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Giving tax credit where credit is due

Opinion: Columns

September 30th, 2020 9:01 AM

Nick Binotti

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With about one month to go before Illinoisans vote on whether to amend the state constitution and switch to a graduated income tax, let's review two of the lesser-known tax policies embedded within the "Fair Tax." 

Along with the well-publicized graduated tax rates, the "Fair Tax" includes a new Child Tax Credit of $100 per child for taxpayers earning below $60,000 that phases out as one reaches $100,000 in income. The "Fair Tax" also includes an increase in the Property Tax Credit from 5 to 6 percent. Both tax credits are sound, progressive tax policies. There's just one small problem: Neither requires a constitutional amendment.

Both tax credits could be implemented today under the current flat tax. The Property Tax Credit has been on the books since 1991. I don't recall it ever being increased until now, despite how much our crippling property tax burden has grown over the past few decades. Apparently this child tax credit was playing hide-and-seek all these years, only to be found right before election time. 

Using Governor Pritzker's Fair Tax calculator, a married couple with $60,000 in income, two children and a $6,000 property tax bill would receive a $43 tax reduction without these added tax credits, a mere fraction of a fraction of a percent of what they pay today. That's not even enough to cover the recent hike in license plate fees. But tack on these two tax credits and their tax reduction jumps to $300, a far more persuasive number. Basically, these tax credits are an Enron-esque attempt to gin up the "Fair Tax" numbers and hide the regressivity in the graduated tax rates for working families. And because the "Fair Tax" marketing campaign wavers from poor to misleading to unethical, it leads voters to believe graduated rates are the magical source of the tax reduction, not these tax credits.

A recent study by the Institute of Taxation and Policy found that over the past 20 years, Black and Hispanic taxpayers paid $4 billion more than they would have under the "Fair Tax." But as illustrated in the example above, the vast majority of that $4 billion would have resulted from these two tax credits, not a graduated income tax. Why has our Democrat-led state legislature willingly withheld billions of dollars from people of color for the better part of two decades when it was well within their existing taxing power to do something about it?

Furthermore, why weren't these tax credits implemented this budget year? The "Fair Tax" squad obviously knows their value. Why, during a worldwide pandemic, did Gov. Pritzker choose to withhold hundreds of dollars from working families at a time when every dollar is needed, now more than ever?

Should the "Fair Tax" fail, these tax credits can still be implemented and improved. Double the property tax credit to 10 percent. Triple the child tax credit and raise the age limit. The personal exemption was $1,000 when it was first introduced 50 years ago. If it were indexed to inflation (another glaring deficiency of the "Fair Tax"), it would be over $6,700 today instead of $2,275. Raise that too. All are progressive changes as millionaires are not eligible for these tax credits.

Time is running out to check out the "Fair Tax" calculator. Just give credit where credit is due.

Nick Binotti is an Oak Park resident.

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