The Washington, D.C.,-based Tax Foundation is raising the alarm about a proposed graduated income tax in Illinois.
Tax Foundation Vice President of State Projects Joseph Henchman said they don’t often hold press conferences in state capitals about their reports, but “this report is focused on a proposal that we thought was so alarming enough in its implications that we thought it was necessary.”
The report says if Illinois moves to a graduated rate the state’s business competitiveness would go from the middle of the pack to near the bottom compared to other states.
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Voices for Illinois Children’s Emily Miller supports the graduated tax. Miller said the proposal provides tax cuts for 99 percent of Illinoisans while at the same time will bring in $1.9 billion of more revenue.
“I just wish at this point we could move forward and start agreeing on some things,” Miller said.
Though they won’t go as far as to call it a bait and switch, the Tax Foundation says a constitutional change would give lawmakers too much tax rate leway.
Miller said a graduated tax will allow lawmakers to increase tax rates on higher earners. Right now, Miller said, the flat tax means rates would have to change for everyone.
“They have to increase taxes on low- and middle-income families. They do not have a choice but to continue taxing the middle class,” Miller said.
Henchman said if the state’s constitution is changed to allow for a graduated tax, rates could be set at whatever the legislature determines.
“They’re not necessarily limited to only hitting very high-income people,” Henchman said.
Henchman said the proposed graduated tax would hit small businesses hard and would lower the state’s competitiveness in their Business Tax Climate Index from 23 to 48.
The proposal remains in the House and requires a constitutional amendment.