House GOP: Graduated Tax Threat to IL Jobs, Families

House Republican Leader Jim Durkin (R-Western Springs) and members of the Illinois House Republican caucus today announced their unanimous opposition to the graduated income tax proposal introduced by legislative Democrats. The plan, currently filed as HJRCA 33, would replace the state’s current flat tax with a graduated income tax system, with rates to be determined by the General Assembly.

“There is a movement in Springfield by the majority party to move Illinois from a flat income tax to a graduated tax,” said Durkin. “The same party responsible for years of overspending, over taxing and a mountain of debt wants to move to a graduated tax for one reason and one reason only – to raise taxes and spend more money.”

Representative Bill Mitchell (R-Forsyth) believes a graduated tax would be a jobs killer for Decatur.

“For decades now, Decatur has been suffering from the loss of manufacturing jobs,” said Mitchell. “Decatur had the second-worst economic decline in all of America in 2013. This is a crisis that can no longer be ignored by the powers-that-be in Springfield. Our focus should be on creating good-paying jobs for working-class Illinoisans who want a helping hand, not a handout. The last thing we need is another tax increase on hardworking families.”

Democrats argue that under their so-called “progressive” tax system, only the wealthy will pay more. However, the House Democrats’ plan includes seven tax brackets and a top rate of 9 percent, raising taxes on all income over $18,000. Under a graduated tax system, as taxpayers’ incomes rise with inflation, lower and middle income families are subjected to higher tax rates – commonly referred to as “bracket creep.”

“States that impose graduated income tax systems always sell them to the public as only increasing taxes on the very wealthy, but when the dust settles, almost all earners end up with a tax increase. That’s exactly what will happen with this graduated income tax proposal for Illinois,” said State Rep. Chad Hays (R-Catlin). “The majority party is getting ready to pull a ‘bait and switch’ on Illinois taxpayers. They may allow the ‘temporary’ income tax increase to expire, but will immediately replace it with a graduated income tax increase.”

“There is no question, a graduated income tax would cost Illinois jobs and hurt families who are working to make ends meet,” said State Rep. David Leitch (R-Peoria). “A recent study estimated a graduated tax system in Illinois could result in the loss of 88,000 jobs; this at a time when Illinois’ unemployment rate is consistently higher than the national average – and much higher than most neighboring states with whom we’re competing for jobs and growth.”

High taxes are already causing employers and families to leave Illinois. According to the 2013 United Van Lines Migration Study, Illinois has the second-highest record of out-migration of any state. Nearly 278,000 Illinoisans left the state in 2012.

The non-partisan Tax Foundation’s analysis of the proposed graduated income tax found that:

  1. Illinois’ “State Business Tax Climate Index” score could fall to 44th from its current 31st ranking if the proposed progressive income tax passes;
  2. Illinois already fell from 17th over the last few years with several rounds of tax increases, which did not succeed in alleviating Illinois’ financial situation or improve the economy; and
  3. Higher and more progressive income taxes generally contribute to worsening economic performance.

“A graduated tax system punishes success and discourages small businesses from creating jobs,” said State Rep. Patti Bellock (R-Hinsdale). “Seventy-five percent of small businesses pay taxes at the individual, not the corporate, tax rate. They create the majority of new jobs. Illinois is already ranked among the worst states for job creation. We can’t afford to lose more jobs.”

Approval of a measure to amend the Illinois Constitution in favor of a graduated tax would require a three-fifths majority vote of the Illinois House and Senate and ratification by Illinois voters. In the House, where Democrats currently hold 71 seats, a three-fifths majority equals a minimum of 71 votes. All 47 House Republicans joined Leader Durkin today in opposition to a graduated tax.

“A graduated tax system would give a blank check to the Democrat majority in Springfield to set the rates,” Durkin added. “Under their plan, as taxpayers’ incomes rise with inflation, working families are forced into higher tax brackets, eating away at hard-earned savings and adding financial strain to families struggling to pay their mortgage, pay for a child’s education, or care for an aging parent. Plain and simple, a graduated tax would threaten job creation, weaken our economy, and hurt Illinois families.”