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Illinois Needs a “Fair Tax”. Replacing the Flat Tax With a Graduated State Income Tax. FLAT TAX RATE HURTS THE POOR. The 2% tax increase had to be paid by everybody Even with the tax increase many programs have had to be cut. What’s Wrong with Illinois’s Tax System?. UNFAIR - PowerPoint PPT Presentation
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Illinois Needs a “Fair Tax”
Replacing the Flat Tax With a Graduated State Income Tax
The 2% tax increase had to be paid by everybody
Even with the tax increase many programs have had to be cut
FLAT TAX RATE HURTS THE POOR
What’s Wrong with Illinois’s
Tax System?UNFAIR
INEFFICIENT
INADEQUATE
Who has benefitted from economic growth?
Our Current Income Tax Structure
The Tax Burden for the Top 1% in Illinois is 2 to
3 Times Less
Because Illinois Taxes are Unfair, They are Inefficient
EDUCATION (preK through higher ed.) 35% HEALTHCARE
30% HUMAN SERVICES
21% PUBLIC SAFETY 5%
91%
FACT: Over $9 out of $10 of the General Funds are spent on 4 core
services:
Category 2013($
Millions)
2000 Adjust for Inflation & Pop
Growth
$ Diff FY2013 –FY2000 Adjust for Inflation & Pop Growth
% Change
Net Public Services excluding Pensions and Group Health
$23,539 $30,915 -$7,376 -23.86%
P-12 $6,542 $7,464 -$922 -12.35%Higher Ed $1,980 $3,315 -$1,335 -40.28%Healthcare (excluding Group Health) $6,852 $8,934 -$2,082 -23.30%
Human Services (excluding all Healthcare) $4,749 $7,086 -$2,337 -32.98%
Public Safety $1,606 $2,081 -$475 -22.82%Sources: FY 2013 Budget as passed in HR 706, SB2348, SB2413, SB2443, SB 2454, SB2474, SB 2332, SB2378, SB2409, and June 2012 Communications with Legislative staff.
How Much have we Cut?
Local and State Share of Education Funding Spending
Source: National Center on Education Statistics, 2011. “Revenues and Expenditures for Public Elementary and Secondary Education: School Year 2008-2009 (Fiscal Year 2009).”
And the Income Tax Increase Expires in 2015
Rate Structure Change In 2015, the personal income tax rate
drops from 5% to 3.75% In 2025, the personal income tax rate
drops from 3.75% to 3.25% Revenue Impact
In 2015, along with reduction in the corporate tax rate, this will result in a loss of... $4
billion
What’s The Solution?
How Can We Make Illinois Taxes More Fair, More Efficient, and
Fiscally Sustainable?
Graduated Income Tax
Makes the system more fair; account for a person’s ability to pay
Helps repair the state budget long term
Spurs the economy by putting money back in the pockets of middle and low-income Illinoisans
Most Other States Have Graduated Rates
Our Neighbors:Iowa: 9 Rates (0.36% to 8.98%)Kentucky: 6 Rates (2.0 to 6.0%)Missouri: 10 Rates (1.5% to 6.0%)Wisconsin: 5 Rates (4.6% to 7.75%)
Federal Income Tax Rates are Graduated
35 of the 42 States with Income Taxes have Graduated Rates
No tax on first $5,000 5% tax rate up to $100,000 7,5% up to $150,000 8.5% up to $200,000 9.5% up to $300,000 10% up to $500,000 10.5% up to $1,000,000 11% over $1,000,000
A Specific Proposal
Graduated Rates Could Mean that Most Illinoisans Would
Pay Less
(Center for Budget and Tax Accountability, January 2012)
We Can Win a Fair Tax
Preamble of Illinois’ Constitution
We, the People of the State of Illinois - grateful to Almighty God for the civil, political and religious liberty which He has permitted us to enjoy and seeking His blessing upon our endeavors - in order to provide for the health, safety and welfare of the people; maintain a representative and orderly government; eliminate poverty and inequality; assure legal, social and economic justice; provide opportunity for the fullest development of the individual; insure domestic tranquility; provide for the common defense; and secure the blessings of freedom and liberty to ourselves and our posterity - do ordain and establish this Constitution for the State of Illinois.
Current Illinois Constitution: Article IX -- Revenue Section 3. Limitation on Income Taxation (a) A tax on or measured by income
shall be at a non-graduated rate.
Change requires a constitutional amendment
1. Constitutional amendments can only be placed on the ballot in November with approval by 60% of the General Assembly (71 votes in the House and 36 votes in the Senate)
2. Referendum in November must be approved by 60% of voters
We need to win both voter approval
and legislative support
Constitutional Amendment Process
1. Build Momentum and Educate our Communities
2. Win Legislative Approval (January 2014 to May 2014)
3. Win Voter Approval (May 2014 to November 2014)4. Propose and Pass Fair Tax Bill
Four Phase Plan:
Our Voices Have to Be Heard
Our stories have to be told
FIRST: Endorse the Campaign
Then educate,energize, organize and mobilize!
Next Steps – The Path to Victory