Illinois House Deputy Majority Leader Lou Lang (D-Skokie) introduced a plan Friday for a graduated state income tax. The proposal would require a constitutional amendment, which is contained in HJRC 59, sponsored by state Rep. Christian Mitchell (D-Chicago).
Illinois currently has a flat income tax, under which all residents are taxed at the same 3.75 rate despite their income. Advocates for a progressive tax rate say a flat tax disproportionately affects low-income households because people with high incomes pay a smaller percent of their earnings. A graduated, or progressive, income tax system, applies higher rates to larger incomes and lower rates to smaller incomes.
Under Lang's proposal, HB 689, heads of households or taxpayers who are married and filing a joint return would see the following income tax rates: 3.5 percent for those earning $200,000 or less; 3.75 percent for those earning more than $200,000 and up to $750,000; 8.75 percent for those earning more than $750,000 and up to $1.5 million; and 9.75 percent for those earning more than $1.5 million.
For all other taxpayers, the rates would be 3.5 percent for those earning $100,000 or less; 3.75 for those earning more than $100,000 and up to $500,000; 8.75 percent for those earning more than $500,000 and up to $1 million; and 9.75 percent for those earning more than $1 million.
Ninety-nine percent of Illinoisans would see a tax cut under the proposal, which would generate $1.9 billion in new state revenue, according to proponents.
Catherine Kelly, a spokeswoman for Republican Gov. Bruce Rauner, provided the following statement to Capitol Fax about the graduated income tax proposal: "The majority party's desire to skyrocket taxes is breathtaking. A progressive income tax would be the straw that breaks the Illinois economy's back - sending our state even further into the economic doldrums. It's beyond time for Democrats to come to the table and work with the governor to find common ground on real structural reforms that will get our economy moving in the right direction."