Taxing sophistry

Illinois Policy Institute

Earlier this month, the Chicago Tribune published an editorial sounding the alarm on “the next Illinois tax hike” – a progressive tax.

While many in the state have come to recognize this upcoming tax fight, others, such as Jan Goldberg of Riverside, Ill., refuse to admit the truth.

In a recent letter to the editor titled “Benefits of a progressive tax system,” Goldberg argues that a progressive income tax would actually be a tax cut for Illinois taxpayers. That’s not true.

It’s important to remember that the current 5 percent flat rate income tax is a temporary tax hike rate. That rate is legally required to sunset to 3.75 percent in 2015 and again to 3.25 percent in 2025.  To be clear, sunsetting the tax hike is not just a promise, it’s the law. That means any income tax rate above the sunset rates would be a tax increase, not a decrease.

The truth is that the progressive organization, the Center for Tax and Budget Accountability, calls for changing the current law and not allowing the tax hike to sunset. What’s more, the CTBA wants to change the state’s constitution to allow for another multibillion-dollar tax hike. Their plan would tax income earned after $5,000 at ever-increasing marginal tax rates, starting at 5 percent and topping off at 11 percent. That plan would increase the income tax rate for 85 percent of taxpayers in Illinois.

In fact, two married teachers in Chicago each making the average Chicago Public Schools salary of $74,990 would earn enough money to kick part of their income into the 7.5 percent tax bracket. That’s double the rate they’re scheduled to pay in 2015. Without kids and after taking the standard personal exemptions, that couple could pay approximately $2,700 more in state income taxes under the progressive tax plan the CTBA proposes for Illinois.

As for the argument that Illinois should get on “the right side of history,” Goldberg is correct: history shows that states without an income tax consistently outperform states with the highest income tax rates. And that’s true for population growth, economic growth, nonfarm payroll employment, and state and local tax revenue.

It’s time for Illinois to get on the right side of history and abolish the income tax altogether.

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