increasing income taxes by 67%? And then there’s his claimed enthusiasm for “maintaining a business environment that encourages job creation.” Nothing like nearly doubling the income tax rate on Illinois business to stimulate growth and job creation. I know this kind of rubblish has always played well for Chicago’s Ghettocratic machine, and it’s a testament to Elgin’s chani for ’s Machinethe

  5. rm says:

    and it’s a testament to Elgin’s changing demographic that we now have it on our own doorsteps. (hit the wrong button while typing previous post… people like Farnham make me so angry!)

  6. Kiki says:

    Regarding your correction…that’s all well and good, but you still state that you made “the assumption they supported funding education through income taxes.”

    I don’t know about you, but I was raised to believe that when you “assume” something, it makes an a@# out of you and me…next time, I would suggest verifying support or opposition of something by an elected official or someone running for office BEFORE you write it. I would stay away from words like “assume” or “assumption”..just a thought…

  7. TDM says:

    I oppose SB2288. It isn’t balanced and it increases spending on non-education related pork.

    The concept of a straight and equal substitution of higher income taxes offset by lower property taxes is a good one in my opinion. It would help reduce the inequity between poor school districts and wealthy ones.

    I think most Illinois residents agree; it is a politically popular idea. The problem is that Bills like SB2288 aren’t straight & equal. Too many Illinois legislators are corrupt, wanting to increase spending for their lobbyists.

    I won’t cry over the loss of our “Flat Tax” system in Illinois, should that ever happen. The burden of a 5% tax on a $40,000 family income is a lot harder to bear than a 5% tax on a $400,000 family income.

  8. john says:

    I would have made the same assumption as Elginite if they said what he said they said at the forum. I have no reason to doubt Elginite but it would be good to see a video or hear another confirmation.

    If politicians go around saying they want to reduce the burden of property taxes, it means they’re going to raise taxes somewhere else. How many taxes do you have? If it’s not income taxes, it’s going to be sales taxes or something else. But most likely it’s going to be income taxes.

    It’s like if a few weeks ago, a politician was asked if they would support a federal bailout. Even if the bill isn’t mentioned, you can assume that if they say they support a federal bailout, they’re talking about the bill that’s on the table.

    If Schmitz and Munson are not supporting SB2288, but are still calling for “school funding reform” I want to know what they’re talking about. Are they going to build casinos? Do more lotteries? Where is this money going to come from?

  9. RS says:

    Kiki, I will keep in mind what you said, and I urge you to keep in mind that my assumptions are just verbalized assumptions that people make when they hear the same things that I hear. I may just be verbalizing what people are thinking.

    John, Thanks for backing me up :)

    TDM, I respectfully disagree :) You can also argue that an 80% tax on someone earning a million dollars is easier to bear than a 5% tax on $40,000.

    As for school districts, I think that should remain a local issue. That’s the beauty of the American system. We distribute power and responsibility, and push things down to the lowest possible level so that people at the grassroots have a say.

    Chicago is the 4th richest city in the world on a per capita basis, and they can’t fund their own school district? If Chicago’s school district needs money, let them raise taxes from their own district not the rest of the state.

  10. SpeakingTheTruthElgin says:

    I was at Senator Noland’s forum last night. I did not see you there. About 50 other people were in attendance. Senator Noland did an exemplary job talking to his constituents about wanting to know their opinions on property tax reform and education funding reform. The nonpartisan Center for Tax and Budget Accountability’s executive director, Ralph Martire, also did an excellent job in explaining SB750 and SB2288. His presentation clarified ALL of the stated misinformation you have been writing about concerning this issue. Mayor Ed Schock was also a participant and explained why SB2288 and SB750 are good for this community and our school district. Kudos to Senator Noland for hosting such an important forum for his constituents.

  11. John G. Dalton says:

    People from both parties have been asking the legislature to address the inequities of our over reliance on regressive property taxes to fund our schools for most of my adult life. Here we have a legislator brave enough to try to address this growing problem (with far reaching consequences), and all some folks can do is belly ache. The bill may not be perfect, but it’s a step in the right direction. Senator Noland should be commended for taking a stand and trying to get something constructive done for the taxpayers, many of whom are retired on fixed incomes and having trouble paying escalating property tax bills. It takes guts to call for a income tax increase to pay for the property tax reductions, and it takes guts to hold open forums like this to solicit feedback from the voters and the community. Such forums can allow the bill to be tweaked to improve it, and can be used to dispel inaccurate information about the bill, such as that found in this very forum. For example, it is misleading to describe it as a “67% tax hike” without adjusting that figure to account for the reduction in property taxes. The net increase or decrease in the overall tax burden is the relevant figure.

  12. Jessica says:

    I wish I had gone to that. I tried to scan through the bill but I couldn’t get too much out of it. For example, whose income tax would be raised and under what sort of levels would receive tax credits.

    A way to reform education is to throw it all in one pot. You live in Illinois and are in grade x? You have y dollars spent on you, whether that’s in Chicago or Lake Forest or Peoria. The monies will be divided by district based on the number of students in the district. The districts will have to remain accountable disperse money based on the number of students at each school. No more differences in class size based on how much money your parents make.

    It’d help many municipalities, such as ours. No more having people not wanting to live in a certain place because they’re scared of the school district. It could be the start of the end of a vicious cycle that hurts cities and towns.

  13. RealityCheck says:

    Let’s see…where do I begin.

    While Mr. Martire presented a very cohesive presentation, I would hardly characterize it as unbiased. As an old cliche says about statistics, you can bascially make them say whatever you need them too. At times national stats were used, then local stats, then correlation charts based on narrow parameters all in the name of making a particular point at a particular time.

    To Speakingthetruth, unless you have some sort of superhuman understanding, SB2288 and HB750 are so packed full of legislative loopholes you could drive a truck through them. The State is robbing from their current funds.

    To Mr. Dalton, 2/3 is a 67% increase, and while the abatement of roughly 20% might be given to certain areas for property tax relief, Mr. Martire stated himself that there are no guarantees that new legislation could not eliminate the abatement in the future, thus leaving us with the 67% increase in personal income tax without any property tax relief at all. I don’t know about you, but I don’t think our illustrious state government has shown even a hint of restraint when it comes to taking more money out of us.

    I don’t know if you’re aware of this, but our economy is already in recession and is headed for a deeper one, therefore those “revenues” the State is chomping at the bit to take out of us are going to cause an even greater burden on those of us who pay taxes. By the way, have you given any consideration to the renters in this state that would be hit with the full 67% without an abatement of any sort?

    If you would like a solution, I have one. Our government should REDUCE THEIR SPENDING in other areas so they can properly meet their infrastructure obligations and fund the schools appropriately. Living within their means…what a novel idea.

  14. Dannyblake says:

    HTF can a candidate “sign on” to a bill? The idea of property tax relief through this method is absurd–Ralph M. is so confused…