H-F Area LWV Holds Program on a Fairer Income Tax

Does Illinois need a Graduated Rate/Fairer Income Tax?  This was the question that was addressed at a recent program meeting of the Homewood-Flossmoor Area League of Women Voters which took place at the Homewood Library.  Claire McIntyre, LWVIL Issues Specialist, and her colleague, Kathy Tate-Bradish, presented a proposal which explained how a fairer income tax structure would bring in about $2.4 billion more in annual state revenue and a reduced tax for 94% of taxpayers. 

Illinois’ flat tax policy constrains the long-term economic growth in the state’s private sector by over taxing our best consumers, low and middle income families.  This practice directly reduces consumer spending because over time, their income in real inflation adjusted terms has been flat or declining.  Illinois’ tax system ranks 3^rd highest in tax burden for low income families of all states. The lowest 20% of Illinois earners (under $18,000), have the largest tax burden (13.7%), with the highest 1% ($500,000 and up), paying only 5.3%.

The Illinois Constitution requires the income tax to be a flat tax system.  Of the 41 states with an individual income tax, all but 7 have a graduated tax rate structure. A graduated rate income/Fair tax could lower the tax rate of 94% of Illinois’ taxpayers who earn under $150,000 while raising the effective rate on those making over $500,000 by just 3%. 

A graduated rate income/fair tax would not be a new tax, but a new and fairer revenue system.  This fair income tax will not hurt the economy but will actually help it.  The nine states with the highest graduated income tax rate structures had better growth in the state GDP per capita, better change in median wage, and identical unemployment rates than the 9 states with no income tax.

If Illinois can amend its Constitution to allow for a graduated rate/fair income tax, we could cut the overall tax burden for the vast majority of taxpayers, raise new revenues and eliminate the structural deficit, pay the bills the state owes its vendors, stimulate growth in jobs, fund those essential services that citizens consider a priority, and provide a fairer tax system for all Illinois taxpayers.

Co-Program Chair Kate Atkins-Trimnell made arrangements for the evening's program.

 For more information on this topic, please see www.lwvil.org. Or contact Issues@lwvil.org.