Back in February, the Civic Committee of the Commercial Club of Chicago proposed some sweeping revenue changes designed to significantly boost the state’s credit rating to “AA” over time and help accelerate the state’s pension payments to bring down its huge, unfunded liabilities.
The group’s proposals were striking because their members are some of the wealthiest people in the state. In the country, even.
The Civic Committee led the charge several years ago to slash pension benefits for government employees and has long been known to be on the same side of the fence as the loud legions of Illinois government-bashers. Heck, they helped build that fence. They also helped lead the fight against a graduated income-tax proposal.
The committee surprised almost everyone by proposing a temporary, ten-year personal and corporate income-tax “surcharge” to raise $2.9 billion per year, or, as an alternative, a tax on retirement income. The committee also proposed expanding the sales tax to services, which it said could bring in an additional $1.2 billion a year if the state adopted Iowa’s model. Much of the money would be used to pay off state pension debt.
In exchange, the committee proposed repealing the corporate franchise tax and the estate tax.
The franchise tax was lowered during the spring session. And lowering or even repealing the estate tax was also on the Senate’s discussion table this year. Senate Republicans at one point thought they might make some headway, even though the governor has long expressed reservations. As a billionaire who inherited great family wealth, JB Pritzker wasn’t exactly eager to sign such a bill into law. But Republicans apparently saw some signals that the governor would be open to such a plan this year if the legislature decided to go ahead.
Senate President Don Harmon reminded me last week when we spoke that the Senate had already passed a repeal of the estate tax.
“I am more convinced than ever that the estate tax, more than the income tax, determines people's residency,” Harmon claimed. He has said for a while that he believes many people move away from Illinois not because they want to lower their current tax rates, but to assure that their heirs inherit more of their money when they pass away than they would if they were still in Illinois.
Harmon said getting rid of the estate tax is “worth discussing, but only in a broader tax-reform package. It's not something we can do as a one-off. It has to fit within a broader tax-reform package.”
A top Senate Republican source suggested recently that the state budget talks veered away from the estate-tax issue because Harmon wanted a broader deal down the road. The source also said it sounded like the Civic Committee’s plan could be a blueprint, or at least a starting point.
Harmon confirmed that he was indeed looking at the recommendations.
“I think that the Civic Committee offers a very interesting blueprint,” Harmon said of the tax-hike proposals the group proposed. “And if in fact the Civic Committee can generate broad support from the business community and from Republican lawmakers, it's absolutely worth a longer conversation.”
That’s a big “if” at this point, but we’ll see.
The Civic Committee also recently announced that it plans to raise tens of millions of dollars for Chicago violence-reduction programs, including finding meaningful jobs (with wrap-around services) for people who had gone through violence-prevention training, many of whom have extensive criminal records.
Instead of a traditional “get tough on crime” approach, the Civic Committee emphasized “constitutional policing” and other police reforms. The group also announced that it had hired Robert Boik to help spearhead that effort. Boik oversaw Chicago’s 2019 federal consent decree to overhaul the policing system until he was pushed out after criticizing his superiors.
Harmon seemed quite encouraged by the group’s proposals and its entire approach these days.
“From our research,” Harmon claimed, “there's a dichotomy in the public perception. People want to be safer. But people understand that the root causes of crime are far more complicated.” He said he believed people were moving away from the “locking up and throw away the key types of people.”
“I confess, it's not what I expected” Harmon said of the Civic Committee, which has long had a conservative bent.
“I think that the Civic committee is approaching major problems with a very different perspective,” Harmon said.
More on that topic next week.
Rich Miller also publishes Capitol Fax, a daily political newsletter, and CapitolFax.com.
