Wirepoints: Progressive state income tax would hurt working families
State income taxes for an average couple of two teachers could increase by at least 50 percent, or over $10,000 annually, if Gov. J.B. Pritzker’s proposed progressive income tax were to ever see the light of day, a public affairs website claims.
The eye-popping figures come courtesy of a new round of projections composed by Wirepoints that highlight just some of the reasons why the government watchdog website says the state would be better served if the new governor were to consider other ideas for getting the state out of its financial rut.
In its report, Wirepoints outlines four major reasons why the idea of a progressive tax won’t work for Illinois, starting with its contention there is no way the system could work by taxing just the rich, as Pritzker has been outlining since he broached the subject on the campaign trial.
The three other reasons are the website’s finding that the new tax would come at a steep cost to middle-class taxpayers, that it will make Illinois even less competitive with neighboring states and that ultimately it will lead to even more of the rising outmigration that has come to define the state in recent years.
“Pritzker never proposed any tax rates for his plans, but Wirepoints ran estimates based on his spending promises and released them in a report titled: What Pritzker’s progressive tax rates will probably look like,” the website detailed in a recent article. “Even if Pritzker got the minimum in new spending that he promised—about $11 billion more—the progressive tax rates needed to raise that amount would hit Illinois’ middle class particularly hard.”
In addition to the massive tax increases that would fall on the homes of working spouses, Wirepoints estimates that any taxpayer with an income of more than $75,000 can expect an Illinois tax increase of roughly 24 percent.
The state’s current flat tax rate of 4.95 percent is roughly a percentage point higher on average than that in Indiana (3.23 percent) and Michigan (4.25 percent). Its already 11 percent combined tax rate makes it one of the country’s biggest outliers in the area in that residents here now pay the sixth highest combined taxes in the country, while, with the exception of Wisconsin, all neighboring states pay a rate of just over 9 percent.
In short, Wirepoints concludes, “Illinois can’t afford the consequences of a progressive tax. The state is already too uncompetitive with its neighbors. It’s too much of an outlier on taxes. And it’s losing too many people. A progressive tax scheme simply isn’t the right thing for Illinois.”