The state’s top earners would pay more in income tax and 99 percent of Illinois taxpayers would pay less, under a tax code overhaul hailed as “good public policy” by its Democratic sponsor but denounced by Gov. Bruce Rauner’s administration as “the straw that breaks the Illinois economy’s back.”
The proposed graduated income tax system is meant to raise $1.9 billion to prevent more cuts to the state’s social services.
Under the bill state Rep. Lou Lang, D-Skokie, filed Friday — which will only work if Illinois voters approve a constitutional amendment to reform the tax code — most married taxpayers would pay 3.5 percent for income of $200,000 or less; 3.75 percent on income between $200,000 and $750,000; 8.75 percent on income between $750,000 and $1.5 million and 9.57 percent on income over $1.5 million. Those brackets would be for taxpayers who are married and filing a joint return or are head of a household.
The rates for all other taxpayers would be 3.5 percent for income up to $100,000; 3.75 percent on income between $100,000 and $500,000; 8.75 percent on income between $500,000 and $1 million and 9.75 percent on income above $1 million.
“This bill will create a tax cut for 99 percent of our taxpayers. That’s got to be a good public policy. I can’t imagine how anybody could vote against a proposal that provides a tax cut to hard working people in Illinois that need a little help,” Lang said.
Lang’s proposal will only move forward if voters approve a constitutional amendment filed by Rep. Christian Mitchell, D-Chicago. In order to get on the ballot, the amendment must first pass the House and Senate. If Mitchell’s bill is approved by the deadline of May 7, Lang’s bill must then get 60 votes.
Rauner’s administration blasted the legislation, saying Democrats should be focusing on “real structural reforms,” instead of hiking tax rates.
“The majority party’s desire to skyrocket taxes is breathtaking. A progressive income tax would be the straw that breaks the Illinois economy’s back – sending our state even further into the economic doldrums,” Rauner spokeswoman Catherine Kelly said in a statement. “It’s beyond time for Democrats to come to the table and work with the governor to find common ground on real structural reforms that will get our economy moving in the right direction.”
But Lang called the bill “a structural reform for our tax system.”
Leaders of Voices for Illinois Children — a children’s advocacy organization — say changing the tax code is “real reform.” They say the legislation will have bipartisan support because many districts don’t have high earners. That means most of the people in their district would benefit from a change in the tax code.
“This is a real reform to our tax code. It’s a written proposal and it’s up to the people to decide whether or not this is something that would benefit them,” Voices for Illinois Children spokeswoman Emily Miller said. “The governor appears concerned but I just think we should let the people decide whether or not it’s time for a change.”
Business groups are also speaking out against the legislation. The Illinois Chamber of Commerce said on Friday that it adamantly opposes the plan.
“The plan would punish small business owners and would accelerate the documented flight of high net worth individuals out of our state,” CEO Todd Maisch said in a statement.
Maisch said any effort to “[gouge] the rich” is putting a target on the backs of small businesses.
“Punishing successful businesses with higher taxes is a sure way to result in fewer of them in Illinois,” Maisch warned in the statement. “Individuals with higher net worth are our citizens who are most able to move their success to other states. We are confident that if this plan were ever to become law, it would not generate anywhere near $1.9 billion for Illinois, but would generate millions in revenue for more welcoming states.”
The Illinois Policy Institute also spoke out against the legislation, saying it sends a message that “Democrats want hard-working taxpayers to pay for their ineptitude.”