Monday, September 25, 2023

On constitutional flat taxes in Illinois


Both the Illinois Federation of Teachers and the National Education Association support the Illinois Allow for Graduated Income Tax Amendment, commonly called the Illinois Fair Tax Amendment, a proposed change to the Illinois state constitution that will allow the General Assembly to restructure the tax code so that individuals who earn more will pay income taxes at a higher rate than those who earn less.

Workers in Illinois currently pay income taxes based on a flat tax structure, where the same percentage of an individual’s adjusted gross income is collected in taxes, regardless of how big or small that income is. For example, a person who makes $20,000 a year would have a 5 percent income tax rate, or about $1,000, while an individual who makes $200,000 a year would also have a 5 percent income tax rate, or about $10,000.

In June 2019, Gov JB Pritzker, a Democrat, signed SB 687, which would enact a graduated income tax if voters approve the ballot measure. SB 687 would change the state’s income tax from a flat rate to six graduated rates beginning on January 1, 2021.

State income tax structures (Source: Tax Fdn. via Ballotpedia)

Illinois is one of just a few states to use a flat tax structure. Other states are Colorado, Indiana, Kentucky, Michigan, New Hampshire, North Carolina, Pennsylvania, Tennessee, and Utah.

Proponents claim the state must pay for essential workers and priorities like public health, education, and public safety without unfairly burdening low-income families. A research study by the Institute on Taxation and Economic Policy, a national nonprofit that analyzes taxes, shows how the current flat tax “exacerbates income inequality and racial wealth gaps.”

But although the current administration promises to raise taxes on the rich and give everyone else a tiny tax cut, opponents of the constitutional amendment ask, Why should we trust the government of the future? The Chicago Tribune presents a long list of broken promises from Illinois Democrats. And the Illinois Commerce Commission, which also opposes the amendment, writes on its website: “A flat rate tax does not promote divisive class warfare rhetoric or purposefully attempt to re-distribute income according to a subjective fairness standard. A flat rate tax requires all taxpayers to vigilantly stand guard against excessive government spending.”

Paul Katula
Paul Katula is the executive editor of the Voxitatis Research Foundation, which publishes this blog. For more information, see the About page.

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