Chicago City Wire

When Illinois public employee unions bought the Chicago Sun-Times in summer 2017, financial analysts questioned the decision.

The newspaper industry, after all, was in a death spiral, hemorrhaging advertisers and paid subscribers. The Sun-Times was a well-known critical case; eight years after filing for bankruptcy, it was still losing a reported $8 million per year.

Three years later, the newspaper isn’t yet returning cash on the unions’ investment. But it is delivering air support in their most important state public policy battle of the past half century. 

In their quest to persuade Illinois voters to allow hiking state income tax rates on select groups, like small business owners, the Sun-Times’ newsroom has aggressively taken its owners’ side. 

The Illinois State Constitution currently prohibits so-called “graduation” of income taxes, mandating all state taxpayers be treated equally. 

For leading state government employee unions like Service Employees International Union (SEIU) and the American Federation of State, County and Municipal Employees (AFSCME), a graduated income tax represents the mother lode. 

It would allow their legislative super-majorities to use the Illinois state income tax code to reward friends and punish enemies, tapping long-coveted new sources of tax revenue to supplement exhausted ones. The net: higher salaries and richer pensions for public union members.

“Beware the disinformation campaign”

Last month, after John Canning, one of Chicago’s most successful private equity investors, argued in a Crain’s Chicago Business column against allowing graduated income tax rates, the Sun-Times editorial board countered five days later with a response imploring readers to “beware the disinformation campaign.”

Canning’s point— that raising taxes would give politicians more tax revenue to spend but wouldn’t improve Illinois’ financial woes— was "false" and “disingenuous,” wrote the Sun-Times editorial board.

“Business groups and anti-tax zealots have waged a disinformation campaign to turn you, the voter, against (the amendment),” wrote its editorial board. “They make alarmist claims that don’t hold up.”

Among them— the argument that graduated income taxes in other states have typically led to higher rates for not just wealthy, but also middle-class taxpayers. That’s like in California, where anyone earning $56,000 or more now pays 9.3 percent in state income taxes-- more than twice the current rate in Illinois. 

An analysis by Wirepoints calculated that a $75,000 per year earner in Illinois would have to pay nine percent in state income taxes under Pritzker’s spending plans.

Arguments like Wirepoints’ were omitted from “Everything you need to know about the Graduated Income Tax,” a primer on the debate for Sun-Times readers, written by Sun-Times political reporters Tina Sfondeles and Rachel Hinton.

Far from “everything,” Sfondeles and Hinton didn’t include “anything” other than arguments from Gov. J.B. Pritzker in favor of the measure.

“With a constitutional change, the Pritzker administration estimates that 97% of Illinois residents will see at least a modest decrease in their income taxes,” wrote Sfondeles and Hinton.

“Racial inequality” is the result of flat income tax rates, according to Addison Woodward, a state pensioner and board member of the Center for Budget and Tax Accountability (CTBA), a pro-tax advocacy group funded by many of the same public employee unions that own the Sun-Times.

The Sun-Times published a letter to the editor from Woodward on Sept. 1, describing him as a resident of Streeterville, where public records show he lives in a $1 million condominium. It didn’t disclose his longstanding work for the newspapers’ ownership.

“The citizens of Illinois need to support a progressive (graduated) income tax or be prepared to see a substantial increase in the flat tax or a huge cut in services,” Woodward wrote.

State tax to the max 

The average Illinois household pays property and sales taxes that are among the highest in the nation and now owes $52,000 in state government debt, mostly to public employees who didn’t put enough away to fund their own retirements.

That’s like Woodward, who saved a total of $128,902 over 31 years of state work but has already collected $1.651 million in retirement, according to state pension records.

His windfall is emblematic of how, even as the state loses residents and businesses, public employee unions have continued their winning streak. 

Approval of a graduated income tax would represent their biggest win yet, tapping a new source of government tax revenue that can be used for future member salary and pension increases.

Illinois state government workers’ annual pay now ranks second in the U.S., higher than California and New York, according to the U.S. Bureau of Economic Analysis. 

Amidst the COVID-19 lockdown-- which prevented private businesses from operating and kept state government offices closed-- governors in New York, Washington, Pennsylvania and Virginia all delayed their planned state government worker pay increases. 

But Gov. Pritzker went ahead with Illinois raises on July 1. That’s even while he cited the state will have a $6 billion budget deficit this year.

When Illinois first enacted a 2.5 percent state income tax in 1969, the state had 11.1 million people, a $33 billion annual budget and $8.7 billion in debt, adjusted for inflation.

Today, Illinois has 12.6 million people, a $43 billion annual budget and $250 billion in debt.

The state’s population has risen 14 percent, its annual spending 30 percent and its debt nearly 2,800 percent over the period.