For more than 40 years, the League of Women Voters has supported a graduated-rate income tax for Illinois.
In May of this year, the General Assembly finally decided that the public can vote on whether the Illinois Constitution should be amended to remove the requirement that income may only be taxed at a flat, non-graduated rate.
Only four states, including Illinois, still mandate a flat tax. The proposed change, reflecting the federal income-tax system, would allow for higher incomes to be taxed at higher rates, and lower incomes at lower rates.
The league believes that a progressive income tax is a fair tax because it is based on the ability to pay. Currently, Illinois has one of the most regressive overall tax structures in the nation. A progressive income tax is the only tax that can be designed to correct this burden on low-income taxpayers.
In Illinois, the bottom 20 percent of wage earners currently pay almost twice as much of their total income for state and local taxes as the top 20 percent. This is an unjust burden on our poorest residents.
As the income gap between rich and poor in the United States continues to grow, taxing our highest earners at a rate proportionate to their increasing concentration of income growth could also make a real difference in addressing the state’s well-known fiscal crisis. The proposed amendment will not itself change the current rates, but it will allow for them to be graduated.
Recently passed and signed by Gov. J.B. Pritzker, SB 687 would assure that at least 97 percent of Illinois households will see no income-tax increase and that most middle- and low-income families would receive a small tax cut under the new provisions. Only taxpayers making more than $250,000 a year would pay more.
Our state faces about $6.5 billion in unpaid bills despite making painful funding cuts. Since 2000, reductions in spending on core services (health care, human services, education and public safety) have exceeded 20 percent in inflation-adjusted dollars. Cuts to higher education have approached 50 percent. With the new rate structure, a fair tax could raise at least an additional $3 billion each year, revenue that Illinois sorely needs to regain fiscal stability.
Most of the arguments against the progressive income tax are not supported by data-driven, peer-reviewed studies. Even with these proposed rates, Illinois rates will remain below those of many of our neighboring states.
There is no data to support the proposition that increases in income tax drive out high-income residents. Additionally, over the last decade, states with high income-tax rates have shown higher economic growth than states with no income tax. That is not to say that high rates attract growth, but simply that it is not a factor in depressing economic growth. See the data for yourself at: https://youtu.be/ZbcOyUK2gIk.
In the general election in November, at the top of the ballot, we will have a chance to amend the Illinois Constitution to allow a graduated income tax. To amend this section of the state constitution, approval is needed by either a majority of those who cast a ballot, or by three-fifths of those who do not skip the question and vote on the proposed amendment.
For decades, the state has notoriously “kicked the can down the road,” saddling an enormous debt on future generations. It is time to put the state on a steady path to meet its obligations with a modern income-tax structure. The league urges you to vote yes on the Fair Tax Amendment.
Trisha Crowley is president of the League of Women Voters of Champaign County.
via The News-Gazette
July 26, 2020 at 10:26AM