CHARLESTON — The effort to pass a graduated income tax in Illinois will begin anew next spring, state Rep. Naomi Jakobsson, D-Urbana, said Thursday.
Jakobsson, who earlier this week announced that she would retire at the end of this two-year term, spoke on behalf of the tax policy shift with Ralph Martire, director of the Chicago-based Center for Budget and Tax Accountability.
She is sponsoring a constitutional amendment to move from a flat income tax to a graduated or progressive income tax. But the Legislature must first approve a resolution to put the amendment on the November 2014 ballot.
Jakobsson said the state needs more revenue "because of all the cuts that we have seen over the years, cuts to education, whether it's pre-K or higher education."
She said, "We probably should have done this a long time ago," but the need is critical now because the state's flat 5 percent income tax rate will be cut in January 2015.
"We probably will see a lot of services cut because we'll have less revenue to pay for all of these things," she warned.
Although the constitutional amendment would not suggest particular tax rates, Jakobsson offered a possible rate schedule which she said would increase state revenue by 15 percent, while ensuring that about 80 percent of Illinoisans would see an income tax cut.
Those making $196,000 or more would pay at a 7.2 percent rate, according to her proposal. Those with annual incomes of $2 million would pay at an 8.5 percent rate.
But anyone making $95,000 would see a three-tenths of 1 percent reduction to a tax rate of 4.7 percent. Those making $18,000 a year would have a rate of 3 percent.
Illinois' current 5 percent tax rate is unfair to low- and middle-income taxpayers, she said.
"For the lowest 20 percent income group, Illinois' total state and local tax burden is the second-highest in the nation," Jakobsson said.
Martire, who also supports a graduated income tax, said legislators should give Illinois citizens the chance to vote on a change in tax policy.
"Obviously we've got it all wrong in Illinois. One of the best ways to fix this, at least from a fairness standpoint, is to have the Constitition permit a graduated rate structure, and that's why we need to pass this amendment," he said. "This should be good, bipartisan policy.
"Ultimately amending the Constitution is up to us on tax policy. So when you sell this to your local elected official, if they're against it, as a lot of people are going to be worried about it, you can say, Who are you to deny me the right to vote on how I am taxed? I don't care if you're liberal or conservative, your voting to allow this to come to me is simply letting me as your constituent (decide) how I want to be taxed. Are you afraid of me?"
He called it "an argument that's hard to overcome. Voting for it doesn't even mean you support it. It means that as an elected official you support allowing your constituents to decide whether they want to be taxed fairly or not."
Martire said his group developed a graduated tax rate plan where 94 percent of Illinoisans would pay less. And he asserted that "there is no statistical correlation between being low-tax and being economically competitive at the state level."
He said Illinois' tax system "is shortchanging core services, it is frustrating the state's ability to invest in really important things that do drive long-term economic growth like public education and infrastructure, and it is frustrating our ability to take care of the most vulnerable members of our society. And it's all because we're afraid of fixing the tax policy."
He said that Illinois needs about $4 billion more in revenue to solve its current deficit and then begin "enhancing education funding to the point where every child in Illinois receives a meaningful educational opportunity."
He suggested raising $2.5 billion from a graduated income tax and $1.5 billion by broadening the state's sales tax to cover services as well as goods.
Jakobsson, meanwhile, said she's not sure the amendment question would be approved by lawmakers next spring.
"I don't know," she said, "but I'm still focused on getting it done."