While taxes imposed by municipalities and states are often debated on economic, efficiency or equitable grounds, the justice of taxation is rarely a subject for discussion.
But we need to have that debate in Illinois, where our government has become predatory, perverse and unjust.
We believe government may justly compel a range of things, including taxation. The premise behind government of, by and for the people is that everyone is created equal and free, and that therefore just government does not rule, it serves; just government does not impoverish, it enriches.
So, taxation is just, even though compulsory, when imposed by an elected government pursuing common welfare. For example, we generally agree that taxes imposed for our common defense, to alleviate poverty or to enhance opportunities in the community are just because they create a better, stronger community for us all.
When is government unjust? When a strong few -- such as a king and his knights -- tax to enrich themselves, or when a government does the opposite of what it should do, such as taking something from the community, piling up what has been taken and burning it.
Predatory governments serve themselves, not the community as a whole, and perverse governments impoverish the community instead of enriching it.
Which brings us to Illinois.
Illinois is the least tax-friendly state in the nation, according to both Kiplinger’s and WalletHub, and so Illinois’ population shrinks while population in neighboring states grows. As people leave or decide not to come, property values fall; WirePoints estimates that Chicagoland homeowners lost more than $250 billion in recent years. This massive loss in property values not only dwarfs the revenue Illinois and its municipalities collect each year, it’s greater than some measures of our unfunded pension debt. However, no one benefits from this property loss -- it’s as if the government took a portion of each resident’s wealth, piled it up and burned it.
Residents of Illinois do not receive better government services for their higher taxes; they receive less and less because an extraordinary growing share of all government revenues are devoted to paying past promises to Illinois’ valuable government workers.
Government must offer competitive compensation to attract people who will provide excellent services to its communities. Taking care of government employees is necessary for any government to function. However, generations of politicians didn’t actually put up the money to pay for their generous promises. As a result, funding those pension promises is becoming a core purpose of Illinois’ government and the obsession of its leadership, making our government both predatory and perverse.
As Illinois keeps increasing taxes on middle-income Anne (who has no pension) to pay ever greater pension benefits to government worker Jay, not only is Anne paying more for the same or less service, but the value of Anne’s house and nest egg for her own retirement falls too. When government knowingly causes Anne, with no pension, to lose money for her retirement to pay Jay’s pension, government is serving Jay, not Anne.
Our government’s focus on funding Jay’s increasing pension is becoming futile as tax hikes raising money for him hurt Jay too -- because a shrinking tax base leaves less to fund his increasing lifetime pay.
Nor is increasing taxes on the rich a practical alternative: Illinois’ liabilities are too vast and the rich are too few -- and they can leave too, which means more taxes for Anne and more uncertainty for Jay. Scaring rich or ambitious people away is unfair to everyone.
This is Illinois today: a place where government causes everyone to lose -- and that’s perverse. The state has entered a self-reinforcing spiral of failure, with shrinking wealth, a shrinking population and shrinking pension funds too, despite the ever higher taxes to save them.
Illinois leaders need to face and fix the structural problem making our government unjust; government needs to restructure in order to refocus on serving and building communities. The only way out of this death spiral is lower taxes, which means we must reduce liabilities driving taxes higher -- which means pensions must be reset to be fair to workers and sustainable for taxpayers.