Personal Income Tax

Released October 21, 2020

In early August, the Illinois Chamber of Commerce issued a press release arguing against ratification of the proposed amendment to the Illinois Constitution that will permit the state to utilize a graduated rate structure for its income tax. According to the Illinois Chamber, such ratification, coupled with implementation of the specific graduated rate structure identified in P.A.101-0008, which is called the “Fair Tax” by proponents, would “somehow” shrink the Illinois economy, and disproportionately harm women and minorities. But the press release based these claims on largely unsubstantiated findings contained in an Executive Summary of the report, “Illinois’ Proposed Graduated Income Tax: Impacting Jobs and the Economy,” which the Illinois Chamber paid the Berkeley Research Group (BRG) to produce.

 

Unfortunately, the Executive Summary does not provide much in the way of support for the conclusions it reaches, nor does it regularly cite its sources, or even provide insight into the model BRG used to reach its conclusions which is particularly problematic in this instance, given that the main findings contained in the Executive Summary are contrary to prior research on migration, tax burden, and the economy.

 

CTBA decided to reached out to both the BRG and the Illinois Chamber to request a copy of the full report, however, neither the Illinois Chamber nor BRG was willing to make the full report available to either CTBA or the public. CTBA chose to respond to the BRG Executive Summary released by the Illinois Chamber anyway. To find out more about how, when compared to the body of research conducted by credible sources in the relevant areas, the Key Findings presented in the Executive Summary are revealed to be either inaccurate or misleading, please read CTBA’s new Issue Brief, “Analysis of Berkeley Research Group Graduated Rate Income Tax Impact Report.”

Released October 14, 2020

On November 3, 2020, voters will have the chance to ratify an amendment to the Illinois Constitution which would allow the state to use a graduated rate structure for its income tax. Ratification of this amendment would  permit implementation of Public Act 101-0008 (“P.A. 101-0008”) which was signed into law on June 5, 2019. If implemented, this legislation which is frequently referred to as the “Fair Tax” by proponents, would replace the state’s current flat rate income tax with a graduated rate structure that: is tied to ability to pay; in normal economic times would raise around $3.5 billion in new revenue annually; and would effectively help eliminate some of the long-term structural flaws that have consistently made Illinois’ overall tax system one of the most unfair and poorly performing in the nation.

Many of those opposed to the Fair Tax have tried to mislead Illinoisans into voting against ratifying the proposed amendment to the state’s constitution this November, by relying on arguments that have emotional appeal but are not supported by either evidence or the vast body of research. One such specious argument consistently made against the proposed Fair Tax is that the change to a graduated rate income tax structure will cause a mass exodus of middle-income households and millionaires from Illinois.

This claim, however, is exposed for the baseless canard it is when evaluated against the body of research covering the relationship—or as it turns out lack thereof—between tax policy and migration, as well as the relevant data from the Internal Revenue Service (“IRS”), U.S. Census Bureau, and the Illinois Department of Revenue (“IDOR”).  People (including millionaires) move for many complicated, interrelated reasons, least of which is because of tax policy.

Released October 31, 2019

In his first year in office, Governor J. B. Pritzker signed a General Fund budget that the General Assembly passed into law — something it took his predecessor four years to accomplish.

Released May 24, 2018

Fiscal Year (FY) 2019 marks the fourth General Fund Budget proposed by Governor Bruce Rauner. For the first two years of Governor Rauner’s administration, FY2016 and FY2017, the state went without a full General Fund Budget.

Released April 30, 2018

This report makes the case for a graduated rate state income tax in Illinois, and illustrates two possible rate structures that would accomplish each of three major objectives:

Released September 9, 2015

This Report offers a solution to Illinois' longstanding fiscal shortcomings. There are a number of common sense, data-driven initiatives that will modernize the tax code—and still keep Illinois relatively low tax. The Report details how changes to Illinois' tax policy, primarily to its income and sales taxes, and re-amortizing its pension debt can completely eliminate its structural deficit.

Released December 22, 2014

CTBA's issue brief, The Pending FY2016 Fiscal Cliff details the significant—potentially over $12 billion— fiscal shortfall facing the next General Assembly and Governor-elect Bruce Rauner as they work to craft a Gener

Released August 31, 2014

This Issue Brief provides CTBA's analysis of gubernatorial candidate Bruce Rauner's position paper on fiscal policy, "Bring Back Blueprint: Jobs and Growth Agenda” (the “Blueprint”). The Blueprint represents candidate Rauner’s most complete policy statement on how to resolve the very real and serious fiscal problems that have plagued Illinois state government for decades. After taking into account all of the Blueprint’s proposals, the Illinois budget would be $5.9 billion short in FY2016, and that is before factoring in the current projected deficit from FY2015, which would increase the total accumulated deficit to $12.4 billion in FY2016. The Blueprint presents no data, plan, or policy proposal as to how to balance the budget.

 

Released June 9, 2014

Because the Illinois legislature failed to act during the spring 2014 legislative session, both of the temporary state income tax increases that became law under the Taxpayer Accountability and Budget Stabilization Act of 2011 (TABSA) will begin to phase down halfway through Fiscal Year (FY) 2015, which begins on July 1, 2014. Under TABSA, the personal income tax rate will decline from 5 percent to 3.75 percent, and the corporate income tax rate will drop from 7 percent to 5.25 percent beginning on January 1, 2015. 

Released May 19, 2014

This Report provides a detailed analysis of Governor Pat Quinn’s two very different proposals for the FY2015 General Fund budget—a Recommended Budget and a Doomsday Budget. This unconventional approach to the FY2015 budget was forced on the Governor because of the scheduled phase down of the temporary tax increases in the state’s personal and corporate income tax rates that became effective in 2011.

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