By Naomi Jakobsson
The Illinois Policy Institute is blanketing the state with diatribes against the Fair Tax Amendment to the Illinois Constitution that would permit the Legislature to replace the flat rate income tax with a progressive tax. Their statements are comprised of empty rhetoric interspersed with outright lies. They need to be answered with coherent policy arguments combined with facts.
The biggest lie is that the proponents of the Fair Tax Amendment are proposing an income tax schedule that would raise taxes on most Illinois taxpayers. I am proposing a schedule that would start at 3 percent for the lowest income levels up to $18,000 per year, 2 percent less than the current rate. For a midrange income of $58,000 the rate would be 4.1 percent, 0.9 percent less than the current rate.
The "tipping point" at which the rate would go over the present 5 percent would be at $106,000 per year. Eighty-three percent of Illinois families make less than $106,000 and would therefore see a reduction in their tax bills. At the high end, the rate would rise to 7.2 percent for a family earning $500,000 per year and continue to 8.5 percent for a family earning $2 million per year. This schedule would raise approximately 15 percent more revenue than the current 5 percent flat tax.
How can we lower taxes on 83 percent of the taxpayers and still raise more money? The answer lies in the growing disparity over the last decades between incomes at the low end of the economic scale and at the high end. This trend is nationwide, but has been far more pronounced in Illinois than in the nation as a whole. Now, the top 1 percent of Illinois incomes receive more than the bottom 60 percent combined. The Illinois revenue problem is exacerbated by the fact that our combined state and local tax burden falls disproportionately on the lower income groups that are losing ground, while sparing the higher income groups that have been gaining ground. Our combined state and local tax burden on the lowest 20 percent income group, average income $10,100, is 13.7 percent, the second-highest in the nation. Our combined state and local tax burden on the highest 1 percent income group, average income $2.1 million, is 6.5 percent. Our present tax system, both stupid and unfair, seeks to raise its revenue where the money isn't, on the lowest income groups.
Why does the Illinois Policy Institute, against all reason and evidence, argue against making our tax system fairer? The answer might lie in the list of those who donate to the IPI, which is a 501 c(3) charity. However, as they state delicately on their website, "We respect our donors' privacy." In other words, the IPI is a hired mouthpiece for well-funded anonymous and dishonest attacks against those, like me, who are working for a fairer tax system.
Some will argue that the higher income groups, in response to a graduated income tax, will move out of the state. To which I respond, "Where will they go, to find comparable economic opportunity?" The top 1 percent of incomes in Illinois earn more than double the amount of the comparable group in any of our surrounding states. The key is the wealth engine that is Chicago. Ninety-five out of the top 100 highest income ZIP codes in Illinois are either on the Chicago North Shore or in wealthy Chicago suburbs. There are only a handful of comparable wealth creation centers like Chicago in the nation. One of those is Southern California. But anybody at the highest income level who moves there will find about the same personal income taxes that I am proposing for Illinois.
Some will accuse me of waging "class warfare." My answer is that the war is already well on. While many higher income individuals cheerfully and willingly pay their taxes, others of them have retained a mercenary army of lobbyists to fight against all efforts at a fairer tax system, and in fact to increase even further the disparities in our tax system. Springfield is their battlefield. It is time for the rest of us to realize this, and fight back. It's time to pass the Fair Tax Amendment.
State Rep. Naomi Jakobsson, D-Urbana, represents the 103rd District.