Why progressives keep losing the battle to tax the rich
Bring Chicago Home’s loss at the polls is the second time a progressive tax has failed in Illinois in recent years: first, a graduated marginal income tax, the unfortunately dubbed “fair tax,” and now an increase in the real estate transfer tax on buyers purchasing property of more than $1 million.
Opponents of the Bring Chicago Home referendum made it seem like increasing a tax on millionaires would be a disaster for homeowners across the city, regardless of the value of their property. They told voters that the measure was essentially an increased property tax in disguise, and the tactic worked.
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In both cases in which a progressive tax was put to a vote, the majority of voters, who would have financially benefited from these taxes, voted against them. So what are we missing?
Arguably, the way campaigns explain progressive taxes to voters needs to be overhauled. Bring Chicago Home tried to win on its altruistic merits and with a “make the rich pay their fair share” message. The fair tax literally baked the same message into its name. Message discipline is important, but only if the message works, and “pay their fair share” clearly has a ceiling.
America’s history of hating unfair taxes goes back to our days as a British colony. The modern-day Tea Party movement that gave way to Trumpism capitalized on Americans’ innate distrust of taxes, and even Democrats whose political ideology isn’t shaped by cutting taxes, still don’t so much like taxes as they see their necessity. The bottom line is that people just don’t buy the concept of a tax being fair. We might as well be branding these “good taxes,” which sounds like something out of the TV series “Parks &Rec.”
It’s not that voters don’t want a fair system. It’s that what’s fair is up for debate, and that debate distracts us from the tangible outcomes progressive taxation would deliver.
While Bring Chicago Home regroups, the mayor’s office, the City Council and the other proponents need to put pen to paper and better define where the tax revenue would go. Chicago doesn’t need more slush funds. We need plans voters can have confidence in — and we need to protect ourselves from predictable political attacks.
We also need to expose the opponents’ duplicity in diminishing the public’s trust. Take one of the primary detractors of Bring Chicago Home: the Chicago Association of Realtors. We’re living in a bizarre age in which the real estate profession is being glamorized by reality TV shows such as “Selling Sunset” and “Buying Beverly Hills.” Donald Trump himself is a cash-poor “real estate tycoon.” It’s brilliant public relations for an industry whose average members don’t wear designer clothes, much less sell luxury real estate. And it’s PR that embeds largely positive views of Realtors in the public’s mind — it makes them seem sophisticated, fun and ultimately trustworthy. (Team Christine all the way.)
That’s the glamorous image members of the public see. What they didn’t see during the Bring Chicago Home campaign is that Realtors have been living high on the hog, taking 5% to 6% commissions, when the average in many other countries is between 1% to 3%, as reported by The New York Times. That’s all about to change due to a settlement reached by the National Association of Realtors in which it is being forced to give up its artificially inflated commissions as it battles numerous antitrust lawsuits.
That’s right. The Realtors balked at how Bring Chicago Home’s marginal tax increase, which would be paid by only 5% of Chicago property buyers, would affect the real estate market, all the while taking 2 to 5 percentage points more than the free market allows when sellers are able to negotiate the commissions they pay. Whose thumb is really on the scale? Certainly not the homelessness advocates who originated this policy idea.
People might not love the idea of voting in favor of a tax — even one that benefits them — but they really don’t like siding with people who’ve hustled them, and close to 53% of voters were hustled.
Conservatives are very good at appealing to people’s anger and feelings of betrayal. It’s not pretty, but it’s time progressives do the same.
