Pritzker’s proposed progressive income tax rates harm Illinois’ economy, while hardly fulfilling his promises.
Progressive income tax rates proposed today by Illinois Gov. J.B. Pritzker won’t hit his promised $3.4 billion in revenue. Analysis by the Illinois Policy Institute reveals revenue from these proposed rates would bring in only $1.4 billion, according to dynamic estimates, or $2.4 billion, according to static estimates
This falls far short of closing the budget gap, much less financing billions in new spending. With $14 to $19 billion in spending promises, Pritzker’s proposed rates will nearly guarantee future tax hikes on Illinois’ middle class.
Enacting a progressive income tax with these rates would also cost Illinois 30,400 jobs and $11.2 billion in lost economic activity.
Illinois Policy Institute analysis of Pritzker’s plan shows:
- Revenue from these proposed rates would bring in only $1.4 billion, according to dynamic estimates, or $2.4 billion, according to static estimates. Neither situation closes the budget deficit nor allows for billions in new spending.
- Pritzker would need to raise between $14.3 and $19.4 billion more through a progressive income tax hike to fully implement his spending promises by fiscal year 2022.
- Nearly a third of small businesses would suffer under this tax. In 2017, small businesses generated 70 percent of all new jobs in Illinois.
- With this new tax structure, including the corporate income tax and personal property replacement tax, Illinois corporate rate would become 10.45 percent, the second highest in the nation.
- In his February budget address, Gov. Pritzker said his proposed rates would be more competitive than Iowa’s tax rates, who recently voted to move its top rate to 6.5 percent. Pritzker went back on his promise with a top proposed rate is 7.95 percent on net income over $1 million.
Illinoisans shouldn’t be fooled by this false promise. There is no possible way Gov. Pritzker can fulfill all of his spending promises, pay down billions in debt and still cut taxes for 97 percent of Illinoisans, as his proposal states. He can’t even raise the amount of revenue he claims this proposal does.
Getting rid of Illinois’ constitutionally mandated flat income tax would serve up a blank check for lawmakers to hike taxes on everyone. The governor has already tricked Illinoisans once by taking back his promise of more competitive rates than neighboring states like Iowa and Wisconsin. There is nothing that prevents Pritzker or other lawmakers from changing the rates once the constitution allows a progressive income tax. If he were serious about protecting the middle class, these rates would be written into a constitutional amendment.
Instead of looking out for the state’s most vulnerable, Pritzker’s proposed rates would crush nearly a third of Illinois’ small businesses, who are the lifeblood of our economy. Research shows that progressive income tax structures have no positive effects on income inequality. The only way to protect taxpayers for the long term is through structural reforms to our state’s largest cost drivers: pensions and government worker health insurance.
Related Posts:We truly are under attack. We need user support now more than ever! For as little as $10, you can support the IWB directly – and it only takes a minute. Thank you. 688 views