Illinois could eliminate flat income tax rate

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by Diana Zoga / News 4

KMOV.com

Posted on July 22, 2013 at 5:53 PM

Updated Monday, Jul 22 at 6:00 PM

(KMOV.com ) -- Some lawmakers are proposing big changes to the way your income is taxed in Illinois. 
Currently, filers in Illinois pay a flat tax rate across all income levels.  But some democrats in the Illinois House and Illinois Senate are backing an idea to eliminate the flat tax and replace it with a graduated system - similar to the way many states and the federal government tax income.

It would take a constitutional amendment and voter approval to make the changes.

State Senator Kwame Raoul of the 13th district in Chicago told News 4, by phone, that the current flat tax rate isn't fair to lower income filers.

"Right now, we're handicapped because the constitution says there has to be a flat tax and, you know, that's great for the rich but it's unfair to the middle class and the working poor," said Raoul.

Raoul is one of the state legislators sponsoring a resolution to amend the state constitution.  There's a Senate Joint Resolution and a corresponding House Joint Resolution up for debate.

If passed, a constitutional amendment question would be placed on the ballot for voter approval.

All of this is happening as lawmakers try to raise more revenue for the cash-strapped state.  The current flat income tax rate in Illinois is 5%. It was hiked up from 3% by lawmakers two years ago.  The tax hike is scheduled to roll back, slightly, to 3.75% in 2015.

Along with resolutions to amend the state constitution and eliminate the flat tax, there is another one that opposes any changes to the tax structure. Representative Charlie Meier of the 108th District tells News 4 that the elimination of a flat tax rate would penalize entrepreneur.

"They say its fair because they're taking it from people who have more money than others, but what they're doing it attacking the businessman," said Meier.

"Why should I have to pay a higher percentage for working hard?".

If the state constitution is amended to eliminate the provision that requires a flat tax rate, the structure of the new graduated tax rate would be hashed out by state lawmakers, later.  At this point, there's no guarantee that lower or middle income earners would get a tax break. 

"What we're saying is lets just lift the mandate from the constitution of a flat tax, then we can have a discussion as to what the structure of the income tax is," said Raoul.


 

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