Reminding Our Reps that Fiscal Health Requires a More Sensible Tax Approach

by Vadim Gershteyn
Advocacy and Community Organizing Intern

With Illinois deficit the worst in the nation, at an astounding $43.8 billion in the red, policymakers have to make difficult decisions about our nation’s fiscal responsibilities. Until recently, however, the responsibility has been shifted mostly onto the most poor and most vulnerable. On Friday, Nov. 9th, Jewish Council on Urban Affairs (JCUA) intern Vadim Y. Gershteyn joined Roots of Justice, IIRON, and others outside of Dick Durbin’s office in protesting proposed cuts to Medicaid and Medicare as part of the budget reduction strategy put forward by Congress. Medicare is a popular, highly-efficient program that remains solvent and fully-funded for at least twenty to eighty years. Medicaid is many people’s only safeguard against serious illness or even death. The efforts to privatize either of these programs (especially Medicare) would mean less medical coverage for our seniors and at-risk populations.

At a townhall meeting attended by Roots of Justice, IIRON, and other groups, our federal representatives Jan Schakowsky, Mike Quigley, and Danny Davis declared their commitment to blocking austerity measures in balancing the budget.  Senator Dick Durbin has not signed on to the measure, backed by Majority Leader Harry Reid, which bars cuts to Medicare, Medicaid, and Social Security. In balancing the budget, there has been far less support for raising taxes on the very wealthy, who now pay only a 15%-20% effective tax rate, lower than the rate for many middle-income Americans. There has also been little Congressional support for a “Robin Hood” tax, which levies a tax on financial transactions that can regulate high-risk transactions and brings much-needed revenue to the federal government.

On the state level, we can help bridge the fiscal gap by supporting a Fair Tax initiative in Illinois that will shift the burden from the poor and middle-class to the very wealthy (read more about JCUA’s position on the fair tax initiative).

The responsibility for the economic collapse caused by the banking and financial industry cannot be levied on the very poor and the powerless. We cannot stand idly by as the people most hurt by the 2008 financial meltdown make sacrifices to balance the budget while corporations and the very wealthy do not pay their fair share. It is a commitment that dates back to our prophets, to take care of the poor and make sure the burden of social responsibility does not fall on the most vulnerable. Sen. Dick Durbin should join our representatives in saying no to cuts to our social safety net and no to austerity.

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JCUA Endorses Campaign for Graduated Income Tax in Illinois

On October 3, 2012, JCUA’s policy committee met with Citizen Action Illinois to discuss the need for a graduated income tax in Illinois. After learning about the state of the tax system in Illinois today, the JCUA has chosen to join Citizen Action Illinois and many other community groups in endorsing the Fair Tax Campaign.

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Some Numbers

Currently, Illinois has a flat income tax rate, which given Illinois’ budget deficits and funding needs, is inadequate also unfair. Consider the following numbers:

• It has been reported that in 2011, the bottom 20% of households in Illinois bore quite a larger tax burden than the top 20% of Illinois households, as they paid twice as much of their income in state and local taxes than the top 20%.
• The total tax burden felt by those with an average income of less than $18,000 is 13.7%; however, the tax burden felt by those earning $500,000+ per year is only 6.5%…yes, the group with an average income of $2,084,700 per year bears only a 6.5% tax burden [1].

To put it plainly, those with the lowest incomes end up paying far beyond their means, while the wealthiest households in our state pay what amounts to being a drop in the bucket of their income. Illinois is simply asking too much from those families who are struggling the most in today’s economy.

What Are Other States Doing?

What we’re asking for is nothing new – our neighboring states currently function with more progressive tax systems, and it is not coincidental that these states’ budgets put our state budget to shame. Some facts:

• 34 of the 41 states that currently employ an income tax system have graduated rates already.
• Analyses show that if Illinois’s tax base paid Iowa’s income tax rates, Illinois would raise $6 billion more a year, and over half of the taxpayers in Illinois would experience a tax cut of 24% on average. Imagine what this state could do with so much more revenue
• To make matters even more pressing, the flat income tax increase currently in place will expire in 2015, and taxes will drop from 5% to 3.75%, taking with it about $4 billion in revenue for the state. If you think things look bad now for social services in our state, imagine what they could look like with $4 billion less.
• By pressuring the state to amend the constitution and incorporate a more fair tax, Illinois would not only build revenue, but according to the non-partisan Center for Tax and Budget Accountability, this would also cut taxes for up to 94% of Illinois residents! (Learn More Here)

How Do We Get This Done?

This certainly is a huge battle to fight, but we feel it is also hugely important, and have therefore chosen to join hands with the Fair Tax Campaign to promote a more fair tax system. To do this requires a constitutional amendment. To get a constitutional amendment on the ballot requires 60% of the General Assembly’s approval, and the ballot proposition must be approved by 60% of voters. This means that the next step in this process is to win legislative and then voter approval. We are ready to stand by and do what we can to bring about a more just tax system in our state, and we feel we are on our way to a more fair future for Illinois. Stay tuned for the next steps in this campaign!

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References:

[1] Institute on Taxation & Economic Policy, Who Pays? A Distributional Analysis of Tax Systems in All 50 States, p. 42, Third Edition, November 2009. Note: this table shows 2007 data updated to reflect permanent changes in Illinois tax law enacted through January, 2012.

Guest Op-Ed: JCUA Teen Leader on the CTU Strike

by Sophie Leff

Sophie Leff (left) at a JCUA event

The following is an op-ed piece by Sophie Leff, a junior at Northside College Prep. Sophie did Or Tzedek’s Activism and Community Organizing  summer program in 2011 and Advanced Activism in 2012. She was a part of the leadership team who planned Or Tzedek’s first Winter Leadership Retreat in 2011. Sophie is currently the Social Action Vice President of Beth Emet Synagogue Senior Youth.

Sophie writes: “I do not prioritize national standardization. I prioritize safe physical and emotional learning environments; modern, relevant and challenging curricula; abundant and up-to-date instructional materials; and above all, good teachers. This isn’t a message only for CPS, it’s for the State of Illinois. Its negligent school funding (based on property taxes) provides the least amount of resources for those who need it most, and it’s a message for the nation as a whole.”