SPRINGFIELD, Ill. (WTVO) — This year’s presidential election has already broken records for voter turnout. Illinois’ ‘Fair Tax Amendment’ is one of the controversial questions getting a lot of attention.
We sat down with a political scientist from NIU who explains what it is and how a fair tax would impact Illinois residents.
You may have already heard of the ‘Fair Tax Amendment’ proposed by democrats. The bill is pushing for a graduated income tax where the more you make, the more you’ll pay in taxes. Right now, the state’s income tax is run under a flat tax where every income level is taxed at the same rate.
“The idea is that if you have a small incremental change in the rate. For the very top income earners, that that would actually generates a lot more revenue than if you raise everybody’s tax,” said Dr. Kurt Thurmaier, NIU’s Chair of Department of Public Administration Chair.
It’s not a new concept. In fact, according to Dr. Thurmaier, a majority of states–including our neighboring states of Iowa and Wisconsin have a fair tax, or progressive tax as it is also known as.
“Iowa for example- their top rate is 8.5 percent. Every state is different they have different brackets,” Dr. Thurmaier added.
In Illinois, the current 4.95% flat individual income tax would be transformed into a six-rate-tax, with rates ranging from 4.75 to 7.99% depending on how much you make.
Anyone making between $10k and $100k will be taxed at 4.9%. If you make between $100k and $250k, you will be taxed at 4.95%–the same rate Illinois taxpayers are currently paying across the board.
If a single filer makes between $250k and $350k, their rate jumps to 7.75%. If passed, those new rates would take effect on January 1st. Could those rates change? The answer is yes. Dr. Thurmaier says the changes would be minimal.
“You can not have a much higher tax on the middle class that the surrounding states because then you could move to another state- but the chances that they would move that rate all the way down for people that make 50k a year..not very high… possible… but you can throw the people that do that out of the legislature,” Dr. Thurmaier added.
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