PI Original Adam Doster Friday January 29th, 2010, 1:36pm

Daley's Own "Class War"

This week, Mayor Richard Daley derided the state of Oregon for approving two ballot initiatives that raise taxes on businesses and the wealthy to plug a portion of the state's budget hole, describing it as "class war."  But if Daley really cares about tax fairness, he should look at how the wealthy avoid paying their fair share here in Illinois.

Sometimes, you just have to wonder why he keeps the "D" next to his name.

Sensing an opportunity to boost Chicago's ailing convention industry, Mayor Richard Daley derided the state of Oregon for approving two ballot initiatives this week that raise taxes on businesses and the wealthy to plug a portion of the state's budget hole. He said that city officials will now attempt to convince Oregon businesses to relocate in the Windy City and went so far as to suggest that Oregon voters engaged in a "class war" by approving the tax hikes. From the Sun-Times:

“What happened in Oregon is not good news for Oregon. They believe that anybody who makes $125,000 or more [annually] or businesses or anyone who makes $250,000 -- they’re gonna start taxing them. They call them ‘rich people,’ ” the mayor said.

“I’ve always thought America stands for [rewarding success]. You finish high school. You work hard, go to college and you hope to succeed in life. I never knew it’s a class war -- that those who succeed in life are the ones that have to bear all the burden. I never realized that. It will be a whole change in America that those who succeed and work hard [that] we’re gonna tax ‘em more than anyone else.”

That's a whole lot of nonsense.

Let's start with some facts about the Beaver State.  Families earning over $250,000 per year in Oregon make five times more than the median household income. If those taxpayers -- who only constitute about three percent of the state's population -- don't qualify as "rich," who does?

Next, Daley says that Oregon voted to "start taxing" the wealthiest among them. That's not quite right, either. The state already had a progressive income tax on the books. Measure 66 simply created an additional higher tax bracket. Those that qualify will now pay 10.8 percent in income taxes, up from 9 percent. (Remember, Oregonians pay no sales tax and only limited property taxes.) And these are marginal tax rates, meaning the new rate will only apply to their share of earnings above $250,000. Daley also forgot to mention that the new revenue will help the state avoid more crippling cuts to schools and social services.

The last line of Daley's quote is perhaps the most ridiculous. Let's put aside his suggestion that only the wealthy and successful "work hard." Is Daley not aware that, for almost a century, the federal government has utilized a progressive income tax system, one that taxes the wealthy at a higher rate? And that it's a central plank of the Democratic Party (of which he's theoretically a lifelong member)? And that when a taxing body extracts income at a flat rate, like in Illinois, it's the poor who bear a far heavier burden than the rich?

Meanwhile, certain Democratic lawmakers are trying to right that wrong and bring sustainability to the state's budget. Passing such a bill in this economic environment is going to take a lot of political courage. Tax-wary conservative Democrats, including many from Chicago's North Side, are going to have to stick their necks out and approve a tax reform plan to prevent the state from going under. How is their mayor contributing to that effort?  By providing pols with political cover -- just a year-and-a-half after his own schools chief voiced support for a state income tax increase!

If Daley is so worried about issues of tax fairness, he should note that the richest Illinoisans (those making over $1 million per year) appear to be shielding as much as half of their earnings from the state's already-low income tax.  Closer to home, Chicagoans across the board are now paying higher taxes in order to bankroll public subsidies for his favorite corporations.

Who's waging a "class war" again?

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