ST. CHARLES – Voters in November will decide whether to replace the state’s flat-rate income tax with a graduated rate structure.
During a Zoom meeting on Tuesday, the St. Charles Chamber of Commerce's Legislative Committee hosted a discussion on the issue in conjunction with the Illinois Chamber of Commerce. If approved by voters, those taxpayers filing jointly with incomes of $100,000 or less would pay rates slightly lower than the current rate of 4.95%. Couples with joint incomes of more than $250,000 – would see rates increase to 7.75%, with millionaires filing jointly paying 7.99%.
Todd Maisch, president and CEO of the Illinois Chamber of Commerce, noted there are "good arguments" on both sides of the proposed fair tax amendment.
"However, we believe at the Illinois Chamber of Commerce that this is the wrong way to go, especially when you look at the context of our overall tax system," Maisch said. "When you look at the fact that we've got the second highest property tax system in the nation. A lot of people say, well, we can hold down sales taxes if we just go ahead and increase income taxes. The figures don't bear that out."
In addition, the Illinois Chamber of Commerce believes the measure opens the door to future tax hikes, he said.
State Sen. Don DeWitte, R-St. Charles, also spoke against the proposal as part of the discussion. In light of the COVID-19 pandemic, he said Republicans tried to pull the tax amendment off the ballot as well as postponing another increase in the state's minimum wage. On July 1, the current minimum wage of $9.25 an hour is set to increase to $10 an hour.
"Coming out of this COVID crisis, every business in the state of Illinois is struggling to make ends meet," DeWitte said.
State Rep. Dan Ugaste, R-Geneva, also spoke against the fair tax amendment.
"We don't need another tax increase in the state of Illinois," Ugaste said. "We already have one of the highest tax burdens in the entire nation. We don't have a revenue problem in our state, we have a spending problem. We need to learn how to better address our structural problems. These include our pensions, our backlog of bills and our inefficiencies of government, just to name a few...The last thing we need though in Illinois is another regulation bill or tax telling businesses or successful individuals that they're better off setting up shop somewhere else."
But State Rep. Karina Villa, D-West Chicago, who currently represents the 49th district, said she supports the fair tax measure.
Speaking as a candidate for state Senate District 25, Villa said the measure "would make our tax system more fair for all Illinoisans, allowing higher incomes to be taxed at higher rates and lower incomes to be taxed at lower rates. This is a kind of system that a majority of the states and the federal government use, but our constitution currently prohibits it."
"If you are a small business owner, you won't see your taxes increase, unless you make more than $250,000 a year in profits," Villa said. "This means that the overwhelming majority of small businesses will not see an income tax increase, especially if they are struggling from the impacts of the coronavirus crisis."
Villa noted that more than $9 out of $10 the state spends is on education, healthcare, human services and public safety.
"The money from the fair tax will go toward funding those critical services," she said. "97% of the filers in Kane County will not see an increase because they make under $250,000 a year."