Democrats, special interests and government unions are urging the General Assembly to raise Illinois taxes yet again by implementing a progressive tax. This tax increase is being sold as a "tax on the rich," but in fact would hurt the middle class the most; one of the leading proposals would increase taxes on all income above $18,000.
"Democrats raised taxes three years ago, and now that the tax hike is supposed to sunset in 2015 they are pushing for a new way to send more of your money to Springfield. Taxpayers deserve tax relief and to invest their hard-earned dollars the way they see fit, not send more money to our broken state government," said Rep. Ives.
Rep. Ives appeared alongside the nonpartisan, Washington DC-based Tax Foundation at a press conference Wednesday, where the Tax Foundation released a new study showing how Illinois' economy would suffer if it implemented one of the progressive tax plans being circulated in Springfield.
The Tax Foundation study found that:
- Illinois’ State Business Tax Climate Index ranking could fall to 44th, from 31st currently, if the proposed progressive income taxes are passed, which indicates a tax climate less supportive of economic growth;
- Illinois already fell from 17th over the last few years with several rounds of tax increases, which did not succeed in alleviating Illinois’ financial situation or improve the economy; and
- Higher and more progressive income taxes generally contribute to worsening economic performance.
- In 2015, tax increases from 2011 are scheduled to partially sunset, with the individual income tax dropping from 5 percent to 3.75 percent and the corporate income tax dropping from 9.5 percent to 7.75 percent. Because of the state’s backlog of unpaid bills ($7.6 billion in 2013), and with the state budget still not structurally balanced, some policymakers may consider doubling down on bad tax policy.
“With credit ratings agencies suggesting that Illinois faces a risk of slipping back into recession, Illinois policymakers should address structural spending issues to repair the state’s finances,” said Tax Foundation Economist Lyman Stone. “Extending what was meant to be a temporary tax increase, or significantly increasing the state’s income tax still further, would sidestep these fundamental issues while worsening the state’s already shaky economic footing.”