The Illinois Constitution reads:
SECTION 3. LIMITATIONS ON INCOME TAXATIONWhat a dumb thing to put in a Constitution: the income tax must be non-graduated. The right type of income tax we should impose on ourselves is a decision for the people to make through our elected representatives, not something that should be restricted by the Constitution.
(a) A tax on or measured by income shall be at a
non-graduated rate. At any one time there may be no more than
one such tax imposed by the State for State purposes on
individuals and one such tax so imposed on corporations. In
any such tax imposed upon corporations the rate shall not
exceed the rate imposed on individuals by more than a ratio
of 8 to 5.
Fortunately, lots of legislators are working to change this and a new proposal introduced by Elementary and Secondary Education Committee Chair Mike Smith (D-Pekin) looks like it has some legs. He has introduced HJRCA 42 which would do two excellent things.
1. It would cut taxes on most working families by making the first $4200 earned tax-free. Right now only the first $2100 earned is tax free, so we are perpetuating poverty by taking people who make minimum wage. That's dumb.
2. It would create a new tax bracket of $250,000. Any income earned above the quarter-million dollar level would be taxed at 6%, not 3%. So Michael Jordan's $31 million earned last year would face a tax bill of 3% for the first $250,000 and 6% of the net $30,750,000. And you know what? I think he can afford it.
The amendment also indexes those two figures so that they rise with inflation -- another smart move.
Full disclosure: I've been actively working pro bono to get some constitutional amendment on the ballot this November so we can get rid of this dumb flat rate mandate. I am pleasantly surprised by Representative Smith's amendment, which is another way of saying that I had no hand in it.
The best part about HJRCA 42 is that it has been assigned to a committee! Next week it will be heard in Representative Jack Frank's State Government Administration Committee. That is enormous progress as I'm not aware of any other constitutional amendment for a progressive income tax getting assigned to committee in either chamber in the last decade or so.
So this thing can happen. The May 4th deadline is fast approaching to pass a constitutional amendment with a three-fifths vote in each chamber, so if you have not called your state legislators and asked them to put a progressive income tax amendment on the November ballot yet, now is the time.
Of course, if you thought Steve Forbes was right in 1996, and that you think we should use a *higher* income tax rate the *lower* one's income becomes, then you probably won't like these amendments. If, on the other hand, you think that the government should tax us based on our ability to pay that year, then these amendments are very good.
Another very good sign: Downstaters are not scared of a progressive income tax, as Representatives Bradley, Holbrook and Vershoore (as this Bloomington-Normal Pantagraph article makes clear) all support the amendment. There's an incorrect school of thought that Downstaters will always vote against tax increases, no matter how reasonable the proposal or whether the relatively low-income voter will in fact be better off under a progressive tax system, so therefore pushing for a tax increase is folly. I think this amendment is helping to make clear that the consensus for fixing our regressive tax system is growing, particularly Downstate.