As a Tax Professional, I have been asked frequently about the Proposed Amendment to the Illinois Constitution or what has been referred to as the “Fair Tax for Illinois” Amendment.
First and foremost, I believe calling this a “Fair Tax” is very misleading. Politicians who support this amendment are hoping the masses will blindly vote for a so-named “Fair Tax”. Illinois which currently has a flat 4.95% income tax which is imposed on the taxable income of the state’s residents and Illinois source income for the state’s non-residents.
A “flat tax”, such as the state imposes is actually about as “fair” of a tax as imaginable. You have more taxable income; you pay more tax. You have less taxable income; you pay less tax. That is about as “fair” as a tax structure can be.
Here are some facts about the State of Illinois current tax system:
Illinois does not need a progressive tax regimen. Take a look at Indiana, they have 3.23% flat tax rate and maintain a budget surplus. Conversely, take a look at states like California, New York and New Jersey (all of which have a progressive tax). How do their state budgets outshine Illinois?
Has anyone ever noticed the IL-1040 Schedule G? Taxpayers can make donations to a handful of charitable causes which either reduce your refund or increase the amount you owe. Here’s a suggestion. If you are a billionaire like a Warren Buffet, Bill Gates, JB Pritzker or anyone else who are happy to pay more tax, let’s add a line to Schedule G allowing voluntary contributions to end the state’s budget shortfall.