The graduated income tax: For and Against

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By Tom Holmes

In addition to the names Donald Trump and Joe Biden, on the Nov. 3rd ballot there will be the following:

Yes or No

Proposed Amendment

Article IX — Revenue

The website Ballotopedia explains, "A 'yes' vote supports repealing the state's constitutional requirement that the state personal income tax be a flat rate and instead allow the state to enact legislation for a graduated income tax. A 'no' vote opposes this constitutional amendment, thus continuing to require that the state personal income tax be a flat rate and prohibit a graduated income tax."

The amendment does not change the present flat tax rate. What it does is give permission to the legislature to change the rate if it wants to.

Arguments for and against the amendment seem to be based on speculation regarding what the legislature, which is controlled by the Democrats, will do if the amendment is passed.

Against

Dan Watts, president of Forest Park National Bank, is opposed to the amendment because it is "bad for individuals, businesses and the great state of Illinois."

His argument:

1.    The proposal reduces taxes for incomes less than $250,000 by 0.2% while raising taxes over $250,000 by 2.8%.

2.    The constitutional protection of a flat tax prohibits the legislature from stratifying tax rate levels. Once passed the legislature could increase taxes on any income.

3.    The state of Illinois has mismanaged its finances for years. Rather than addressing expenses, the Democratic-controlled government seeks only to increase revenue. Illinois is a home with a hole in the roof and, rather than addressing the hole, it seeks to paint the water-stained walls.

4.    Small businesses are often taxed at individual income rates (an IRS election known as Subchapter S). A 56 percent increase in taxes for businesses making more than $250,000 will eventually lead to slower job growth and likely job losses.

5.    Higher taxes on successful individuals and businesses will lead to migration from Illinois to lower-tax states.

6.    Illinois currently ranks as the 36th worst state in overall tax burden. The proposed increase in income tax will propel the state to the 47th worst tax-burdened state in the Union.

7.    A major contributing factor to Illinois fiscal woes is the grandiose public pension obligation. Like the flat tax, those pensions are protected by the state constitution. Query: Why does the legislation seek to eliminate the protection from taxation while not addressing the protection for the root of the problem?

Dan Bjornson, an accountant in town, is also planning on voting against the amendment.

"I don't think the amendment, in and of itself, is bad," he said. "However, if it passes, it will allow the government to raise taxes on selected classes of taxpayers. To me that is a sneaky way to raise taxes.

"Passage of this amendment would give additional power to the politicians who we don't trust. They've made a mess of the state's finances and I would not want to give them additional power."

Like Watts, Bjornson would rather reduce government spending to balance the budget than raise taxes.

For

Etta Worthington, a local advocate, contends that there is a lot of disinformation circulating about the amendment. For example, she points out that some say retirement income would be taxed if the amendment passes.

"That's not really true," she said. "Retirement income could be taxed at any time, depending on the legislature and the governor at the time. The Fair Tax has nothing to do with that. And you have to look at who most likely is behind this untruth, the major funding of Ken Griffin, the richest man in Illinois."

"The bottom line is this," she added. "Almost everyone who is reading this will experience a tax cut as a result of this amendment. It seems only fair that the superrich should have to pay more, and that the burden on the working poor and the middle class should be lessened. And, on top of that, the increased revenue to the state will give increased funding to schools, among other things.

Clark Craig, a community organizer with the Progress Center, added that 97 percent of the people in Illinois would see their income tax rate stay the same or go down and that 68 percent of the states in the U.S. have implemented a graduated income tax. 

"While everyone would share a more equal burden in terms of the impact on their budget," he argued, "at the same time, it has been shown that graduated income tax systems produce higher tax-revenue, which is then used to fund such things as infrastructure, police, firemen, social services and many other items (including paying a large backlog of unpaid bills in Illinois) needed to maintain a healthy society."

He also contends that, if passed, small businesses would not be taxed under the Fair-Tax system.

Mayor Rory Hoskins said, "I will vote for the Fair Tax. Governor Pritzker is on the right side of this issue."

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