A Progressive Income Tax is Illinois’ Best Shot at Solving Budget Crisis
After many years of struggle, it looks like momentum for progressive tax reform in Illinois is picking up.
Democratic gubernatorial candidate J.B. Pritzker, who’s mounting a strong campaign, has backed a constitutional amendment to allow a progressive income tax, under which rates would be higher for those with higher incomes. Democratic legislative leaders, long hesitant on this issue, are recognizing the necessity of the change.
The Center for Tax and Budget Accountability recently issued a report detailing how a progressive income tax could be structured to reduce taxes for 98 percent of state residents – everyone earning less than $300,000 a year – and still raise an additional $2 billion a year.
The extra money comes from raising the marginal rate for higher earners, up to 9.85 percent for people making over $1 million a year. That’s the top income tax rate in the Midwest, found in Minnesota (though there it applies to individuals making over $160,000) – which is the state that has led the region in job growth since raising taxes on the rich five years ago (and raising the minimum wage).
CTBA argues that Illinois’s fiscal problems stem from its flat rate income tax with a single rate for all income levels. That cuts the state off from the vast wealth that’s accumulated at the top of the income ladder. Combined with deductions and other state and local taxes, it gives Illinois one of the most regressive tax structures in the nation. “In Illinois, the top 1 percent of income earners pay just 4.6 percent of their income in state and local taxes, while … the bottom 20 percent of earners have almost three times the tax burden of the wealthiest, [paying] 13.2 percent,” according to the group’s new report.
It’s not that taxes are too high, it’s that the wealthy aren’t being taxed enough and everyone else has to make up for it. A progressive income tax would be fairer and would do a better job of raising revenue. After years of budget crisis, folks are catching on.