Tax, budget group’s director: Higher-ed cuts aren’t helping

URBANA — State budget cuts in higher education and other areas are having a devastating impact on traditionally disadvantaged populations, the director of the Center for Tax and Budget Accountability told a group at the University of Illinois on Monday evening.

Ralph Martire, executive director of the group, said that Illinois needs to broaden its sales-tax base to include more services and should raise its income tax rate (now 3.75 percent) to about 5.25 percent in order to begin resolving its budget problems.

He insisted that the about $7 billion more going into the state’s treasury would have no effect on the Illinois economy.

“When your net tax increase takes less than 5 percent of the economic activity of the governmental entity being studied, it’s too small to be measured,” said Martire, a longtime advocate of more taxation in Illinois. “Put it in context: We have a $770 billion economy. The answer is it will do nothing.

“There is no statistically meaningful correlation between tax policy and economic growth,” he said. “Some of the fastest-growing economies are in high-tax states and some of the fastest-growing economies are in low-tax states. It’s other things that drive economic growth. It’s not tax policy.”

Martire, whose appearance was arranged by state Rep. Carol Ammons, D-Urbana, also said he has given up on a proposal he once championed to enact a graduated income tax in the state.

Illinois now has a flat income tax and, coincidentally, Ammons and a group of legislative Democrats last week said they would renew their call for a so-called progressive tax.

No dice, Martire said.

“When the Democrats had a veto-proof majority in the House and the Senate and the governor’s office, they couldn’t get an amendment (to the state Constitution) to the voters to vote on a graduated tax,” he said. “I’m thinking it ain’t happening now when you don’t have a veto-proof majority of Democrats in the House and you have a somewhat conservative Republican governor,” he said, referring to Bruce Rauner.

Marrure said his group still thinks a graduated income tax is “good tax policy,” but “we don’t work on it at all anymore. The state really needs the money now.”

And if the Legislature and Rauner wait until next year to raise taxes, Martire said, the state would need a 5.5 percent or 5.75 percent income tax rate.

“At some point, if they wait too long, it will be politically undoable, and I don’t know what happens,” he said.

Martire said the state’s recent efforts, including eliminating MAP grants for low-income students, cutting budgets at universities that serve disadvantaged students and forcing schools to raise tuition, are “horrible public policy.”

“Where were our biggest cuts focused? At the universities that catered primarily to minority and low-income populations. It’s really a double-negative whammy from an economic and social-justice standpoint,” he said. “All the economic data show that having access to higher levels of learning is crucial if they’re going to be viable in the modern economy. Yet the state of Illinois has decided to disinvest significantly in all of its universities but in particular those that cater to low-income and minority students.”

And the increased debt on the poorest Illinois families is devastating, he said.

“So they’re going to be burdened with student debt, they’re not going to have the credentials that will get them higher-paying, good-benefit jobs, and they’re going to be going back to their community to do what? It’s horrible public policy,” Martire argued.

“When you really connect the dots, you see that everything the state of Illinois is doing is reinforcing past discrimination. It is creating obstacles to economic advancement for traditionally disadvantaged populations. We have literally done everything wrong if what you’re doing is trying to create access to economic opportunity.”

Martire cautiously avoided blaming any current politicians for the state’s woeful financial condition. But he said that the state’s “disinvestment” in higher education made no sense.

“What is going on with funding higher education at the state level is historic, and not in a good way. This is not a time when this state ought to be disinvesting in its higher-education system,” he said. “Public institutions of higher learning are crucial elements in the network that needs to be available if lower- to lower-middle-income students are to move up the economic ladder.”

He said the state “doesn’t value its higher education,” citing statistics that show that in both real and inflation-adjusted dollars, higher-education funding has dropped since 2000.

“That is a stunning data point. You go back 15 years and see less in nominal dollars being devoted to higher education,” he said. “Illinois is an outlier when compared to other states.”

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April 4, 2017 at 12:17AM

Tax, budget group’s director: Higher-ed cuts aren’t helping

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