SPRINGFIELD - If adopted by Illinois voters, the Democrats' progressive tax proposal would be "a major across-the-board tax relief for 94 percent of Illinois' taxpayers," State Sen. Don Harmon (D-Oak Park) said Tuesday.
However, two anti-tax groups disagree, arguing that Harmon failed to mention that the "tax relief" he espouses is based on the current flat tax rate of 5 percent, a rate raised 67% in 2011 and one that is suppose to return to 3 percent in 2014.
Harmon, who is chief sponsor of an effort to move Illinois from a flat income tax to a graduated income tax system, specified the tax rates he is proposing Illinois adopt:
- 2.9% for those under $12,000 annually
- 4.9% for those making between $12,000 and $180,000 annually
- 6.9% for those making between $180,00 and $204,000 annually
Harmon said the option he's proposing is an alternative to two other choices taxpayers are facing, 1) continuing what he calls an "unfair, regressive" flat tax that is temporarily at a 5% rate, or 2) cutting services such as education and health care by 20% across the board.
"This 'fair tax' proposal is the third way to generate revenue," Harmon said, "which will provide tax relief to 94% of Illinois' taxpayers."
Brian Costin of Illinois Policy Institute disagrees with Harmon's assessment. According to Costin, Harmon's numbers show a tax hike on anyone making over $12,000 a year.
"The actual tax rate on a minimum wage worker would be 3.42%, still higher than in 2011," Costin said, "Everyone who makes more than $21,739.13 will pay more under Senator Harmon's "fair tax" than the current 3.75% law."
"Tax-hikers are trying to fool Illinoisans into supporting another tax increase by calling their pitch a 'tax on the rich,' but the reality is middle- and working-class Illinoisans would be hit hard by this proposal," said Kristina Rasmussen, executive vice president of Illinois Policy Institute. "The progressive tax is a wolf in sheep's clothing – just another money grab by Springfield politicians."
Americans for Prosperity-Illinois' David From also refuted the senator's claims.
“Senator Harmon and his fellow advocates of higher taxes are claiming that a 4.9% rate is a tax cut for most Illinois taxpayers. However, the very law Senator Harmon helped pass in 2011 says that the personal tax rate will be 3.75% in 2015. Sen. Harmon's new rate would increase the tax burden for someone earning $50,000 annually by $630 in 2015."
Polling from the Paul Simon Public Policy Institute showed that 74% of Illinoisans do not support making the “temporary” tax hike permanent, which is essentially what this new rate plan would do, From said. "Leaders in Springfield need to stop continually going back to the taxpayers for more and more of their money, while refusing to reform the way they spend money."
Harmon's effort will change the Illinois Constitution, so it needs super majority approval in the Senate and House. If it passes the legislature, then it will go on the November 2014 ballot for voter consideration.