Let's Talk Taxes - Why Illinois should think about ditching the regressive flat tax

 Today I am featuring a post By Laurie Nowak - DuPage County Board Member, District 6 and Member of the Economic Development Committee

 

February 4, 2014 at 6:56pm

Today I was the only Economic Development committee member to vote in support of a fairer, graduated state income tax for Illinois. Illinois is considering joining 34 other states who have already enacted a graduated income tax, instead of the flat tax system we have now. Before this can be done, 3/5 of lawmakers must vote to allow a ballot question to allow voters to decide which tax system they prefer. But my fellow committee members apparently do not want it go take that route, as they all voted in support of the status quo.

The Economic Development Committee held "hearings" on the subject of flat tax vs graduated tax. Up until today, we only heard from partisan speakers who were brought in to spout rhetoric (providing no data to back up their claims). They came with no studies, no presentations, no statistics, no plan. 

They didn't hesitate to cast blame - yet when I asked them, they could not or would not verify whether the revenue from the temporary tax increase was being used to pay down debt or not (that's right, even the State Senator who was invited couldn't answer that) - they just alluded that it was being spent frivolously. 

It was not until today when Ralph Martire from the Center for Tax and Budget Accountability presented that my question was answered - and the fact is that core services in Illinois were CUT nearly 25%. Payments on debt is the spending that increased. 

CTBA reported that, believe it or not, "Illinois is actually one of the lowest spending states in the nation. In fact, Illinois ranked 49th nationally in the number of state employees per 1,000 residents. Despite having the largest population in the Midwest, Illinois ranks second lowest among Midwest states in General Fund spending on services." 

Having these hearings go through Economic Development rather than Legislative Committee where they belong pushes the Board to look at this issue with tunnel vision rather than a wide angle lens at the whole picture. 

Of course it is important to consider how policy will affect businesses in the state - but PEOPLE were left out of the equation in these discussions. With so many living at or below the poverty line in DuPage, it is our responsibility to consider the impact on our hard-working middle-class residents and not overly-burden those most unable to pay. 

That being said, what I believe is toxic to the Illinois business environment is the perpetuation of fear and rhetoric that Illinois is bad for business. 

In reality, Illinois ranked fifth in the nation for best corporate locations. Illinois posted the strongest growth in the entire Midwest for the fourth quarter of 2013. Illinois is the largest exporting state in the Midwest and fifth largest in the country. Illinois was ranked 16th most innovative state in the country. Western Access/I-390 will bring 65,000 jobs to the DuPage region. And Advantage Illinois has assisted in creating 2000 new jobs in two years in Illinois. 

It's not all doom and gloom - and hiding behind fear-mongering is wrong. The majority of Illinois residents SUPPORT a graduated income tax. People actually support consumption tax on services as well - which was not discussed at these hearings. What residents largely do take issue with, which was only touched upon (again thanks to the big picture approach taken by Mr. Martire), is the property tax.

You can read more of the Graduated Income Tax here, here, here and here.