By refusing to allow two bills to receive hearings while the state’s General Assembly was in session, Illinois lawmakers rejected proposals to change the state’s income tax structure from a flat tax to a progressive one that would impose higher tax rates on earners with higher incomes.
A resolution proposed by state Rep. Christian Mitchell (D-Chicago) would have asked voters to approve a ballot question endorsing an amendment to the state’s constitution to allow a progressive income tax, taxing individuals at different rates depending on their income.
Another bill, sponsored by state Rep. Lou Lang (D-Skokie), proposed increasing the amount of money taken from high-income individuals living in the state, by raising the progressive income tax rates in the state.
As currently required by the state’s constitution, Illinois taxpayers are taxed at the same percentage of income regardless of how much they earn. Lawmakers did not formally consider either bill before the Illinois General Assembly’s session ended in May.
Spreading the Suffering Around
Ted Dabrowski, vice president at the Illinois Policy Institute, says progressive income taxes impose heavy economic costs on many more people than just the rich.
“You can look at states across the country, and the best one to look at is California,” Dabrowski said. “The higher tax rates creep down to the middle-income and even below middle-income [taxpayers], to the point where it becomes a burdensome tax on everybody, not just the rich.”
Progressive Taxes ‘Very Dangerous’
Dabrowski says progressive income taxes discourage hard work and suppress the economy.
“A progressive tax is very dangerous because it punishes success,” Dabrowski said. “Income taxes by their very nature are not good, because they punish people for work. It’s important that we preserve the flat tax, which treats everybody equally; it’s the same rate for everybody. Anything other than that, and you’re just punishing someone and punishing success at some random and discriminatory rate.”
‘Low and Flat’
Joseph Henchman, vice president of legal and state projects at the Tax Foundation, says Illinois’ flat tax may be the only fiscal bright spot for taxpayers living there.
“The proposal would eliminate the one redeeming feature of the state’s tax system,” Henchman said.
“Property taxes are high, sales taxes are high, corporate taxes are high, but the income tax is low and flat,” Henchman said. “I think that’s a big reason the state’s economy is so strong, and Chicago’s economy is so strong, despite the state’s budget woes.”
Ben Johnson ([email protected]) writes from Stockport, Ohio.
Jared Walczak and Joseph Henchman, “Illinois Considers an 11.25 Percent Tax on Small Businesses,” Tax Foundation, April 26, 2016: https://heartland.org/policy-documents/illinois-considers-1125-percent-tax-small-businesses/