Automatic Annual Gas Tax Increases in Illinois

Right on schedule, the new year will bring (yet another) onerous increase in gas taxes for Illinoisans: the gas tax is set to be increased to 42.5 cents per gallon, effective January 1, 2023. The state gas tax was 19 cents per gallon before J.B. Pritzker took office—meaning the gas tax has more than doubled in the last four years.

Elections have consequences and people’s memories are very short. Not only did Pritzker immediately raise the gas tax upon his installment as governor in 2019, he made yearly tax hikes automatic to account for inflation. But out of caution for Election 2022, he delayed the regularly scheduled tax hike until after the election. Instead, Pritzker required gas station owners to put stickers on their pumps that said:

“As of July 1, 2022, the State of Illinois has suspended the inflation adjustment to the motor fuel tax through December 31, 2022. The price on this pump should reflect the suspension of the tax increase.”

The Illinois Fuel and Retail Association fought the overtly political and partisan law in court, but the case was thrown out. Yes, this is Illinois. Since they were still required to post Pritzker’s propaganda (or pay a $500 fine), IFRA member gas stations also planned to post signs pointing the finger at the governor for the gas tax hikes as well as a QR code that would direct customers to an online gas tax calculator.

Unfortunately, such efforts to inform the public of Pritzker’s antics were not enough. Now one piece of legislation is attempting to postpone the increase for a few months. HB 5829, if passed, would delay the tax hike until July, 2023. The bill, however, does not touch the annual automatic increases.

So what’s an Illinois citizen to do? HB 5829 does too little and is too late. It simply kicks the can down the road a short distance. Pritzker won. He has no incentive to delay the hike. Illinois gas taxes are among the highest in the nation—second only to California’s ghastly 54 cents per gallon—but Governor Pritzker appears to have his eyes set on first place. As of December 2nd, the average gas price in Illinois was $3.70 per gallon, compared with the national average of $3.38 per gallon—a 32¢ difference!

Take ACTION: Click HERE to send a message to your state lawmakers to ask them to rescind the automatic tax increases on gasoline in Illinois. Remind them that working families are getting squeezed with inflated costs for groceries, electricity and heating. There is no good reason to automatically increase taxes on gasoline every year. Illinoisans want relief at the pump.

Lawmakers need to stop toying around with trifling measures like the proposed gas tax hike delay. Measures such as HB 5829 kick the problem a couple months down the road and give citizens the illusion of stability, but in reality, it just delays the inevitable. As long as J.B. Pritzker’s unjust automatic annual tax hike remains on the books, Illinois’s citizens are going to face greater and greater financial burdens at the gas pump. Serious action needs to be taken to protect Illinois citizens from the financial overreach of their government.

Please contact your lawmakers—something needs to change.

The Internet Sales Tax: A Threat to Small Businesses and Federalism

Written by Ken Blackwell

A number of critical decisions are set to be released by the Supreme Court this month. One in particular could have wide-ranging impact on our economy and on the very principle of federalism.

Court Cases

In South Dakota v. Wayfair, the Court will decide whether to uphold its earlier decision that states cannot force businesses to collect and remit sales taxes unless the businesses has a physical presence in their state. A bad decision from the court — as well as possible legislation from Congress — would lead to Internet sales taxes. This would harm hundreds of thousands of small businesses across the nation and change the very face of the Internet economy.

In 1992, the Court decided in Quill Corp vs. North Dakota that states do not have the power to impose sales tax burdens on businesses with no physical presence in their state. This important precedent has prevented states from being able to tax, audit or regulate businesses and individuals that do not reside in their state.

State and local governments — and some allies in Congress — have tried to find a way to undo this precedent. The lure of additional revenue proving too tempting to pass up. The Wayfair decision will determine whether we continue this critical model — as will subsequent decisions by Congress.

Complications for Small Businesses

An entrepreneur who starts an online business should not be turned into a national tax collector. There are currently over 10,000 sales tax jurisdictions in the United States. If an Internet sales tax goes through, these small businesses will now be forced to figure out and collect the taxes for all those different jurisdictions.

As a former local and state official, I know firsthand how complicated these taxes can be. Certain products will qualify for one rate. A different product will have another tax rate. The taxes in one city, town or county will differ from the rate in other parts of the state.

Hard working entrepreneurs on their own, or with a few employees, would have to navigate that maze of taxes. Most will likely have to hire accountants or tax lawyers to help them figure it out — cutting into the bottom line for a small business. This will jeopardize profits and jobs.

More worrisome, such a tax would suddenly make those businesses vulnerable to audits or tax bills from states or localities they do not reside in or vote in. As a conservative, the last thing I want to see is entrepreneurs targeted by aggressive tax collection and audits from officials in other states.

As a letter signed by numerous conservative and taxpayer groups earlier this year pointed out, “dismantling the physical presence protection for remote retail sales could throw open the floodgates for states to aggressively attempt enforcement of not just their states tax laws, but also business and individual income tax rules, and even activist regulatory obligations on out-of-state entities.”

Taxation Without Representation

The Internet sales tax would be a rejection of our nation’s long-held belief in no taxation without representation. Allowing authorities to tax people who do not live or vote in their state and who will not benefit in any way from those taxes goes against the system of federalism that our founders created.

Supporters of the sales tax have claimed that states are losing tremendous revenue. The facts say otherwise. Former Rep. Chris Cox has long been a champion against Internet taxes. He pointed out in a recent WSJ op-ed that despite the claims by South Dakota in the case, “[t]he state’s own data show that sales and use tax revenue grew from $787.7 million in 2013 to $974.7 in 2017 — considerably faster than the state’s rate of economic growth.” He added that sales tax revenue has been booming in most states.

A Form of Cronyism

While it may seem like an Internet sales tax is a good way to stick it to some giant online retailers who are getting away with not paying their taxes, the exact opposite is true. The tax would in fact be a form of cronyism that helps these big retailers.

Amazon and Wal-Mart, among many others, already collect sales taxes since they have a physical presence all over the country. Those companies want an Internet sales tax because it would harm the small businesses who are competing with them. It gives the giant companies greater advantage. They have the resources and the personnel to figure out thousands of tax laws — small companies do not.

Pushing Internet Taxes

The coming court decision is not the only danger to small businesses. In recent years, many members of Congress, including Republicans who should oppose higher taxes, have tried to advance legislation that would allow such Internet taxes. During the omnibus spending bill debate, members tried to include this tax — with the support of Speaker Ryan.

Many believe there will be another attempt during a lame duck session. The GOP is having great success in cutting taxes, rolling back regulation and turning the economy around. The last thing they need to do is allow higher taxes and more intrusive government — as an Internet sales tax would do. Polls have consistently shown that Americans overwhelmingly oppose an Internet sales tax.

The coming weeks and months will be critical in this debate. Entrepreneurs and supporters of free-market principles must stand strong and fight any attempt to impose Internet sales taxes. We cannot allow policies that would raise taxes, hurt small businesses, and discourage entrepreneurship. We cannot undo the concept of no taxation without representation to help some big retailers and satisfy the revenue desires of politicians across the nation.

Ken Blackwell, a former Ohio State Treasurer, Ohio Secretary of State and Mayor of Cincinnati, serves on the boards of the National Taxpayers Union and the Club for Growth. He also served as a domestic policy advisor to the Trump Transition team.

No Taxation without Moderation

We’re all familiar with the old adage that the only two things certain in life are death and taxes. Yet, one major difference between the two is that for death, there are never any increases per capita and everyone has a flat rate. That certainly can’t be said for the taxes, particularly in Illinois.

According to recent statistics, Illinois ranks lower among all states in nearly every economic category than five years ago, including a bleak 49th in the nation in job growth.

Despite these depressing indicators, Illinois lawmakers continue to propose new legislative projects and programs that would siphon more money from hard working citizens for various pet projects, including a proposition from House Speaker Michael Madigan (D-Chicago) to spend $100 million taxpayer dollars on a Barack Obama Presidential Library.

It seems everywhere you turn, there are new taxes and/or additional taxes being proposed. Here are a few examples:

Earlier this year, retiring State Representative Naomi Jakobsson (D-Champaign) introduced legislation for a graduated income tax to replace the flat income tax in Illinois. The bill is currently tabled for the session. Nevertheless, support among Democrats is rising; this legislative proposal had collected 38 co-sponsors.

A group called the Transportation for Illinois Coalition is calling for a .04 per gallon increased tax hike on gasoline.

State Senator Mattie Hunter (D-Chicago) recently sponsored legislation to impose an additional tax on soda.

Chicago Alderman Bob Fioretti (D-2^nd Ward) is calling for a new commuter tax for those suburban residents who work in the City.

Chicago Mayor Rahm Emanuel recently withdrew his proposal to raise the property taxes in the City.

And when Governor Pat Quinn gave his annual budget address to the General Assembly in March, he didn’t mince words about making permanent the “temporary” income tax increase they had burdened Illinois’ families and businesses with three years ago.

To justify the continuation, Gov. Quinn proposed a $200 million increase in funding for education, all part of his plan for a $6 billion increase in education funding over the next 6 years. Few can criticize spending money on children, but are they really the beneficiaries?

According to the Illinois Policy Institute, 70 percent of new education spending has been spent on teacher pensions. And even if all the money was spent directly on the classroom those positive impacts may be countered by harm caused by continuous taxation. Consider that one of the most vital factors in a child’s environment is the stability of a family. Study after study tells us that a family environment that is financially stable and has parents actively involved in a child’s life is critical to a child’s success in school, even more important than the total amount of time in the classroom.

Yet increasing taxes only add to the financial burdens of parents and families. Taking a greater percentage of income from working families often require parents to work longer hours and results in greater financial stress, lower disposable incomes and ultimately less time for parents to spend with their children. We are taking needed revenue away from a child’s primary care givers and giving it to a much less effective secondary source. The guise that “It’s for the children” is a suspicious justification for increasing tax burdens.

Illinois is expected to generate $36.66 billion in revenues for the 2014 fiscal year, $588 million more than previously expected. These are record setting amounts, yet the current financial crisis is not expected to improve. According to the Illinois Policy Institute, since the tax increases there has been $18 billion in new state revenue, yet state pension debt has increased by $17 billion, along with increases in the aggregate amount of unpaid bills and the interest the state must pay on those overdue bills. Furthermore, the state’s bond rating has been downgraded five times. And yet there is no sign from Springfield that there is any change of course in the future.

It seems that our elected officials have been something less than good stewards with the state’s finances and yet they are again asking for more. Is there any reason to believe that there will be different results? Until proven otherwise, it is time for the citizens of Illinois to say enough to the government bloat, waste, and incompetence. To our elected officials, read our lips and count our votes: no new taxes.

TAKE ACTION: Click HERE to send an email or a fax to your state representative and state senator to let them know what you think of the effort to make the “temporary” income tax hike permanent. The voters of Illinois expect their elected officials to keep their promises. Let them know that you oppose any new tax increases when they refuse to cut government waste and bloat.

You can also call your lawmakers through the Capitol Switchboard at (217) 782-2000.

Stand with Illinois Family Institute!

Are the Mega-Rich Really Taxed Less Than Secretaries?

By Brittany Smith, World Magazine

President Barack Obama makes it sound as if there are millionaires all over America paying taxes at lower rates than their secretaries. “Middle-class families shouldn’t pay higher taxes than millionaires and billionaires,” the president said Sept. 19.

The data tell a different story, though. On average, the wealthiest people in America pay a lot more taxes than the middle class or the poor, according to private and government research. The wealthy pay at a higher rate, and as a group they contribute a much larger share of the overall taxes collected by the federal government.

In 2009, 1,470 households filed tax returns with incomes above $1 million yet paid no federal income tax, according to the Internal Revenue Service. But that was less than 1 percent of the nearly 237,000 returns with incomes above $1 million.

In his White House address Monday, Obama called on Congress to increase taxes by $1.5 trillion as part of a 10-year deficit reduction package totaling more than $3 trillion. He proposed Congress overhaul the tax code and impose what he called the “Buffett rule,” named for billionaire investor Warren Buffett, who said he wanted to be taxed more.

Obama’s rule says, “People making more than $1 million a year should not pay a smaller share of their income in taxes than middle-class families pay.”

The problem with the Obama-Buffet tax hike is that there are some important facts missing. “When Buffett receives dividends and capital gains, it is true that he pays ‘only’ 15 percent of that money on his tax return,” said Dan Mitchell, a tax policy analyst for The Cato Institute. “But dividends and capital gains are both forms of double taxation. So, if he wants honest effective tax rate numbers, he needs to show the 35 percent corporate tax rate.”

This year, households making more than $1 million will pay an average of 29.1 percent of their income in federal taxes, including income taxes and payroll taxes, according to the Tax Policy Center, a Washington think tank.

Households making between $50,000 and $75,000 will pay 15 percent of their income in federal taxes.

Lower-income households will pay less. For example, households making between $40,000 and $50,000 will pay an average of 12.5 percent of their income in federal taxes. Households making between $20,000 and $30,000 will pay 5.7 percent.

The Tax Policy Center estimates that 46 percent of households, mostly low- and medium-income households, will pay no federal income taxes this year. But most will pay other taxes, including Social Security payroll taxes.

State Democrats Pass Massive Income Tax Increase

How did they vote?

Illinois lawmakers approved a 66 percent increase in the state’s income tax in the final hours of a lame duck session.

Despite tens of thousands of calls, emails, faxes and letters in opposition to increased taxes, our state legislators decided to raise the state’s personal income tax from the current 3 percent flat rate, to 5 percent and the corporate income tax rate from 4.8 percent to 7 percent.

The bill number is SB 2505.

In the Illinois House, our state representatives voted 60-57 in favor of this measure late Tuesday night. (The House needed 60 votes to pass it.) The Illinois Senate voted 30-29 in favor of this tax hike in the wee hours of Wednesday morning. (The Senate needed 30 votes to pass it.)

These votes were ushered through by House Speaker Michael Madigan (D-Chicago) and Senate President John Cullerton (D-Chicago) without a single Republican vote in favor. According to the Chicago Tribune, Governor Pat Quinn (D) is “happy” about the passage of these tax increases and is expected to sign the bill into law in the near future.

This lame duck session of the Illinois General Assembly ends today at noon.

We have one last chance to communicate to Governor Quinn about this anti-family proposal which will take much needed resources away from our family budgets to feed the ever increasing and insatiable demands of our growing state government.

Click HERE to urge Governor Quinn to VETO SB 2505. Tell him we do not have a tax problem — we have a spending problem!

Look at the chart below to see how your state representative voted, or you can download it by clicking HERE. To see how your state senator voted, click HERE.

**Please note: All state legislative seats will be up for election in 2012.