The Board of Directors of the Elmhurst Chamber of Commerce at its Tuesday, Oct. 12 meeting voted to endorse the Illinois Chamber of Commerce’s opposition to the Graduated Income Tax Amendment, or “Fair Tax,” to the State of Illinois Constitution on the Nov. 3 General Election ballot.
The Directors vote was without dissent (with four abstentions) based on a recommendation from the Governmental Affairs Committee, one of the Board’s four Standing Committees.
“Fair Tax” proponents favor those who earn more to pay more (or their fair share), while opponents—the Illinois Chamber of Commerce, Illinois Policy Institute, business associations and others—fear that the amendment will hand legislators a “blank check” on income tax hikes for all residents down the road.
“While our state certainly is in desperate need of additional revenue to address a nearly $7 billion budget funding deficit, this amendment clears the way for state lawmakers with a long history of fiscal mismanagement to hike the tax rate on any group of income taxpayers limited only by their own legislative discretion,” stated John R. Quigley, ECCI’s president and CEO.
The Fair Tax is projected to generate an additional $3.6 billion from individuals and $350 million from businesses—still leaving Illinois with a multi-million-dollar budget shortfall.
As proposed, taxpayers earning more than $250,000 annually will pay the higher rates of 7.75 percent, 7.85 percent ($350,000) and 7.99 percent ($1 million), while an estimated 97 percent of residents will pay 4.95 percent or even less. The corporate income tax rate will increase to 7.99 percent, up from seven percent (not counting a 2.5 percent replacement tax), impacting an estimated 100,000 small businesses.
Under Illinois’ current flat rate of 4.95 percent, individuals who earn more income are already paying more in income taxes.
While among only nine states with a flat income tax rate, Illinois ranks lower than its bordering states of Iowa (8.5 percent), Wisconsin (7.6 percent), Missouri (5.4 percent) and Kentucky (5 percent), with only Indiana (3.23 percent) lower. It compares favorably among 43 states that levy individual income taxes.
Since 1969—the year when an income tax (then only 2.5 percent) was first instituted—Illinois’s Constitution has mandated that any income tax must be imposed at a single rate for all individual taxpayers, regardless of their level of income. Over the past 51 years, the income tax rate as ranged from as low as two percent to as high as five percent.
Illinoisans currently pay the nation’s second-highest property taxes (New Jersey ranks No. 1) at $2,400 for every $100,000 in home value and the average state and local sales tax burden in Illinois is 8.78 percent, according to a study by Kiplinger, a financial forecasting service.
The amendment will need either the approval of 60 percent of voters voting on the question, or greater than 50 percent approval from all voters who cast election ballots.
