Tuesday, July 19, 2011

NBC Chicago: How to Lower the State Income Tax

A piece advocating for a more "progressive" income tax:
Even before the state income tax rose from 3 percent to 5 percent, Illinois was listed as one of “Terrible 10 unfair tax states,” because of our flat tax, high sales taxes, and 1.25 percent levy on groceries. The poorest 20 percent paid 7 percent of their income in taxes, while the richest 1 percent paid…1 percent. Those numbers are even worse now that the guy shining Mayor Emanuel’s shoes is paying the same 5 percent as Mayor Emanuel. (This comparison does not apply to Gov. Quinn, who gets his shoes shined as often as he combs his hair.)

But it doesn’t have to be that way! The delegates to the 1970 Constitutional Convention, who included former Mayor Richard M. Daley and House Speaker Michael Madigan, banned a progressive income tax. But it can be un-banned with a constitutional amendment. The legislature could then return most of us to the old 3 percent rate (or less), while forcing Mayor Emanuel to pay 7 percent (or more) to make up the slack. Of the 43 states with an income tax, 33 use a graduated scale. New Jersey, which usually manages to be in less financial trouble than Illinois, goes from 1.4% for the broke to 8.97% for the millionaires. Only four states -- Massachusetts, Minnesota, North Carolina and Tennessee -- tax the poorest of the poor at a harsher rate than Illinois.
If only there was a discussion to eliminate the income tax entirely. Before the 1970 constitution was enacted there was no income tax in Illinois. Of course I would hope that this state would be in decent financial shape for that to ever happen.

BTW, what does it say about Illinois if blogger Edward McClelland noted that New Jersey has a progressive income tax yet has less financial trouble than Illinois. Hopefully taxpayers would take an interest in knowing where their dollars are going.

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