Friday, February 22, 2013

House Joint Resolution Constitutional Amendment 0002 (for a Graduated Income Tax)

Bill Status of HJRCA0002 98th General Assembly

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ILCON Art. IX, Sec. 3

Synopsis as Introduced
Proposes to amend the Revenue Article of the Illinois Constitution. Provides that individual income taxes may be at a graduated or a non-graduated rate. Provides that any such tax imposed on corporations shall be at a non-graduated rate, not to exceed the average of the lowest and highest individual rates by more than a ratio of 8 to 5. Effective upon being declared adopted.


Prefiled with Clerk by Rep. Naomi D. Jakobsson
Read in Full a First Time
Referred to Rules Committee
Added Co-Sponsor Rep. Linda Chapa LaVia
Added Co-Sponsor Rep. Robyn Gabel
Added Chief Co-Sponsor Rep. Barbara Flynn Currie
Added Chief Co-Sponsor Rep. Elgie R. Sims, Jr.
Added Co-Sponsor Rep. Esther Golar

from THE CASE FOR CREATING A GRADUATED INCOME TAX IN ILLINOIS (Center for Tax and Budget Accountability):

Current Illinois tax policy is neither fair to taxpayers nor designed to sustain funding current service levels into the future.

• One key reason Illinois tax policy fails both the fairness and sustainability tests is that overall the system fails to impose tax burden in a manner that corresponds to ability to pay.

• A tax system must be progressive to impose tax burden in a manner that corresponds to ability to pay. A progressive tax system imposes a greater tax burden on affluent than on middle to low-income earners, when tax burden is measured as a percentage of income. This is needed to track ability to pay, given the significant growth in income inequality over the last 30 years. Because it tracks ability to pay, progressive taxation has traditionally been the cornerstone of fair taxation under capitalist tax policy generally and in America specifically. Far from being progressive, Illinois’ tax policy is regressive, assessing much higher overall tax burdens as a percentage of income on low and middle-income families than on affluent families. Indeed, Illinois has the third highest tax burden on low income families in the nation (Op. Cit. ITEP “Who Pays?” p. 42. The only states with a higher state and local tax burden on the Lowest 20% of families are Washington, and Florida, neither of which have a state personal income tax).

• The state constitutional prohibition on implementing a graduated rate structure in the Illinois individual income tax (Illinois Constitution 1970, Article IX, Section 3(a) “A tax on or measured by income shall be at a non-graduated rate”)  is one of the primary reasons Illinois tax policy is regressive overall, and hence unfair. Not having a graduated rate structure for its individual income tax also makes Illinois a tax policy outlier. Of the 41 states with an individual income tax, all but seven have graduated rate structures (Federation of Tax Administrators. “State Personal income taxes.” February, 2011).

• Given the significant growth in income inequality over the last 30 years, Illinois’ failure to implement a graduated individual income tax rate structure has both harmed the state’s private sector job growth and contributed substantially to Illinois’ ongoing structural deficits in its General Fund.

• If Illinois amended its constitution to allow implementation of a graduated rate structure for the individual income tax, that structure could be designed in a way that would: (i) cut overall state income tax burden for 94 percent of all taxpayers—that means on average, taxpayers with under $150,000 in annual base income would receive a tax cut; (ii) raise at least $2.4 billion annually in new revenue to help eliminate ongoing structural deficits in the General Fund; (iii) despite shifting tax burden to affluent taxpayers, nonetheless keep the effective state income tax rate for millionaires at just 4.3 percent (The Illinois “effective” tax rate is the overall (not graduated) percentage of Illinois “base” income that a filer pays in Illinois Individual Income Taxes after deductions and credits); and (iv) stimulate the growth of at least 36,000 jobs in the state’s private sector through enhanced public and consumer spending…

Call your legislators. Tell them you support House Joint Resolution Constitutional Amendment 0002; however, also ask them about why corporations should be taxed at a non-graduated rate instead..

1 comment:

  1. I'm afraid this makes too much sense, and exposes our General Assembly and Governor to the realities of WHY ILLINOIS DID NOT PAY UP ON PENSION PROMISES. For shame.


    Retired Special Education Teacher/Supervisor and Adminstrator