Graduated tax would be 'disaster,' McSweeney tells Summit

The adoption of a graduated income tax in Illinois "would be a disaster for the Illinois economy" that would hurt small business and families, State Rep. David McSweeney said this morning at an opening session of the conservative Restore Illinois Summit taking place at the Donald Stephens Convention Center in Rosemont.

Illinois is one of a handful of states that uses a flat tax for income tax revenue, a tax system that is mandated by the state constitution. But amid the state's financial problems and the debate over the cost, funding and formula of public employee pensions, there's been a recent push by some groups to move to a progressive tax that would tax wealthy wage earners at higher rates than lower-income wage earners.

McSweeney was part of a breakout discussion by a trio of conservative leaders at the all-day summit speaking out against the proposals.

The Barrington Hills Republican said the adoption of a graduated tax formula is in actuality a move to increase taxes and that higher tax rates would drive business out of the state.

"We need to focus on adopting real pension reform and cutting spending, not raising taxes," McSweeney said. "The best way to produce new revenue in Illinois is to create a better environment for small businesses and job creation."

Among the other speakers, Benjamin Van Metre, a budget and tax policy analyst with the Illinois Policy Institute, said, "politicians in Springfield are asking Illinois taxpayers to write them a blank check. They want Illinoisans to vote on a progressive tax without knowing the established rates. That's like buying a car and letting the dealer decide the interest rate on your auto loan after you've already signed the paperwork."

Todd Maisch, executive vice president of the Illinois Chamber of Commerce, called the graduated income tax proposals "a tax increase on small business," saying that "most small businesses are sole proprietors ... Revenue from these kinds of businesses are taxed at the individual rate. This means a small-business owner will have less money to reinvest in their business or hire more workers."

Because of the constitutional issue involved, advocates of the switch to a graduated formula would need a super three-fifths majority approval in both houses of the state legislature to put the question on a referendum ballot, presumably in November 2014.

Among proponents is the Center for Tax and Budget Accountability, which argues a graduated tax would provide a more stable revenue stream and that the added taxes on the wealthy would be a fair assessment based on ability to pay. While the group describes itself as a bipartisan think tank, the sponsors of the legislation it envisions are all Democrats.

Also among the proponents is the Illinois Education Association. The teachers organization is strongly promoting the graduated tax as a fair way to raise money for schools. In a promotional flier, the IEA says of the current flat tax: "This unfair tax burden starves our public schools and universities of needed resources and hurts our economy."

Saturday's summit in Rosemont is one of the year's biggest conservative gatherings in the Chicago area. It is scheduled to draw broadcast celebrities from Fox News and conservative radio, as well as appearances by all four hopefuls for the Republican gubernatorial nomination next spring -- Bill Brady, Kirk Dillard, Bruce Rauner and Dan Rutherford.