BUDGET CRISIS OR REVENUE FIGHT?

JUNE 29, 2015

• Income inequality is growing quickly

• The 1% are living in a VERY different world from the rest of us

AVERAGE HOUSEHOLD INCOME

before taxes

• The very rich get richer…

•…but pay less and less in taxes!

AVERAGE TAX RATES FOR THE HIGHEST-INCOME

TAXPAYERS

1945-2009

• It’s not just the income of the 1% that is rising…• We have seen soaring corporate profits.

Even while corporate profits have been rising, they pay less in taxes.

•Our economy has changed but the corporate tax code has not kept up.

•The percentage of corporate profits coming from the financial sector has rapidly grown.

Finance & ManufacturingShare of Domestic Corporate Profits

As Corporate Taxes Go Down,Government Borrowing Going Up!

(Outstanding municipal bonds in billions)

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

• From under $500 Billion in 1980 to nearly $4 Trillion in recent years!

• Force us to cut and borrow by not paying their share in taxes…

•…Then make profit when we borrow from them…

•…Then tell us we have to “live within our means” and cut even more!

So, the SAME PEOPLE:

•To raise the revenue required for the services our communities and state need – we have to look to where the money IS. We can’t get sufficient resources from where the money isn’t: working families.

Why Now?• We are facing crisis level cuts

to our communities and emergency revenue is needed.

• And many of the progressive solutions are not “winnable” in

the very short term…

• So why step up our efforts for progressive revenue now ???

1. Danger of Focusing Only on “Stop the Cuts”• There are risks to stopping cuts and winning short term (and regressive)

revenue without launching robust efforts for progressive revenue at the same time.• We run the risk of playing into the hands of those policy makers that are

aggressively pushing for cuts, allowing them to say:

We took another pound of flesh from the taxpayers of Illinois. Now we have even

more obligation to live within our means

and cut cut CUT!

2. Opportunities to Raise Real Solutions

• The budget crisis allows us to get a hearing on real solutions that would have been dismissed at other times.• We know a revenue package of some variety

will be passed to move us temporarily out of this crisis. • Without a strong push for progressive

revenue, there is little chance that that package will include anything but regressive revenue options. • We have the opportunity to start on the path

to winning larger policies by achieving progressive short-term policy wins.

3. Changing the Debate

• Changing the public discussion won’t happen overnight.• The terms of debate are set for us:

manufactured budget crises, stopgap regressive taxes, and more pushes for cuts. Year after year we get diminishing returns.• The problem is not a budget that was broken

by too much spending on human services or overpaid workers.• The problems is community needs that are

left unmet. The solution is a public system that is able to address them.

4. Opportunities to Educate• There is a lot of work to do to educate

the public on these issues and convince even our own constituencies that this is possible.

• We are finding receptive audiences in many different settings.

• When we connect it to the needs of their community, people want education on the economy, the crisis, what caused it and how to solve it.

5. It’s Time for Sustainable Solutions

• It’s a multi-year crisis. We need a multi-year campaign for bold, smart solutions.

• Since we know we will be back here again – next year’s state budget (and probably every year remaining in Rauner’s term), but also at the city, county and school board level – the time is right to launch a multi-year campaign that can win progressive revenue over time.