As the Democrats rolled out a proposal for yet another multibillion dollar tax increase, in the form of a progressive income tax, for the State of Illinois, these are the realities facing families in Illinois:
· Unemployment is nearly two-percentage points higher than the national average
· Illinois has one of the highest property tax burdens in the country
· The median household income has declined by over 9% in the past three years
· Just over two years ago, the Democrat-led General Assembly passed the largest tax hike in the history of Illinois, promising to pay down unpaid state bills and get Illinois finances in order. Yet, despite record state tax record state revenue, there is still $7.5 billion in unpaid state bills and a $97 billion unfunded pension liability.
Democrats now expect taxpayers to swallow a plan that that will not only make thetemporary 2011 tax hike permanent, but also swap out Illinois’ constitutionally protected flat-rate income tax for a progressive income tax.
According to the Center for Tax and Budget Accountability, this plan will raise the marginal tax rate on 85% of taxpayers. It will raise tax rates for every family earning over $5,000 per year above the 3.75% rate they were promised after the passage of the “temporary” income tax hike. Then, if a household earns more than $100,000 annually, their taxes will continue to increase above the existing (already increased) 5% rate. A family earning $100,000 -$150,000 annually – hardly wealthy – would see their tax rate increase by 50% up to 75% under this plan. That is a 150% increase in that family’s state income taxes since 2011.
The truth is 31 of the 34 progressive tax states levy a higher marginal tax rate on $50,000 in household income than Illinois will in 2015. That’s not simply “taxing the rich” or making “the 1% pay its “fair-share,” it is raising taxes AGAIN on the middle class.
David From, Illinois State Director of Americans for Prosperity, states, “The adoption of a progressive tax will threaten Illinois’ prosperity by giving politicians free reign to engage in class warfare of the type seen at the federal level and in states such as California, further destroying job creation and incentivizing the flight of businesses to more friendly states. As Illinois considers this change, our neighboring states, Indiana, Wisconsin and Iowa are debating tax cuts and finding ways to lower the tax burden on their residents.”
The reality is, taxes and tax policy matters. Iowa, Indiana and Wisconsin do not have growing populations because of their sports teams and theater districts. Bad policies are overcoming Illinois’ competitive advantages in transportation, natural resources and work force. The 2011 income tax increase has proven to be a job killer.