Finding progressive solutions for Chicago’s financial troubles

A 1 percent commuter income tax could generate $300 million a year for Chicago. Mayor Rahm Emanuel says it's illegal, despite its inclusion in a city Inspector General's Office report on revenue options. [Photo by Ron Cogswell, Flickr, Creative Commons License 2.0]

A 1 percent commuter income tax could generate $300 million a year for Chicago. Mayor Rahm Emanuel says it's illegal, despite its inclusion in a city Inspector General's Office report on revenue options. [Photo by Ron Cogswell, Flickr, Creative Commons License 2.0]

Mayor Rahm Emanuel made a curious statement Monday as he discussed options for financing his pension reform bill. “I’m against a city income tax,” he said. “And the commuter tax is illegal.”

How is the commuter tax illegal? A number of experts I consulted were scratching their heads over that one. The mayor’s office hasn’t responded to a request for clarification.

The city’s Inspector General’s Office included a commuter tax in its 2011 report on revenue options, and its lawyers noted no legal impediments. They did note that 620,000 nonresidents working in the city take home about $30 billion a year, and a 1 percent commuter income tax could bring in $300 million a year.

The best speculation is that a commuter tax is “illegal” because the state legislature hasn’t yet authorized it. But that’s true of Emanuel’s new hike in 911 fees imposed on landlines and cell phones — it was “illegal” before the legislature approved it. So, for that matter, was Emanuel’s pension package.

Emanuel has said he’s open to discussing options for revenue sources to pay for the pension fix. But he’s rejected out of hand the three options that topped a Sun-Times poll on the question: the commuter tax and a financial transfer tax, both supported by 25 percent of respondents, and a city income tax, which 21 percent supported.

What distinguishes those measures is that they’re based on the ability to pay. Throughout his term, Emanuel has favored regressive revenue sources — hikes in fees for water, cable TV and phones, increased fines and speed camera revenues.

It’s striking how big business interests “continue to frame the policies that Rahm and most other pols in Chicago and Illinois are even willing to consider,” in spite of “the overwhelming popularity and economic sense” of progressive alternatives, said Ron Baiman of the Chicago Political Economy Group, a major proponent of the financial transaction tax.

Aside from our mayor’s apparent bias toward the interests of the wealthy, it’s also true that getting any of these measures through Springfield would be incredibly difficult. And that’s to state the matter with wild optimism.

You can certainly point the finger at House Speaker Michael Madigan — as this column has with tiresome regularity — who’s blocked progressive tax reform in Illinois for a generation, while the state’s finances go down the tubes. But it’s bigger than Madigan. It’s a systemic problem.

Since the presidency of Ronald Reagan, this nation has steadily retreated from progressive taxation, part of a concerted corporate drive to dominate the political system and beat back the populist impulses that emerged in the ’60s, as well as the philosophy of active government that emerged from the Great Depression.

The result: spiraling gains in wealth at the top and decline for the rest of us; a stagnant economy as a hollowed-out middle class can’t provide the consumer demand needed to stimulate real growth.

This is true in Chicago, where fees and fines are loaded onto moderate-income residents, job growth is concentrated in low-wage job sectors, and retirees are losing millions of dollars that would have been spent in our neighborhoods. And taxes that hit the rich are taboo.

The choice is between trickle-down economics — which doesn’t look like it’s working — and a bottom-up approach which grows the economy by building the middle class. The desperate need is for political leadership that will champion a bottom-up approach that supports communities and working families.

Minnesota is one state showing the way. Under Gov. Mark Dayton, the state has raised taxes by $2.1 billion — with 62 percent of the hike paid by the top 1 percent of earners — and invested in education and infrastructure. It’s now the fifth fastest-growing state economy, leading Midwestern states in job creation by a wide margin. On top of that, Forbes Magazine ranked it in the top five states for best business climate.

California is another model. That’s where the anti-tax revolt was born with the passage of Proposition 13 in 1978, which capped property taxes and established a two-thirds margin for legislative action to increase revenues. Gov. Jerry Brown, who signed Prop 13, is back in office; he faced a $25 billion deficit when he was elected in 2010. But he took the bull by the horns, passed on income tax surcharge on the rich and hiked the sales tax. He’s increased spending on schools, health care and food assistance, and invested in high-speed rail — and he’s got a $4.2 billion surplus.

These states are pointing a way out of the economic decline of the United States. It can be done. Why can’t it be done here?

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