In November 2020 there will be a vote on a constitutional amendment to change from a flat income tax to a graduated income tax. There are three major problems with this proposal.
First, Illinois politicians are asking us to trust them with substantial new taxing ability. With this constitutional amendment, Springfield would have a blank check to increase tax rates at any time with a simple majority vote. Illinois voters recently passed a lockbox amendment to prevent lawmakers from raiding the transportation fund. They did this precisely because lawmakers have not proven themselves trustworthy with state finances and have a history of money grabs. But now, these same politicians are asking us to trust them that they will not raise taxes again in the future.
Second, this tax increase will punish job creators and increase the incentive for them to leave the state. In the last five years, Illinois has experienced a net out-migration of 157,000 people. This is like losing the entire population of a city the size of Peoria, Rockford or Joliet! And this occurred while every one of our neighboring states gained population. With this tax increase, our top job creators will experience a tax increase of 61%. This adds another big incentive for them to move their businesses and jobs out of Illinois.
Third, moving to a graduated tax has not worked in the past. The last state to change from a flat tax to a graduated tax was Connecticut in 1996. Since that time, Connecticut’s income taxes have risen 13%, property taxes have soared, and the population has declined. This resulted in a $3.7 billion deficit that Connecticut lawmakers are closing by additional sales taxes. Last year, according to a study from George Mason University, Connecticut ranked #49 in a ranking of states overall fiscal condition. Ironically, the worst state in the study was Illinois at #50.
The reason a tax increase didn’t work in Connecticut is the same reason it won’t work in Illinois. Illinois does not have a revenue problem. Illinois has a spending problem. Until Illinois politicians are honest with themselves and undertake true spending reforms, we cannot trust them with more taxing power. You can’t have fairness without honesty.
“I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.” -- Winston Churchill