CARBONDALE — Carbondale Mayor Mike Henry on Wednesday asked Southern Illinois residents to join him in supporting an amendment to the Illinois constitution allowing the state to shift from a flat to a graduated-rate state income tax.
Under a graduated-rate tax, higher income earners would chip into the state coffers at a higher tax rate than those in lower income brackets.
“I urge everyone to vote for the ‘fair tax.’ It is fair. I voted for it yesterday and I have encouraged my friends to vote for it,” said Henry, joined by a handful of other amendment supporters at a news conference held outside Carbondale City Hall.
The vast majority of people in Southern Illinois would see a tax decrease or no change under the proposed tax structure, Henry said. Currently, all Illinoisans’ individual incomes are taxed at a flat rate of 4.95%. Approval of the amendment would usher in a new rate structure beginning January 2021, raising the tax rate for those who make more than $250,000 annually.
State officials estimate the change would bring in an additional $1.4 billion in the second half of this fiscal year, and about $3.4 billion annually in subsequent fiscal years.
“The state of Illinois has had budget problems for decades,” Henry said. “We cannot cut our way out of this. We have to have more revenues, and we need to improve our infrastructure. We need to get more adequate funding for our schools and universities, our infrastructure — so we have clean water, have the best sewer treatment plants going — and we need to employ our local people here in Illinois.”
Opponents of the amendment say it would give politicians in Springfield too much power, doesn’t provide for assurances the money will go to critical programs, and allows lawmakers to delay making needed structural changes for a financially sound state government.
“The truth is, the proposed rates are just a drop in the bucket in comparison to the amount of money the Legislature would need to fix their fiscal mismanagement,” The Coalition to Stop the Proposed Tax hike Amendment says on its website.
“Unless the Legislature is forced to control spending and make needed reforms, they will have to continue raising taxes on everyone in Illinois, including middle-class families.” The coalition also argues this is the worst possible time to change the tax rates, with employers large and small already struggling amid the pandemic.
Under the proposal, the corporate flat-tax rate would increase from 7% to 7.99%. Though, the corporate tax is not applicable to most small businesses.
Wednesday’s press conference was organized by the Vote Yes for Fair Tax committee and was one of several events held around the state in the run-up to next Tuesday’s election.
Henry was joined at the press conference by Jane Cogie, chair of the Sierra Club Shawnee Group; Bonnie Cissell, proprietor of Lincoln Heritage Winery in Cobden; Jason Woolard, a representative of IBEW Local 702; Kate Fakhoury, with Illinois Partners for Human Service; and retired teacher Carla Womack, of Pomona.
Woolard said failure to pass the amendment would force lawmakers to “cut deeper, lower our expectations for what our state can do for us, or increase taxes on everyone with an oppressive flat tax that would continue to cripple our state and burden those who make less than $250,000 a year.”
Woolard said he also wanted to address misconceptions about the amendment that opponents are spreading, particularly as it pertains to retirees. “This fair tax does not change the fact that the pensions in Illinois are not taxed,” he said. “Pensions and the taxing of pensions are not on the ballot.”
The federal government and most states utilize a graduated-tax rate structure, and opponents point to the fact that those states also tax retirement income. Supporters of the amendment note that Illinois lawmakers already have the ability to pass a law taxing retirement income under the existing tax rate structure, and that option will remain whether the amendment on Tuesday’s ballot passes or fails.
Opponents also point to a statement that Democratic Treasurer Michael Frerichs made in June, stating that a progressive tax would “make clear you can have graduated rates when you are taxing retirement income, and, I think that’s something that’s worth discussion.” Frerichs later said he does not support taxing any retirement income, nor does Gov. J.B. Pritzker, whose administration crafted the plan.
Cissell, who runs Lincoln Heritage Winery, said she also believes that opponents have misstated the effect a graduated-rate income tax would have on small businesses like hers. Only 3% of Illinois residents will pay more under the tax structure that will go in effect if the amendment passes. That means 97% of Illinoisans will pay the same or less, including most small business owners, she said. Cissell said tax breaks for low- and middle-income families, even small ones, may also help circulate more money into the local economy, which will help small businesses.
The Illinois graduated tax amendment explained
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