April 24, 2024

Eye On Illinois: Tax collection, disbursal mechanics invite obfuscation, muddle accountability

Be wary of “reformers” who argue only that the system is broken without proffering reasonable solutions.

I wrote that sentence last Saturday. Today’s plan is taking the advice.

Obviously the big news of the week was Gov. JB Pritzker’s budget and state of the state address. Just as obvious was the reactions, all generally predictable based on the reactor’s established ideology. But in reading the Capitol News Illinois recap, one passage stood out.

“Some of the starkest criticisms of Pritzker’s proposal came from the advocacy groups for the organizations that will be hardest hit by his proposed revenue changes,” wrote Jerry Nowicki. “That includes the Illinois Municipal League, which called Pritzker’s plan to repeal a 1% statewide tax on grocery items ‘insulting,’ because it does not include a corresponding reimbursement plan for local governments. Lawmakers paused the tax for [fiscal 2023], but that move reimbursed municipalities for the $400 million not collected due to the temporary hiatus.”

As with similar gas tax fiddling, that move never made much political sense. It’s pitched as putting money back in the pockets of everyday folks, but if a full year grocery tax suspension only cost the state $400 million, and there are about 12.5 million residents, that shakes out to $32 per person. If someone handed you 62 cents per week, would sincere gratitude be in order?

A different way to consider this issue is emblematic of the (intentionally?) confusing state and local tax structure that enables politicians to play such games. The IML also is upset about the state returning less than 7% of state income tax receipts because it was 10% before the 2011 tax increase. Again, political gamesmanship: does a smaller percentage of a bigger pie yield the same amount of calories?

It’s easy to find sympathy for local governments being told how to operate but not allowed the money to execute those directives. It’s just as easy to understand why we can’t have a system in which every taxing body has its own tax rates, collections and disbursement protocols. But Pritzker effectively undercut the criticism by stating the obvious: a local government can set its own grocery tax, so the only real impediment is political will.

Further, he noted a plan to cap at $1,000 the monthly credit retailers can claim for administering sales tax, a move that should provide $85 million to locals and $101 for the state. Again, the impact is in the eye of the beholder.

It’s perhaps impractical, but I’d appreciate legitimate proposals to eliminate as many of these shell games as possible. Governments need money to operate, but taxpayers would benefit from knowing which officials are directly collecting how much. Obfuscation muddles accountability.

• Scott T. Holland writes about state government issues for Shaw Media. Follow him on X, the platform formerly known as Twitter, @sth749. He can be reached at sholland@shawmedia.com.

Scott Holland

Scott T. Holland

Scott T. Holland writes about state government issues for Shaw Media Illinois. Follow him on Twitter at @sth749. He can be reached at sholland@shawmedia.com.