By Cole Lauterbach
Illinois News Network

CHICAGO- A report on how Illinois’ taxes stack up to others shows that the state’s flat income tax rate is slightly progressive when deductions are factored in.

Illinois’ flat tax could be on the way out if voters approve of a change to the Illinois Constitution to allow lawmakers to set rates differently for taxpayers with different income levels. In its annual “Illinois Chartbook,” the Taxpayers Federation of Illinois said the state’s many deductions mean those making less have a larger percentage of their tax liability lopped off.

“For every member of your family, there’s a standard, or personal, exemption of $2,000-plus per person,” Federation President Carol Portman said. “If you only make $20,000 a year and you’re a family of four, $8,000 of your income is pulled out of the base automatically and you’re only paying taxes on the $12,000.”

A progressive tax, Portman said, would do the same, but the difference in tax burdens would be more pronounced, similar to California and New York.

“In those states, it’s a much more meaningful curve so that the bottom-end folks don’t pay as much and the higher-end folks pay a lot more,” she said.

Illinois adds even more progressivity by means-testing some of its exemptions, but Portman said those aren’t reflected in the data.

The income tax rates that would take effect in 2021 should voters approve the Fair Tax Amendment include a clawback provision for those with income above $750,000 (or $1 million when filing jointly) creating a flat tax on all income above those thresholds.