The Washington D.C. based Tax Foundation is raising the alarm about a proposed graduated income tax for Illinois.
Tax Foundation Vice President of State Projects Joseph Henchman says they don’t often hold press conferences in state capitals about their reports, but …
The report says if Illinois moves to a graduated rate, the state’s business competitiveness would go from the middle of the pack to near the bottom compared to other states.
Voices for Illinois Children’s, Emily Miller supports the graduated tax. Miller says the proposal provides tax cuts for 99 percent of Illinoisans while at the same time will bring in $1.9 billion of more revenue.
The Tax Foundation says a graduated tax would remove Illinois’ flat rate, something they say is Illinois’ last saving grace for small business.
They won’t go as far as to call it a bait and switch, but the Tax Foundation says a constitutional change would give lawmakers too much tax rate leway.
Miller says it will allow lawmakers to increase tax rates on higher earners. Right now, Miller says, the flat tax means rates would have to change for everyone.
Henchman says if the state’s constitution is changed to allow for a graduated tax, rates could be set at whatever the legislature determines.
Henchman says the proposed graduated tax would hit small businesses hard and would lower the state’s competitiveness in their Business Tax Climate Index.
The proposal remains in the House and requires a constitutional amendment.