Too bad way too few Illinoisans will ever learn that this will cause tax hikes on Illinois’ middle class. Here are Orphe Divounguy and Bryce Hill:
The current progressive income tax proposal would fail to pay down the state’s unfunded liability while damaging Illinois’ economy.
On May 20, Democrats in the Illinois House Revenue & Finance Committee approved Gov. J.B. Pritzker’s prized progressive tax constitutional amendment. While the Senate had previously passed a new income tax structure – already different from the governor’s original proposal – the House Committee also passed the amendment without putting in income tax rates.
Pritzker and other proponents of replacing Illinois’ flat income tax with a progressive tax have claimed the switch would allow the state to fund its skyrocketing pension obligations, pay off its bill backlog, spend more on education and social services, enable property tax relief and more.
But progressive tax proponents need to face that without pension reform, Illinois’ crushing public employee retirement debt will consume every new dollar generated with a progressive tax – and will require further tax hikes to fully pay off pension debt, as Pritzker has advocated. Illinois could lose up to 95,000 jobs and the economy could suffer up to $18 billion in economic impact were it to try to use a progressive tax to pay off the state’s unfunded pension liability within 40 years, a new Illinois Policy Institute study shows.
Current progressive tax proposals
While Pritzker has been campaigning for months on his own proposal, the rates and brackets passed out of the Senate are different from the governor’s. Pritzker’s proposal levied a 7.95% flat rate on the highest income bracket while the plan passed out of the Senate features a 7.99% flat rate on the highest income bracket. That top bracket also now kicks in at a lower level for single filers: $750,000 instead of $1 million.
The state’s corporate income tax rate would also be bumped up to 7.99% from 7%. Pritzker’s plan hiked the corporate income tax to 7.95%.
Read more about the coming tax hikes on Illinois’ middle class: Illinois Policy Institute
Image credit: Illinois News Network.