The election countdown calendar hits nine weeks today. One reader reached out looking for guidance on an issue not getting enough attention:
“Please do a column giving the real pros and cons of the Illinois tax reform we are to vote on this fall,” she wrote. “I am really confused about it and I don’t trust any of the ads I am hearing.”
I’ve not heard the advertising — they must not run during baseball broadcasts — but I agree the question is crucial.
“I am wondering if the graduated tax is really beneficial to lower income people or are we just giving a blank check to them to raise taxes down the road? They seem to get us coming and going. Are we better off staying with the flat tax? What are the real pros and cons?”
Right now Illinois’ personal income tax rate has to be the same for everyone. The rate can change (it’s presently 4.95%) but it’s always unilateral. Voters are being asked to amend the constitution so Illinois, like the federal government, 32 states and Washington, D.C., can have income tax brackets. The measure requires 60 percent in favor to pass and would take effect Jan. 1.
That’s the easy stuff. Things get complex when trying to calculate your personal exposure. For starters, income is taxed in tiers, so no matter how much you earn overall, your taxes are calculated in chunks.
Lawmakers already approved the first set of brackets. Everyone’s first $10,000 is taxed at 4.75%. The next $90,000 is at 4.9%. The next $150,000 is 4.95%. Ultimately, if your household earns $250,000 or less, you’d pay less in the first year of the new plan.
Who pays more? Above $250,000 there are different percentages for single filers and joint filers between 7.5% and 7.99% depending on status and income. This should apply to only 3% of Illinoisans, and of that 85% live in the greater Chicago area.
Gov. JB Pritzker says the change would give Illinois an extra $1.4 billion through the end of June 2021 and $3.4 billion total over the calendar year.
It’s important to remember those rates, while official, aren’t permanent. Neither are the brackets. Passing the referendum only abolishes the flat tax, lawmakers could tweak rates and brackets as needed every year. Nothing stops them from changing the current rate, but referendum opponents say lawmakers will have fewer impediments with the ability to make changes affecting smaller slices of the population.
Therein lies the dilemma: We’re facing a long-term question with short-term information. And what of sales taxes, vehicle registration, myriad fees and local property taxes?
Voting yes is endorsing change, but the government won’t ever run on less money.
• Scott T. Holland writes about state government issues for Shaw Media Illinois. Follow him on Twitter at @sth749. He can be reached at [ mailto:firstname.lastname@example.org ]email@example.com.
via | Northwest Herald
August 31, 2020 at 04:42PM