JCUA Endorses Campaign for Graduated Income Tax in Illinois

On October 3, 2012, JCUA’s policy committee met with Citizen Action Illinois to discuss the need for a graduated income tax in Illinois. After learning about the state of the tax system in Illinois today, the JCUA has chosen to join Citizen Action Illinois and many other community groups in endorsing the Fair Tax Campaign.

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Some Numbers

Currently, Illinois has a flat income tax rate, which given Illinois’ budget deficits and funding needs, is inadequate also unfair. Consider the following numbers:

  • It has been reported that in 2011, the bottom 20% of households in Illinois bore quite a larger tax burden than the top 20% of Illinois households, as they paid twice as much of their income in state and local taxes than the top 20%.
  • The total tax burden felt by those with an average income of less than $18,000 is 13.7%; however, the tax burden felt by those earning $500,000+ per year is only 6.5%…yes, the group with an average income of $2,084,700 per year bears only a 6.5% tax burden [1].

To put it plainly, those with the lowest incomes end up paying far beyond their means, while the wealthiest households in our state pay what amounts to being a drop in the bucket of their income. Illinois is simply asking too much from those families who are struggling the most in today’s economy.

What Are Other States Doing?

What we’re asking for is nothing new – our neighboring states currently function with more progressive tax systems, and it is not coincidental that these states’ budgets put our state budget to shame. Some facts:

  • 34 of the 41 states that currently employ an income tax system have graduated rates already.
  • Analyses show that if Illinois’s tax base paid Iowa’s income tax rates, Illinois would raise $6 billion more a year, and over half of the taxpayers in Illinois would experience a tax cut of 24% on average. Imagine what this state could do with so much more revenue
  • To make matters even more pressing, the flat income tax increase currently in place will expire in 2015, and taxes will drop from 5% to 3.75%, taking with it about $4 billion in revenue for the state. If you think things look bad now for social services in our state, imagine what they could look like with $4 billion less.
  • By pressuring the state to amend the constitution and incorporate a more fair tax, Illinois would not only build revenue, but according to the non-partisan Center for Tax and Budget Accountability, this would also cut taxes for up to 94% of Illinois residents! (Learn More Here)

How Do We Get This Done?

This certainly is a huge battle to fight, but we feel it is also hugely important, and have therefore chosen to join hands with the Fair Tax Campaign to promote a more fair tax system. To do this requires a constitutional amendment. To get a constitutional amendment on the ballot requires 60% of the General Assembly’s approval, and the ballot proposition must be approved by 60% of voters. This means that the next step in this process is to win legislative and then voter approval. We are ready to stand by and do what we can to bring about a more just tax system in our state, and we feel we are on our way to a more fair future for Illinois. Stay tuned for the next steps in this campaign!

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References:

[1] Institute on Taxation & Economic Policy, Who Pays? A Distributional Analysis of Tax Systems in All 50 States, p. 42, Third Edition, November 2009. Note: this table shows 2007 data updated to reflect permanent changes in Illinois tax law enacted through January, 2012.

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