What You Ought to Know In regards to the Illinois Truthful Tax Legislation

In November of this year, Illinois voters will decide whether to pass a constitutional amendment that lifts the current ban on tiered income tax. If the amendment is passed, it would pave the way for Governor JB Pritzker Signature of the tax plan which passed last spring. Under this plan, the flat income tax of 4.95 percent would be replaced by a progressive tax, which means that residents with higher incomes would gradually pay higher tax rates between 4.75 and 7.99 percent. Rates for net income over US $ 250,000 depend on whether taxes are filed by an individual or collectively. Of the 43 states that have tax wages and salaries, Illinois is one of them nine states with a flat tax structure.

In an interview with The Maroon, Amanda Kass, the deputy director of the Government Funding Research Center At UIC College of Urban Planning and Public Affairs, she said she wanted voters to be informed of what the change would actually do. “It is important that the constitutional amendment does not introduce sentences,” said Kass. “Which income tax rates apply and which are taxable is still up to the general assembly and the governor. The proposal to amend the constitution differs from the tariff structure approved by the General Assembly. Voters should really consider these two things as separate. “

While the new tax plan increases the tax rate for the highest income brackets, lower and middle income households would pay the same or a lower amount under the new plan. The youngest government Data It is estimated that the median household income in Hyde Park is $ 54,140 per year. Under Pritzker’s plan, only households earning $ 250,000 or more would be subject to an increased tax rate.

According to Data from the Illinois Treasury via the Chicago TribuneTwo percent of residents of 60637 would see a change in their tax rate to cover households between East 55th and East 71st and from South State Street to Lake Michigan. That number is 3 percent in zip code 60615, which extends north-south from east 55 to east 47 and east to west from South State Street to the lake.

In the past few months, Governor Pritzker has spent millions of dollars of his own money promoting the tiered income tax. Proponents of the bill predict At least 97 percent of residents would receive a tax cut. Another argument in favor of tax legislation is that it would bring much-needed income to the state. Even before the financial burden of the COVID-19 pandemic, Illinois was struggling with a large budget deficit. The state has Billions of dollars worth of debt and currently holds the worst credit rating of a US state. Governor Pritzker has set himself the task of solving these problems and has advocated a progressive income tax as the solution that only increases taxes for the richest people.

Notable opponents of the change are prominent university donor and founder of the Citadel hedge fund, Kenneth C. Griffin and the Illinois Chamber of Commerce. Critic of the bill fight that it would give state lawmakers uncontrolled powers to raise taxes in the future, which could potentially result in businesses and high net worth individuals leaving the state.

The evidence for this claim is mixed. For example a study The study conducted by Stanford University on states with “millionaire taxes” showed that migration of people with high incomes occurred, but not to a significant extent. The study’s report states, “Millionaires are not very mobile and actually have lower migration rates than the general population. This is in part because family and corporate responsibility are higher among the top income earners, thereby embedding individuals in their local regions. “

Yet even if a simple exodus of wealthy individuals is unlikely, others argue that a progressive income tax could have other undesirable consequences. Dr. Paula Worthington, professor at the Harris School of Public Policy at the University of Chicago, said, “People who choose to stay may choose different choices about their workload or investments. You can do this to limit your tax liability or to protect yourself from those higher taxes. ”

These more subtle forms of tax avoidance would lead to increased inefficiencies in the tax system. Dr. Worthington believes that this behavior is likely to intensify if the state continues to raise income taxes beyond what Governor Pritzker is currently proposing. This possibility would affect the long-term success of a progressive tax system to fill the government budget gap.

However, if the change is not approved, Illinois budgetary problems may force Governor Pritzker and the General Assembly to find other avenues to raise funds. If the change to allow for a progressive tax structure is not approved, a flat rate tax increase or a new tax on retirement income could be imminent.

The proposed amendment, Public Act 101-0008 (full text Here) will be elected on November 3rd. At least 60 percent of voters would have to approve this measure for it to be passed. If it comes into force, the new tax system will come into effect on January 1, 2021.

The text of the ballot size can be found Here.