Should Illinois change its income tax rate from flat to graduated?

CHICAGO – A debate on the Constitutional Amendment that would shift Illinois from a flat income tax state to a graduated income tax state brought to the surface the dramatic differences between those supporting the change and those opposing it.

Wednesday at the Chicago Union League Club, Ralph Martire of the Center for Tax and Budget Accountability argued a new system of increasing the income tax rate for those Illinoisans making over $250,000 annually would benefit lower and middle income residents.

Dan Proft, AM560 WIND radio talk show host, said changing the current income tax rate to burdening the wealthiest would cause the state’s negative migration to increase – causing the state to plunge deeper into its financial pit.

“People are fleeing this state like its on fire,” Proft said. “And the number one reason they give as to why they’re leaving is Illinois’ taxes.”

Martire responded, ” Peer review studies show there has never been a tax policy connection between popular migration and tax policies. There’s more evidence that weather has more effect on migration.”

That means a state can tax itself to prosperity, Proft said.

“If raising the rate in Minnesota had no effect on migration, then why shouldn’t Illinois double Minnesota’s rates to 18% if it is beneficial and would create greater growth?” Proft said.

Proponents of the change to a graduated income tax system say they will raise $3.5 billion by taxing the state’s wealthiest, but the state’s debt is exponentially higher.

“What’s the end game? This is a starting point. Where’s the money going to come from” to pay those unmet obligations, he asked.

It’s likely lawmakers will eventually look to the middle-class to make up the state budget’s growing shortfall, Proft said.

Martire responded saying Illinoisans don’t pay as high taxes proportionally as other states. But, he admitted, raising taxes on the state’s wealthiest won’t be a cure all.  There are other issues that must be addressed even if voters put the graduated rate into effect, he said.

“Everyone says that will not solve al the state’s budget problems, there are other things that should take place, including re-amortizing the state’s pension fund obligations,” Martire said.

“And that’s borrowing on the future,” Proft said.

The Illinois General Assembly voted earlier this year to place the Constitutional Amendment changing Illinois’ current flat tax to a graduated rate on the November 2020 ballot.

The tax rate debate in its entirety is viewable at the website.