Taxes
Taxes
In a recent article critical of a proposed move to a progressive income tax, the Heartland Institute’s Matthew Glans and Lennie Jarratt point out that one of the arguments for the tax is an empty one: revenues the state has been collecting through the current flat tax are among the most robust in the Midwest.
Recent data collected by the Pew Charitable Trusts shows that Illinois tax collections rose 15.5% in a comparison of tax receipts in the second quarter of 2018 with each state’s peak quarter of revenue before the end of the recession. The highest was Minnesota at over 25 percent.
The state’s perennial budget problems stem from spending too much, not from collecting too little, the writers say.
The flat tax, moreover, has benefits a progressive tax would take away: the tax doesn’t penalize higher salaries that productivity brings; it’s fair to all. It boosts economic performance by eliminating the tax bias against savings and investments.
“Imposing a progressive income tax is likely to have long-term negative effects on all Illinois residents by further damaging the state’s business climate and eliminating more jobs,” Glans and Jarratt write in the article. “Illinois is already an economic basket case: its population is decreasing at an alarming rate, unemployment remains high, and future unfunded liabilities keep growing. Simply put, increasing taxes on Illinois residents is the wrong path, and will only compound existing issues.”
Illinois has the most punishing tax system in the country, according to a recent ranking published by WalletHub. That tax burden is driving taxpayers from the state.
“Illinois’ inability to keep its people is spreading to more of the state’s counties, according to data released April 18 by the U.S. Census Bureau,” the Illinois Policy Institute reports.
“Late last year, the U.S. Census Bureau released data confirming Illinois experienced its 5th straight year of population loss driven by residents moving out," the IPI continues. "The big concern is prime working-age Illinoisans are leading the exodus, thanks to the state’s underwhelming labor market driven by high taxes and by policies that hinder job creation.”
A progressive income tax would only create a greater exodus.
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