It is a commonplace of Illinois politics that each new governor has a prison cell fitted out for him along with his election certification. And sure as the swallows return to Capistrano, Illinois’s new Democratic Governor Jay Pritzker is under investigation for tax evasion.
But this story is important for more than just illustrating the usual Illinois chronic political corruption. Pritzker comes from one of the wealthiest families in America, and yet gamed the property tax system to reduce his property taxes by $330,000. How did he do it? By having workers remove all the toilets from an expensive lakefront home (conveniently located right next door to his current mansion) thus classifying the structure as “uninhabitable,” thereby reducing its tax liability. Meanwhile, Governor Pritzker is trying to pass several tax increases on the citizens of Illinois in the state legislature right now. Not a good look.
But this story has applications to Elizabeth Warren’s proposed “wealth tax” of 2% on all household assets over $50 million. Just as Pritzker managed to game the valuation system (for the moment anyway) to avoid a hefty property tax bill, you can bet that there will be a booming industry for the ultrarich to classify or value their assets in such a way as to minimize their tax exposure. Schemes like Pritzker’s will be rampant.
Never mind for the moment that the richest 1 percent of Americans currently pay about 37 percent of total income taxes collected; if you really want to soak the rich, the best way to do it is to adopt a flat tax with very limited deductions, and put a cap on charitable deductions so the Buffetts and Gates and Rockefellers of the world can’t shelter their fortunes from taxation by setting up tax-exempt foundations. And then watch the left scream when you propose that.