CHICAGO – The Tax Foundation has come up with twelve things Illinoisans should know about Gov Pritzker's proposed new tax rate system. Besides the need to change the state's constitution, the Tax Foundation outlines how what taxpayers pay would be different:
Under Gov. Pritzker’s proposal, … the current 4.95 percent flat individual income tax would be transformed into a six-rate tax, with rates ranging from 4.75 to 7.95 percent. A recapture provision means that filers with income in the top bracket will have their entire income, not just their marginal income, subject to the top rate of 7.95 percent. Meanwhile, the base corporate rate would increase from 7 to 7.95 percent (10.45 percent counting the personal property replacement tax), in a misguided—and miscalculated—effort to match the new top rate on individual income.
The plan also includes an increase in the value of the property tax credit, from 5 to 6 percent of the taxes paid on one’s primary residence, and a new $100 per child tax credit, which phases out beginning at $40,000 in income ($60,000 for two-income families). The following table shows the proposed rates and brackets.
The Tax Foundation lists 12 points about the proposal:
- The proposal would create some of the highest rates in the country.
- Illinois’ neighbors are making their tax rates more competitive, not less.
- These higher taxes would have a significant impact on Illinois businesses.
- The cost of high rates has never been higher.
- Business rate parity makes little sense.
- The new rates include a highly unusual “recapture” provision.
- The proposal creates a significant marriage penalty.
- Tax burdens will rise due to “bracket creep.”
- There is no guarantee that rates will not rise in the future.
- The numbers do not add up.
- The proposal eliminates the best feature of Illinois’ tax code.
- Illinois’ business competitiveness will decline.
More details on the points are at Tax Foundation.org
