A pro-tax group has taken to the airwaves with a misleading advertisement aimed at getting Illinoisans citizens to vote for a constitutional amendment for a graduate tax.
The ad put out by “Vote Yes For Fairness” opens on a female nurse preparing to administer a COVID-19 test through a car window and then cuts to a male grocery store worker organizing produce.
“If she lived in Wisconsin, she would pay a lower tax than millionaires, in Iowa so would he, but not in Illinois because we have one of the most unfair tax tax systems in America,” a narrator said.
While the ad was correct in pointing out Wisconsin and Iowa have progressive taxes, the conceit that workers in those states pay less in income tax is flawed.
The Fair Tax is being marketed to voters as limiting its effect to millionaires. However, a deeper dive into the issue reveals the claims made by “Vote Yes For Fairness” are misleading to voters.
Illinoisans making $50,000, which is just below the national average wage of $52,145, currently pay the same 4.95 percent tax percentage under the current flat tax, regardless of income.
For an employee making the same amount the income tax rate in Iowa is 7.44 percent and 6.27 percent in Wisconsin. This means a worker in Illinois will save $56 over Iowans making the same wage and Wisconsin workers making $261 more in income tax per year than Illinoisans.
Neither state’s top tax bracket is limited to millionaires.
The top rate of nine progressive income tax brackets in Iowa is 8.53 percent for yearly wages $73,710 or more. In Wisconsin 7.65 percent is the highest income tax bracket for those making at least $263,480 per year.
Similarly, the ad says Illinois is one of the “only” states with a flat income tax. In all, eight states have a flat tax, including the boarder states of Kentucky, which has a 5 percent rate, and Indiana with a 3.23 percent rate. Illinois’s neighbor to the east, Missouri, is different in that it has a Gross Income Tax where workers pay at most 5.4 percent on income over $8,424.
The proposed tax would also increase the corporate tax to 10.45 percent and increase the pass-through business income tax to a high of 9.45 percent.
According to the Tax Foundation, if Illinois passes the progressive tax increase it will move the state ranking from 36th to 48th place on the State Business Tax Climate Index.
Illinoisans will vote on whether to reject or accept the tax via referendum in the November election.
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