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The Quad Cities Chamber is seeking feedback on a ballot question asking Illinois voters to decide their future personal and corporate income tax structure.
This ballot measure would repeal the constitutional requirement that state personal income tax is a flat rate across income and allow the state legislature to enact legislation establishing a graduated income tax.
Under the flat tax structure, all individuals and corporations pay the same tax rate. The current rate for individuals is 4.95% and corporations at 7%. Implementing a graduated income tax allows legislators to set different rates based on income earned. If this amendment passes, pre-existing legislation creates six new income tax brackets ranging from 4.75% to 7.99%. The corporate tax rate would increase to 7.99%.
Proponents of the proposed graduated income tax argue that the current tax system disproportionately burdens lower and middle-income families. By replacing the flat tax with a graduated income tax, only the wealthiest individuals (those making over $250,000 a year) would see a tax increase. 97% of Illinoisans would see their taxes remain the same or decrease. Advocates state that by implementing a graduated income tax, there will be an additional $3.4 billion in additional revenue that will go to schools, infrastructure, the state pension system, and more.
Opponents of the graduated income tax state that replacing the current structure with the graduated tax will repeal constitutional protections such as the ban of more than a single tax on income and allow legislatures to create new tax brackets and increase rates at will without addressing structural financial problems putting the burden on Illinois businesses and middle-class families. Implementing the proposed amendment would increase the tax rate without providing much-needed tax relief elsewhere that puts Illinois businesses and communities at a competitive disadvantage.