Today, only about one third of the states have a flat income tax as now exists in Illinois. Such taxes impose the same percentage tax on a multi-millionaire as on a janitor. Furthermore, the legal deductions and credits that are usually available to those in higher income brackets often make tax rates for the wealthy actually lower than those of the middle income and poorest citizens.
In the spring of 2019, the General Assembly passed, and the Governor signed, legislation that would leave it up to the voters to approve fairer tax rates. When you vote on November 3rd, 2020, vote “Yes” to allow this change to become legal.
Currently, the tax rate for individuals in Illinois is 4.95%. For almost all of us, our tax rates under the new plan would not change or may be marginally smaller. This is due to Public Act 101-0008, which was enacted along with the referendum authorization. This law will take affect only if the referendum passes. Under it, single payers would pay a tax rate of:
- 4.75% on a range of $0-$10,000
- 4.90% on a range of $10,000 – $100,000
- 4.95% on a range of $100,000 – $250,000
- 7.75% on a range of $250,001 – $350,000
- 7.85% on a range of $350,001 – $750,000
- 7.79% over $750,000
Married/joint filers would pay:
- 4.75% on a range of $0-$10,000
- 4.90% on a range of $10,000 – $100,000
- 4.95% on a range of $100,000 – $250,000
- 7.75% on a range of $250,001 – $500,000
- 7.85% on a range of $500,001 – $1,000,000
- 7.79% over $1,000,000
The current corporate rate of 7.0% would go to 7.99% on all corporate income. *
Additionally, the law would increase the tax credit for homeowners from 5% to 6%. Lastly, the new law would allow a $100 per child tax credit for couples earning less than $100,000 or single persons earning less than $80,000. Compare these rates with your tax payments from previous tax years and see if they would increase significantly, if at all. We doubt it.
Critics argue that this would be a new taxing power. This is incorrect. Actually, it is nothing more than a restructuring of our current tax system. With this restructuring, the middle class and working poor will receive a long needed break.
People opposed to this restructuring maintain that these rates can be raised by a simple change in the law. However, changing the law is not that simple. While tax rates can be adjusted, the current tax structure has already been changed. Years ago the tax rate was 3% and fluctuated up and down to the 4.95% rate that exists now. Legislators can change the law but they are very fearful of doing so as they know citizens get very angry over tax increases. They will be very reluctant to make any changes in the law.
Others have argued that the State needs to make cuts to improve our balance sheet, but other than “pension reform”, they never indicate exactly what cuts should be made or how much. And previous attempts at pension reform have consistently been ruled unconstitutional by the Illinois Supreme Court, preserving all existing guaranteed pensions.
The proposed tax structure would bring in an estimated $3.4 billion in revenue. These funds can be used to fulfill many State obligations such as money for universities, schools, social services for the elderly and disabled, and road maintenance. At the same time current debt, which hovers around $7 billion, can be reduced.
Will a graduated income tax solve all of the State’s financial problems? Of course not, but it can be a start in the right direction in righting our financial ship. A serious attempt to pare down our State’s economic woes would also impress the bond rating agencies to improve our credit rating and make it cheaper to borrow money in the future.
The Illinois Green Party strongly urges voting “Yes” on November 3rd for the graduated income tax to allow the State to have a fair income tax. It is the right and proper thing to do.
* Source: Office of State Senator Ram Villivalam