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1 Jared Walczak, Will Illinois Double down on High Taxes 1 (2018)

handle is hein.taxfoundation/widowhx0001 and id is 1 raw text is: FISCAL FACT No. 583 Apr. 2018 The Tax Foundation is the nation's leading independent tax policy research organization. Since 1937, our research, analysis, and experts have informed smarter tax policy at the federal, state, and local levels. We are a 501(c)(3) nonprofit organization. @2018 Tax Foundation Distributed under Creative Commons CC-BY NC 4.0 Editor, Rachel Shuster Designer, Dan Carvajal Tax Foundation 1325 G Street, NW, Suite 950 Washington, DC 20005 202.464.6200 taxfoundation.org Will Illinois Double Down on High Taxes? Jared Walczak Senior Policy Analyst Key Findings * In Illinois, legislation is pending repealing the state constitution's uniformity clause and adopting a graduated-rate income tax with a top rate higher than the current rate. Graduated-rate taxation has also emerged as a theme in the gubernatorial race. * Illinois' low, single-rate individual income tax is the saving grace of an otherwise high-rate and uncompetitive state tax code, and even its benefits are limited by a surtax on pass-through business income which brings the rate to 6.45 percent for small businesses. * Graduated-rate income taxes are more susceptible to rate changes, a concern in a state where tax increases are contemplated so frequently. Two years ago, lawmakers came close to adopting an 11.25 percent tax on pass-through businesses. * Under House Bill 3522, Illinois would fall from 29th to 41st overall on the State Business Tax Climate Index, which measures tax structure, as the change would eliminate the state's one competitive advantage. * In the past, the state's high taxes have forced officials to cut lucrative incentive deals with companies to keep them in-state. At a time when other states are increasingly working to make their own codes more competitive, repealing a taxpayer protection in the state constitution would be a step in the wrong direction.

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