Cloaked in “fairness,” proponents will suggest that the purpose of the progressive income tax will be to make “the rich pay their fair share.” While no rates accompany the proposed Constitutional amendment currently before the Legislature – which is cause enough for concern – we can look to both other states that do implement a progressive income tax and the two rate schedules which have been proposed to date. The facts do not bode well for hard-working Illinois families.
Apparently inspired by the words of Daniel Burnham, the famed architect of the Columbian Exposition of 1893 who once counseled us to “make no little plans,” the left-leaning Center for Tax and Budget Accountability has called for the creation of an octa-bracket schedule ranging from 5% – 11%, amounting to a tax increase on anyone earning more than $5,000. Currently, a mere seven states operate under a rate schedule with eight or more brackets. Their proposed top marginal rate of 11% would be tied with Hawaii and second only to California. We already have the second-highest property taxes in the nation. Do we really want the second-highest income tax rates, too? Only slightly less ambitious than the CTBA rate schedule is that proposed by Rep. Naomi Jakobsson (D-Champaign), the chief sponsor of this measure, which includes seven brackets culminating in a top rate of 9%. Last summer, it was reported that “Democrats say their proposal would be similar to (the) one advocated by the Chicago-based CTBA. And, just last week, proponents stated their opposition to the Jakobsson Schedule, calling it “less progressive” than they’d like to see.
In 2013, of the 41 states which levied an income tax, 34 employed a progressive tax. Of those 34 states, 30 taxed the middle class at a higher rate than the 3.75 percent Illinoisans will pay in 2015 after the temporary increase begins to recede. In fact, the average top marginal tax rate on Illinois’ median household income for a couple filing jointly amongst those states with a progressive income tax in 2013 was 5.57 percent, nearly two full percentage points higher than the 3.75 percent flat rate in 2015 Illinoisans were promised.
Recently, one of the leaders of the union coalition championing this amendment praised the progressive tax as “the modern way to collect revenue.” Modern? In 1848 Scottish economist J.R. McCulloch noted that, “the moment you abandon, in the framing of such taxes, the cardinal principle of exacting from all individuals the same proportion of their income, you are at sea without rudder or compass, and there is no amount of injustice and folly you may not commit.” A few years later, John Stuart Mill commented that, “to tax the larger incomes at a higher percentage than the smaller…is a mild form of robbery.”
Illinois is hemorrhaging red ink, jobs and population not because our taxes are too low but because of a lack of opportunity. The surest path to restoring Illinois as the economic engine of the Midwest is with sensible public policy that provides job-creators with certainty & individuals with tax relief. This does neither.