Pritzker’s proposed tax and fee hikes on average Illinoisans total more than those on ‘the rich’

The upward march of Illinois’ core cost drivers – pensions and government worker health insurance – cannot be paid for by tax hikes on small groups. Without reform, tax hike proposals on all Illinoisans will continue flowing from the Statehouse.

Illinoisans across the state have rightly been focused on Gov. J.B. Pritzker’s “fair tax” push. That’s the $3.4 billion income tax hike requiring a constitutional amendment to axe the state’s flat income tax protection.

This constitutional change would end up hurting middle-class Illinoisans, too. But Pritzker’s message for now is short and sweet: soak the rich – not you.

It’s misdirection.

Illinoisans need to know that the “fair tax” is just one of 19 tax and fee hikes proposed by Pritzker since taking office. In total, they take an additional $6.9 billion from taxpayers. And more than half of that money – nearly $3.5 billion – comes from taxes and fees on ordinary Illinoisans, not “the rich.” In fact, many would disproportionately hit up the poor.

Here are just a few of the tax and fee hikes Pritzker has proposed in his budget and preliminary capital plan that would affect residents regardless of income.

Doubling the state gas tax ($1.2 billion): A draft of Pritzker’s capital plan states that “Illinois currently has one of the lowest motor fuel taxes in the nation.” This is misleading. When adding up all the layers of taxes and fees Illinoisans pay on gasoline, they currently pay the 10th highest average total state and local gas taxes in the nation, according to the Tax Foundation. The Prairie State is one of just seven states where drivers pay general state and local sales taxes on gas purchases. Drivers also pay underground storage and environmental fees of 1.1 cents per gallon, along with various local charges.

Upping the state motor fuel tax to 38 cents from 19 cents per gallon, generating an estimated $1.2 billion, would make Illinois’ average state and local gas tax burden the second-highest in the nation. Filling up in Chicago, for example, would come with a total tax and fee burden of 39% – or 96 cents in taxes and fees on a $2.46 gallon of gasoline.

Nearly doubling the maximum vehicle registration fee ($490 million): Pritzker’s capital plan imposes a new cost structure based on the age of the car. Illinoisans pay a $101 annual fee for vehicle registration. That would jump to $199 for vehicles 3 years old or newer, $169 for vehicles 4-6 years old, $139 for vehicles 7-11 years old, and $109 for vehicles 12 years and older.

The $199 registration fee for newer vehicles would be higher than any neighboring state and third-highest in the nation, according to Ballotpedia research. Illinois’ vehicle registration fee was just $79 as recently as 2009.

New tax on managed care organizations ($390 million): Pritzker’s proposed budget calls for a new state tax on managed care organizations. And while budget documents from the administration focus on organizations involved in Medicaid-related services, federal law requires the tax to apply uniformly to private sector managed care organizations. Higher costs, of course, are then passed down to consumers in the form of higher premiums.

Rideshare tax ($214 million): Pritzker wants to fund his capital plan in part with a new, statewide tax of $1 per ride on ridesharing services such as Uber and Lyft.

New 7% tax on cable, satellite and streaming services ($150 million): Streaming services such as Netflix and Hulu would come with a statewide 7% tax under Pritzker’s capital plan. Chicago already stretches the definition of its 9% citywide “amusement tax” to include online streaming services such as Netflix and Spotify, as well as Playstation rentals.

Retailer tax hike ($133 million): Pritzker’s proposed budget reduces a tax credit available to retailers for collecting sales tax on behalf of the state, generating an estimated $75 million for the state and $58 million for local governments. These higher costs will also be passed on to consumers.

Cigarette tax hike ($55 million): Illinois’ cigarette tax is already among the highest in the region, driving sales across state lines. Pritzker’s proposed budget would hike the cigarette tax rate by 32 cents per pack. Senate President John Cullerton is calling for a $1 per pack increase, which Pritzker is reportedly on board with.

Plastic bag tax ($19 million to $23 million): A new 5-cent statewide tax on plastic bags would hit up Illinois shoppers for as much as $23 million in state revenue under Pritzker’s budget proposal. No U.S. state currently collects a statewide plastic bag tax.

All of this is to say: when defenders of the state’s flat income tax claim the governor’s plan will result in middle-class tax hikes, that doesn’t mean those tax hikes will come only from the income tax.

The upward march of Illinois’ core cost drivers – pensions and government worker health insurance – cannot be paid for by tax hikes on small groups. Without reform, tax hike proposals on all Illinoisans will continue flowing from the Statehouse.

Need proof? Just look at Pritzker’s first six months in office.