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119 13. Getting Behind the Tax Increase of 1983 Harold Washington made history when he beat incumbent mayor Jane Byrne and Richard M. Daley in the primary and then topped Republican Bernard Epton in the general election. Jim Thompson was elected in 1982 to a third term as Illinois governor . (There are no term limits for governor in Illinois.) He squeaked out a win over the Democratic candidate, Adlai E. Stevenson III, by 5,074 votes. For a few weeks, nobody knew for sure who won. Stevenson went to court to fight for a recount, but after weeks of legal wrangling, the Illinois Supreme Court rejected Stevenson’s challenge. By the time Thompson’s third term began on the second Monday in January 1983, Springfield already was buzzing about whether Illinois might increase the state income tax. It had become clear to everyone only after Thompson won reelection in 1982 that the state was in deep financial trouble. He took a lot of heat when he started talking about the state’s budgetary issues because he had given no indication of major problems during his campaign. I guess he knew there was going to be trouble, though, because he put together a blue-ribbon tax reform commission, chaired by James Furman, executive vice president of the Chicago-based MacArthur Foundation. The commission released a report in December 1982 advising an income tax increase from 2.5 percent to 3 percent on individuals and a 50 percent decrease in local property taxes allocated for elementary and secondary education.1 Those on the commission called this a “tax swap.” They had eighteen additional recommendations, such as broadening the sales tax to include professional and trade services, not just sales taxes on material goods. Their idea would cause consumers to pay sales tax on services from attorneys, plumbers, barbers, artists, doctors, and many others. Within days after all the swearing-in festivities, I became the first legislative leader to call for passage of a state income tax increase. In getting behind the tax increase of 1983 120 doing so, I was ahead of the governor. I taped programs for WBBM and WMAQ radio in Chicago, which played on the third Sunday of January, and called for an increase in the income tax from 2.5 percent to 3 or 4 percent. I also said we needed to pump up the gasoline tax from 7.5 cents to 9.5 cents a gallon. The state had a structural deficit of about half a billion dollars in fiscal year 1984, which was already half over, and we were going deeper into the red. To generate a large amount of new revenue, we always looked for a variety of revenue streams, not just one. Thompson initially called for an increase in liquor, cigarette, and gasoline taxes, but he hadn’t said anything about income taxes. I said it would be too minor to increase only the sin taxes and the gasoline tax.2 I told the governor to do everybody a favor and tell it like it is. Many of my friends, political and otherwise, thought I was suffering from “politically terminal lunacy” by going public with the idea of an income tax increase before anyone else did.3 I did not know what the political repercussions might be for getting out first with the proposal. Illinois had not increased the income tax since its inception in 1969, fourteen years earlier. I told the radio audiences and reporters that twentyeight states had increased some taxes in 1981, and thirty states did so in 1982. So we weren’t the first state needing more revenue during that difficult recession. Some people say the worst time to raise taxes is during a recession because citizens already are hurting. But the truth is, some people always say it’s the “worst time” to raise taxes. The economy was indeed terrible in 1983. The numbers seem staggering even now: Illinois lost 350,000 manufacturing jobs between 1971 and 1982, and the percentage of Illinoisans working in manufacturing deteriorated rapidly from 31 percent to 22 percent during those years. We also gained 134,000 trade jobs and 288,000 service jobs during that time, but overall, those service sector jobs paid a lot less than the lost manufacturing jobs.4 Since Thompson didn’t mention the income tax increase in his inaugural address, we waited to see what he would say in his State of the State address, which ordinarily is...

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