The Great Tax Swap Controversy

One of my pet reform ideas was actually seriously considered in the Illinois Statehouse recently. The state legislature actually took up a proposal to alter the school funding system by cutting property taxes and raising income taxes. Members of the Senate's Higher Education Committee even approved the plan on an 8-1 vote, sending it to the floor for consideration. Of course, it ain't really going to happen.

I don't really know enough about this particular proposal to know whether it was a good plan or not. Apparently it raised income taxes, and then replaced about a third of each district's property tax revenue with state funds. Property owners would then receive a tax abatement. Additional funds would be redirected to poor districts from the general fund, with the result that people in wealthy areas would have their taxes hiked to fund schools in poor districts.

It sounds very progressive, although since they are replacing a proportion of property taxes, it sounds like rich areas are still going to get better schools. Even with the extra money redirected to poorer areas, it sounds like the state will inevitably be sending more money to rich kids than poor ones, which sounds unfair, although still better than the current system.

But it isn't going to happen, because Governor Rod Blagojevich says he will veto anything that looks like a tax hike. I want to be a supporter of the dashing young first Democratic Governor in 30 years. But I can't. He's being a big coward on this issue. Everyone says education is their big issue, but no one will ask for any sacrifices on the part of the population to do anything about it. G Rod (yes, out of staters, we really call him that) is in the way on this and other issues, he'd rather grandstand than pass legislation, and he doesn't seem to have the people skills to work with other leaders of his own party in a productive manner. George Ryan might have been on the take, but at least stuff got done.

To be fair, G Rod isn't the only chicken this spring. "People don't want to vote and see the bill fail, and then have an opponent use it negatively against them in a campaign," according to longtime Jesse Jackson confidant the Rev. James Meeks, an independent Senator from Chicago.

So why would I support this thing? A little back of the envelope calculation revealed it would cost me a couple thousand bucks. But here's the lowdown:

• Local funding of schools creates inevitable disparities. It encourages planners to zone out young families with children (with minimum lot sizes and restrictions on multi-family and rental properties), and zone in malls and other property-tax producing dynamos. In this way it distorts the landscape, promotes sprawl, and increases segregation.
  
• High property taxes forces people out of their homes and neighborhoods. Today's real estate market has not been a boon for everyone. Young families and retirees are forced to move by taxes they can't pay.
  
• Cutting property taxes will reduce the upward pressures on rents and increase the availability of affordable housing.
  
• Once funding disparities are addressed, we can begin focusing on school reform for real. Nobody's going to attempt anything really significant until they know the money's going to be there to pay for it long term.

So while the idea's dead again this year, this is an idea whose time will come. And all you religious people out there, pray for a contested Democratic primary.