ILLINOIS — Some Illinois taxpayers could be paying nearly 60 percent combined federal and state marginal tax rates if Joe Biden is elected president and Illinois voters approve the graduated income tax. That’s according to the nonpartisan Tax Foundation.
Former Vice President Joe Biden’s tax plan, as analyzed by the nonpartisan Tax Foundation, would take the top federal individual income tax rates from 37 percent to 49.4 percent, when including various proposals. Add that on top of Illinois’ flat income tax, Tax Foundation’s Jared Walczak crunched the numbers.
“Your top marginal all-in state and federal rates can reach 44.3 percent,” Walczak said of the way it is now on a federal and state level with no changes. “Pretty high, but that’s where we are right now.”
If voters elect Biden and approve changing the state’s flat income tax to one with higher rates on higher earners under the rates the Illinois legislature approved, Illinois’ top rate would be among the highest in the country.
“For individuals, it reaches 57.26 percent and for pass-through businesses, it gets just under 59 percent,” Walczak said.
That’d be near three other states that could have 60 percent top rates when combining the federal and state income taxes, California would come in at 62.64 percent, Hawaii at 60.34 percent and New Jersey at 60.09 percent.
The Tax Foundation previously reported that if Illinois adopts the state income tax change, the state’s business climate would sink to near the bottom of all states from 36th to 47th.
During a debate hosted by Truth In Accounting on Tuesday regarding the proposed constitutional amendment voters are being asked about this election, Center for Budget and Tax Accountability’s Ralph Martire argued for the amendment while Illinois Policy Institute’s Austin Berg was against it.
Berg said voters should have gotten a chance to vote on things such as term limits, fair maps, a balanced budget requirement, spending caps or pension reform.
“But instead they’re going for money first,” Berg said. “So I don’t think that’s rational.”
“We agree they’re going for money here,” Martire said. “This is a tax increase bill. I agree with that. You agree with that. I don’t disagree.”
Martire said in a non-COVID-19 economy, the tax increase would be $3.4 billion a year without the burden being on the middle class.
The rates aren’t set by the amendment and that’s something Berg said gives too much power to politicians.
The Center Square -Greg Bishop