Middle-income families, businesses to pay more under graduated income tax increase

Families and businesses will flee Illinois under higher tax burdens

SPRINGFIELD—May 1, 2019—Senator Jason Plummer (R-Edwardsville) expressed disappointment in today’s passage of the Governor’s proposed graduated income tax increase. Sen. Plummer has been vehemently opposed to the Democratic proposal that calls for hiking income taxes on the businesses and hardworking families throughout Illinois who are already overtaxed.

Under Senate Joint Resolution Constitutional Amendment 1, there are no provisions in place to prevent future rates from being raised, creating greater uncertainty for taxpayers who are already on the fence about leaving Illinois. It is important to note that since the Governor announced so-called "fair tax" rates, they have already changed. The top marginal rate on this proposal has gone up and the income to which the top rate is subject for those filing separately has already come down by $250,000.

The argument in states that keep a flat tax is that transitioning to a graduated tax system makes tax increases more likely, and the government more prone to change the rates.

In the last 20 years, states that have a flat tax system have reduced taxes 21 times and increased them only four. It is worth noting that half of those increases were in Illinois. In states with graduated tax systems, over the same 20 year period, on 24 occasions, taxes have gone up and the income threshold to which the maximum rate applies has been dropped drastically. Data shows flat tax systems protect all taxpayers.

"The constitutional amendment was just introduced a few weeks ago and we've already seen the rates change," said Sen. Plummer. "A lot of trust is already lost, so how can we believe the numbers being pushed aren't going to change on us again? This proposal is dangerous. The answer to our state government's problems is not to raise taxes."

What Sen. Plummer says is even more troubling is the proposal provides no protections for middle-income families, and takes away the stability the current flat tax provides to taxpayers.

"This is a huge red flag. Shifting from a flat tax to a graduated tax makes it even easier for politicians with no fiscal discipline to raise taxes again," said Sen. Plummer. "No one in their right mind would give Springfield legislators a blank check to control tax rates. They're creating a stronger signal to families and businesses to flee Illinois."

 Lessons learned the hard way

Looking back to 2017, the record-setting $5 billion permanent income tax hike was supposed to balance the budget, but has failed to do so. At the time, the individual tax rates rose to an alarming 4.95 percent from 3.75 percent, and corporate taxes jumped to 7 percent from 5.25 percent.

"Whatever trust there was is gone," said Sen. Plummer. "The same legislators who've promoted tax-and-spend policies for years, while refusing to rein in state spending, will be the first ones calling for future increases."