Thursday, March 20, 2014

Madigan proposes millionaire tax for education

By Jamey Dunn and Caitlin Rydinsky

House Speaker Michael Madigan proposed today a constitutional amendment to impose a higher tax on millionaires, which would bring in an additional $1 billion for school funding.

Under the proposal, Illinoisans would pay an additional 3 percentage points surcharge on any income they made over $1 million. The revenue generated, which Madigan estimates could be $1 billion, would be given to each district throughout the state based on the number of students. He estimates that schools would get an additional $550 per pupil. “Over the last several years, every area of Illinois has experienced school closures, teacher layoffs, and classroom cuts due to reduced education funding that has been forced by a crowding out of state revenues,” Madigan said in a written statement. “This is not a complete solution to our education funding issues, but it is a fair and equitable way to reverse a decline brought on by the national economic problems and will help address a number of spending pressures that vary among school districts.”

If both chambers approve the plan by May 5, voters will have the deciding factor of whether millionaires’ should be taxed the additional amount during this November election. Illinoisans’ may also see an amendment to add term limits for lawmakers placed on the ballot from the efforts of Republican governor candidate and multi-millionaire businessman Bruce Rauner. In addition to running for governor, Rauner has launched a campaign to get term limits on the ballot by collecting signatures through a citizens’ initiative. There is also a push to get an amendment on the ballot to change the way the state draws its legislative districts. If either proposal gets the needed signatures, they would likely also have to survive a court challenge to make it to the ballot.

If Madigan’s plan appears on the November ballot and gains the necessary support from voters, schools could expect to see additional funds in 2015, he said. “Given the drastic cuts to education in recent years, and the threat of cutting nearly $1 billion more in this year’s budget, we are encouraged by the speaker’s proposal to invest more money in public education for our children,” Illinois Federation of Teachers President Dan Montgomery said in a written statement.

For the last three years, the state has failed to meet the per pupil funding level required by law of $6,119. Illinois’ temporary income tax increase is scheduled decrease in 2015 from 5 percent to 3.75 for individuals. The lost revenue means that lawmakers are looking at a tough task as they try to craft next fiscal year’s budget. Early projections indicate that almost $1 billion could be cut from schools. Meanwhile, the Illinois State Board of Education requested a funding increase of $1.08 billion for next fiscal year. The bulk of the request, $879 million, would be needed to meet foundation level funding.

Opponents to the amendment say it is nothing more than a political move meant to polarize voters in an election year. They also suspect it is a distraction from what they believe Madigan’s real intent is—to make the temporary income tax increase permanent. Madigan has not taken a stance on what the state should do about the income tax increase; he says the two topics are not linked. “That’s a separate issue. This is separate from the question of whether the income tax increase would be extended. It’s not related.” Madigan said that his plan is not meant to fill in the gaps of potential cuts. “I think that what we are doing here is calling upon people in Illinois that are well equipped to provide support for education which is available to everybody in the state,” he said.

Conservative groups say that the proposal would drive wealth people out of the state. They also note that it could hurt small businesses that file their taxes as individuals. “With the second highest unemployment rate in the nation, one would think the Democrat[ic] leaders of Illinois would want to grow jobs for our families. Unfortunately, yet again they choose to pursue policies that will push more jobs out of the Land of Lincoln by punishing job creators,” David From, the Illinois state director of Americans for Prosperity, said in a written statement. Madigan, who acknowledged that there are some years in which he would earn enough to have to pay the surcharge, said of millionaires in the state: “If they’re in Illinois today, they’re probably so much in love with Illinois that they’re not going to leave, and they’ll be grateful for this opportunity to support lower (grade level) education.” Madigan estimates that in 2011, there were 13,675 millionaires in Illinois.

Rauner ‘s campaign shot back with a statement highlighting his personal giving to schools and education reform efforts. “Bruce is happy to pay more to support education—in fact he's been doing that personally for decades, but he doesn’t support what looks like a first step towards empowering Mike Madigan and [Gov.] Pat Quinn to raise taxes on the middle class, small businesses and family farms,” said a prepared statement from campaign manager Chip Englander.

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