SPRINGFIELD, IL – The Illinois House Republican Caucus, led by minority leader Jim Durkin (R-Western Springs) announced its opposition to the graduated income tax proposal that has been introduced and pushed by the Democrats. The plan, currently filed as HJRCA 33, would replace the state’s current flat tax with a graduated income tax system, with rates to be determined by the General Assembly.
“There is a movement in Springfield by the majority party to move Illinois from a flat income tax to a graduated tax,” said Durkin. “The same party responsible for years of overspending, over taxing and a mountain of debt wants to move to a graduated tax for one reason and one reason only – to raise taxes and spend more money.”
Democrats argue that under their “progressive” or "graduated" tax system, only the rich will pay more. However, the House Democrats’ plan includes seven tax brackets and a top rate of 9 percent, raising taxes on all income over $18,000. Under this system, as taxpayers’ incomes rise with inflation, lower and middle income families are subjected to higher tax rates – commonly referred to as “bracket creep.”
“Allowing Illinois legislators to rewrite tax rates is a dangerous game,” added Rep. John Cabello (R-Machesney Park). “We have a backlog of $6.1 billion in unpaid bills that the last tax hike was supposed to use to pay down. This new system could expose middle class families and small businesses to a tremendous increase in taxes at a time they can least afford it.”
“There is no question, a graduated income tax would cost Illinois jobs and hurt families who are working to make ends meet,” said State Rep. David Leitch (R-Peoria). “A recent study estimated a graduated tax system in Illinois could result in the loss of 88,000 jobs; this at a time when Illinois’ unemployment rate is consistently higher than the national average – and much higher than most neighboring states with whom we’re competing for jobs and growth.”
“Considering the median household income in Winnebago County is $47,198, it is likely a progressive tax would mean higher taxes for families in our community and throughout the state,” said Rep. Joe Sosnowski (R-Rockford). “Illinois needs to be creating incentives to work and a friendly business environment instead of punishing working families. We cannot keep relying on taxpayers to feed Springfield's spending problem.”
The non-partisan Tax Foundation’s analysis of the proposed graduated income tax found that:
- Illinois’ “State Business Tax Climate Index” score could fall to 44th from its current 31st ranking if the proposed progressive income tax passes;
- 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.
“A graduated tax system punishes success and discourages small businesses from creating jobs,” said State Rep. Patti Bellock (R-Hinsdale). “Seventy-five percent of small businesses pay taxes at the individual, not the corporate, tax rate. They create the majority of new jobs. Illinois is already ranked among the worst states for job creation. We can’t afford to lose more jobs.”
Approval of a measure to amend the Illinois Constitution in favor of a graduated tax would require a three-fifths majority vote of the Illinois House and Senate. In the House, where Democrats currently hold 71 seats, a three-fifths majority equals a minimum of 71 votes. All 47 House Republicans joined Leader Durkin today in opposition to a graduated tax.
“A graduated tax system would give a blank check to the Democrat majority in Springfield to set the rates,” Durkin added. “Under their plan, as taxpayers’ incomes rise with inflation, working families are forced into higher tax brackets, eating away at hard-earned savings and adding financial strain to families struggling to pay their mortgage, pay for a child’s education, or care for an aging parent. Plain and simple, a graduated tax would threaten job creation, weaken our economy, and hurt Illinois families.”