Rock Island Today

Gov. J.B. Pritzker’s plan to change the state’s tax code has received a lukewarm reception.

The Fair Tax would change the income tax system from a flat tax to a graduated income tax. Per the governor, the proposed amendment to the state constitution intends to provide most Illinoisans with a fairer tax code, tax relief and job opportunities.

Pritzker introduced the plan March 9.

Critics argue that the Fair Tax would create a cash grab that will hurt citizens, especially small-business owners, and trigger a brain drain. According to opponents, it will deepen the fiscal hole the state is already in.

Under the plan, which will be voted on in a referendum if approved by three-fifths of the state legislature, all income of millionaires would be taxed at the top rate of 7.95 percent.

In a commentary published last month, Jared Walczak, a senior policy analyst with the Center for State Tax Policy at the Tax Foundation, said that the proposal “diverges sharply from ideal—or even typical—income tax structure.”

“It omits inflation indexing (resulting in ‘bracket creep’), creates a marriage penalty, and includes a recapture provision which subjects the entirety of a taxpayer’s income to the top marginal rate once they reach that bracket,” wrote Walczak.

He added that unlike its neighbors, Illinois “may be headed in the opposite direction.”

Chief economist Orphe Divounguy and research analyst Bryce Hill, both with the Illinois Policy Institute, raised issued with Pritzker’s claim that the plan will generate $3.4 billion in new revenue.

“Pritzker’s revenue projections overstate by nearly $2 billion the amount a progressive income tax hike would actually bring in,” the men asserted in a post on the IPI’s Web site.

Wirepoints founder Mark Glennon shared Divounguy and Hill’s skepticism about the projected revenue figure. Glennon wrote that the number will not be enough to address the annual funding shortfall for the state’s five pensions.

“The new tax wouldn’t come close to solving the state’s pension crisis, never mind the hundreds of local pension funds across the state,” he stated.

State Rep. Tony McCombie (R-Savanna) was contacted by Rock Island Today but declined to comment.