by Germaine Light
Germaine Light is a retired high school biology teacher, Illinois Education Association-Retired member and activist, and member of the Responsible Budget Coalition, who lives in the woods on the Vermilion River in Vermilion County.
The state income tax system in Illinois is antiquated, unjust, and regressive: antiquated in that we are among only eight remaining states in the United States that still have a flat income tax rate, and only four states that are constitutionally required to have a flat tax; unjust in that it puts the biggest tax burden on the people who can afford it the least, the working class; and regressive in that it taxes those at low income levels at the same rate as those at high income levels. It needs to be changed, and soon! Citizens should put pressure on their state senators and state representatives as soon as possible to create a graduated state income tax system.
Illinois has two major problems with its flat income tax: 1) citizens are unfairly taxed, and 2) it doesn’t provide enough revenue for Illinois’ budget needs. The change that is being proposed will greatly alleviate both problems. Illinois income tax should be changed from its current flat-rate system, where everyone pays the exact same rate, now 4.9%, to a graduated income tax system, where those with high incomes pay a higher income tax rate than those with medium and low incomes. With a graduated tax, the lower 80-90% of taxpayers will not have a raise in tax payments. It is only the wealthy that will experience a tax hike.
A flat tax is known as a regressive tax because it burdens lower income citizens unfairly. A graduated tax, on the other hand, is known as a progressive tax because it burdens the people who can best afford it, the higher-income citizens, more. Some argue that a flat tax is fair because the wealthy pay a higher total tax amount since their incomes are larger. But even so, it still is unfair to the working class since it leaves them with the biggest tax burden. An economy won’t be healthy if the working class cannot afford to buy products and services. An economy will grow more if the majority of the consumers, the working class, are thriving and can truly be consumers. Thirty-three states in the United States and the federal government have a graduated and progressive tax. Why not Illinois?
Here is an analogy for the flat tax: if a person on low income gets a speeding ticket of $75, that can be a sizable penalty for a person that is living paycheck to paycheck, and now has to give up buying food or paying utility bills in order to pay the ticket. But if a wealthy person gets a $75 speeding ticket, it’s virtually a drop in the bucket! They don’t even notice a difference. Well, it is similar with taxes. 4.9% is a considerable amount for a low- to medium-income family, but to the rich, it’s easy in comparison. They have so much to spare, they don’t have to give up necessities.
Further, it is the upper-income citizens that have enjoyed the biggest economic growth in Illinois in the last several decades, while the working class has lost financial ground in wages and benefits when adjusted for inflation. A flat tax does not take much advantage of the large economic growth of the higher income citizens. A graduated tax would make much better use of this potential source of revenue, thus providing much needed services for the state.
Everyone knows the state of Illinois has been in financial trouble. Public schools at times have had to wait for months and months for state payments, and, as a result, many school districts have really been hurting financially and have had to cut education programs, hurting our children. What kind of society are we, that we can’t keep essential programs for students? Poor! The young are the future of our state. They must have only the best. We need a better source of revenue.
Medicaid payments have been so slow that in some cases doctors have had to drop patients or not accept new ones. And all kinds of human services for the disabled, the elderly, and the mentally ill have been compromised. State parks have been shut down and even the Illinois State Museum was closed. We need a better source of revenue!
Legislators turned toward public pension funds as a temporary but foolish source of revenue. They reduced and put off required payments to public pensions more than once, calling these episodes “Pension Holidays.” This ratcheted up the state’s debt to dangerous highs. So then the legislators looked at the public pensions again and drooled. They tried to reduce promised pension payments to retired employees and were finally shut down by the Supreme Court on the grounds that this is unconstitutional, thanks to a suit filed by the public sector unions like the Illinois Education Association, Illinois Federation of Teachers, American Federation of State County and Municipal Employees, and the Service Employees Union.
Meanwhile, there have been several attempts by visionary citizens through the last several decades to obtain a graduated tax in Illinois. Ralph Martire, Director of the Center for Tax and Budget Accountability, a not-for-profit organization, has been touting a graduated income tax literally for decades! In his efforts Mr. Martire has spoken at public events and for organizations all across the state over and over again. He has spoken to governors and both houses of the General Assembly. Two former state senators in the Urbana-Champaign area, Republican Senator Rick Winkel and Democratic Senator Michael Frerichs, worked hard for a progressive income tax. In the early 2000s, there existed a Committee for School Funding Reform which consisted of teachers, administrators, school board members and parents, mostly from Urbana, Champaign, and Mahomet schools, and also Farm Bureau members. They worked for a graduated income tax because they knew it would generate more revenue for schools. Farm Bureau members were also concerned that, as the state reduced its payments to public schools from 51% of the schools’ expenses down to less than 30%, the burden for school funding through the years was pushed more and more heavily onto property taxes—which, by the way, are regressive.
Finally, after all these decades of struggle, sweat, and tears, a bill may be introduced during the 2018 Spring Session of the General Assembly that will direct us toward a progressive income tax for the State of Illinois. Finally this state that has greater wealth than most of the states in the United States and greater wealth than many countries of the world will have its chance to be brought up to date and to have a dependable, just and progressive system for collecting revenue for all of its many needs.
It is time now to call your state senator and your state representative and ask them to support such a bill. Even better, ask them to be leaders in the effort and co-sponsor this bill. Meanwhile, talk to your family, friends and neighbors and convince them to do the same. Bring up the topic at clubs and organizations and places of worship. Spread the word!
We need a fair, graduated income tax in the State of Illinois now!
For more information about a Fair Tax for Illinois, and other ideas to keep our state running without cutting vital services, see responsiblebudget.org, and The Responsible Budget Coalition Facebook page.