![]() ![]() It advanced to the Senate Executive Committee, but failed to make the deadline to clear the Senate, and was withdrawn. Harmon's proposed constitutional amendment, SJRCA 40, passed the Senate Executive Subcommittee on constitutional amendments. ![]() Don Harmon (D-Oak Park) proposed a Fair Tax amendment along with separate legislation proposing a marginal rate schedule that taxed the first $12,500 of income at 2.9 percent, the range from $12,500 to $180,000 at 4.9 percent, and taxed all income over $180,000 at 6.9 percent. The House Revenue Committee rejected Jakobsson's proposal in March 2014. The bill received some criticism for containing no proposed tax rate schedule. Naomi Jakobsson, an Urbana Democrat proposed and advanced HJRCA 33, the initial House legislative vehicle for the proposal. Governor Pat Quinn proposed extending the 5 percent flat tax indefinitely, while other groups sought to use a graduated tax to raise revenues. In its own analysis, the federation projected that the loss of revenue "would dramatically destabilize Illinois' already weak financial condition." They argued that the loss of revenue would be bad for Illinois' businesses, due in part to the fact that the state still owed many private businesses money. In January 2014, the non-partisan business group Civic Federation of Chicago estimated that the prescribed cut in income tax would yield decreased revenues of $1.4 billion in FY15 growing to $2.7 billion in FY16. ![]() The rate was set to drop to 3.75% in 2015. In 2011, the Illinois government temporarily raised the personal income tax rate from 3% to 5% in order to raise revenues. Legislative history 2013–14: First attempts to pass graduated income tax in Illinois The United States federal government, via the Internal Revenue Service, uses a graduated income tax. The last state to switch from a flat state income tax to a graduated state income tax was Connecticut in 1996. states with a flat income tax seven states have no income tax 32 other states use graduated income taxes, which tax higher incomes at a higher rate. A flat income tax, which taxes all income levels at the same rate, is required by the current Illinois state constitution. Under current law, Illinois's state income tax rate is a flat rate of 4.95 percent. ![]() See also: State income tax and Progressive tax Opponents of the proposal refer to it using other, less favorable terms. The term "Fair Tax" is used by legislative proponents and advocates of the proposed amendment, who consider a graduated income tax to be more fair than a flat tax. As a constitutional amendment, the proposal needed to be approved by 60% of those voting on the referendum, or by 50% of all voters voting in the election. The referendum was not approved, receiving about 45% "yes" votes and 55% "no" votes. Opponents argued it would open the door to future tax hikes, hurt businesses, drive businesses and wealthy residents to neighboring states, and place more revenues in the hands of an untrustworthy state government. Proponents argued that the proposal would make the Illinois tax code fairer, provide tax relief to most Illinoisans, better fund public goods and social services, and boost small businesses. Concurrent with the proposed constitutional amendment, the Illinois legislature passed legislation setting a new set of graduated income tax rates that would have taken effect had the amendment been approved by voters. The proposal, formally titled the "Allow for Graduated Income Tax Amendment", appeared on the ballot in the Novemelection in Illinois as a legislatively referred constitutional amendment striking language from the Constitution of Illinois requiring a flat state income tax. The Illinois Fair Tax was a proposed amendment to the Illinois state constitution that would have effectively changed the state income tax system from a flat tax to a graduated income tax. ![]()
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