Ald. Edward Burke, that noted political economist, has devised a new theory of taxation. All taxes should be permanently capped; people should never have to pay more than they did the year before.
What a truly remarkable gift to the citizenry. Say, for example, that you just got a big promotion at double your salary. You`re luckier than you think. Under the Burke proposal, you will pay no more in income tax than you did the year before. In fact, you`ll never pay more the rest of your life, even if your salary climbs to a million.
Or suppose you`re furnishing your first house and piling up big bills at the department store. They won`t be as big as you think. Remember, you pay no more in sales tax than you did the year before.
Add a new wing to the house and reap still more benefits from the Burke plan. The addition is forever exempt from property tax. That, too, is frozen forever.
Sounds wonderful, doesn`t it? Of course, the salaries of government employees will be forever frozen, too, giving them less spending power year after year as the cost of living goes up. And the things government must buy to serve its citizens–police cars, polio vaccine, firefighting equipment, street repairs–can never again rise.
Mr. Burke may not have had time to figure out how a government, a business, a family or anyone else who buys goods and services can remain permanently immune to rising costs. His theory of capped taxes is still quite new, born the moment he saw Mayor Washington`s proposed 1986 budget.
For weeks he had been spreading the word that the mayor was about to pop some fat tax increases on the people of Chicago. Then Mr. Washington outlined his budget, and it included a 20 percent cut in the head tax business pays for each employee and a cap on utility taxes, which in recent years have been soaring along with gas and electric bills. No chance there for Mr. Burke to scowl for the cameras and squawk his disapproval.
Ah, but what`s this? The property tax rate would remain the same, but doesn`t that mean a higher amount for homes and businesses that have been newly assessed at higher levels? Of course it does, just as the amount of income tax rises when your salary goes up, even if the rate remains constant. Local governments and local school districts, park districts, county boards and other taxing bodies have traditionally counted on rising property values to help pay for rising costs of labor and supplies. This year the growth in Chicago property values will provide an extra $50 million for city government, even if the tax rate remains the same.
The money is needed to help pay for the reduced business tax, the capped utility tax and forthcoming labor agreements that have been in arbitration or negotiation for as long as two years. But need and fairness can be easily brushed aside if you assume that people pay more attention to your scowl than to the substance of what you`re saying. Ald. Burke had what he wanted: a chance to scold about a tax increase. It`s phony, but maybe no one would notice.
Mr. Washington has made a number of economies in city spending and should make still more. But he`s got to contend with a big, past-due labor bill this year in addition to normal increases in costs. He also wants to add 500 officers to the police force. Managing all of that without an increase in tax rates will require cuts in the number of city employees and reduced spending in other areas.
Managing all of that with a permanent cap on city taxes–in effect, a tax cut–is more than any fair-minded person should expect.
