Although the League of Women Voters (LWV) never endorses candidates or political parties, we do take stands on issues we have studied and on which we’ve reached consensus. The LWV of Illinois and LWV-Jo Daviess County support the proposed graduated income tax amendment (referred to as the Fair Tax amendment) to the Illinois Constitution that will be on the Nov. 3 ballot. As a matter of fact, the LWVIL has been in favor of such an amendment since 1991.
If approved by three/fifths of those who vote on the amendment or 50 percent of those who vote in the General Election, what would the proposed amendment do? It would remove the portion of the Revenue Article of the Illinois Constitution approved in 1970 that is sometimes referred to as the ‘flat tax,’ that requires all taxes on income to be at the same rate. It would give the State the ability to impose higher tax rates on those with higher income levels and lower income tax rates on those with middle or lower income levels.
The amendment would not put any particular rate structure in the Constitution. Setting the rate structure is a statutory responsibility of the legislature. However, when the legislature approved putting the proposed amendment on the November 2020 ballot during the spring 2019 legislative session, it also passed legislation that would institute the graduated income tax structure above if the amendment is ratified.
For decades Illinois legislators have found it hard to cut services. Ninety-six percent of Illinois’ General Fund spending is on the core services of education, healthcare, social services, and public safety and paying those who provide those services in our communities. It has been equally difficult to raise the taxes to pay for them. Instead, for decades administrations and legislators of both parties have turned to irresponsible practices of pushing the cost of education to local property taxes, shorting or skipping altogether payments to pension funds, and “borrowing to spend.” These practices have compounded the problem of inequity in our schools so dependent on community property wealth, put greater burden for higher education costs on our college students, and severely strained social and mental health service agencies around the state. Additionally, the high cost of debt service further exacerbates Illinois’ budget shortfalls.
We believe approving the Fair Tax Amendment is part of the solution to these problems. If the tax burden must increase in Illinois, on whom should it fall? We believe the answer is clear and unequivocal. After all, from 1979 to 2017, the average incomes of the top 1 percent in Illinois have increased 254 percent.
The incomes of the bottom 99 percent increased by 20 percent. The bottom 90 percent were actually earning less after inflation in 2017 than in 1979. The “Fair Tax” Amendment will allow Illinois to shift some of the tax burden to those with greater ability to pay.
Friends have called us recently requesting information about the proposed amendment. One asked whether the amendment would change Illinois’ current policy of exempting all retirement income from being taxed. Neither the amendment, nor the tax structure proposed if the amendment is approved, changes Illinois’ retirement and pension income tax exemption. The power to tax retirement income is already given to the legislature by statute if it should choose to do so.
Another friend inquired about how this amendment would affect the taxation of small businesses. Generally, small businesses are organized as Subchapter S corporations, partnerships, or sole proprietorships. This allows them to be taxed on their business income at the same rate as the owners’ personal income is taxed. Therefore, only small business owners whose total income including income from their small business exceeds $250,000 would see an increase in their Illinois income tax. There is also an Illinois corporate replacement income tax which is not affected by this change in the law.
The LWV of Jo Daviess County encourages you to become fully informed on the Fair Tax Amendment. On September 22, the LWVs of Champaign County and McLean County sponsored a presentation on the Fair Tax Amendment with Ralph Martire, executive director of the Center for Tax and Budget Accountability. LWV members were able to pose frequently asked questions about the amendment to Mr. Martire. Here’s a link to that one and a half hour webinar: youtube.com/watch?v=mDhJrog_Sko&feature=youtu.be.
The LWV of Jo Daviess County urges you to vote yes to approve the Fair Tax Amendment.