Legislators in Springfield completed regular business for the first session of the 101st General Assembly. Several large pieces of legislation were passed that will have an impact on SBAC members both personally and as small business owners. One of the most controversial issues is the proposed graduated income tax.
Elected officials in Springfield voted to include a graduated income tax plan on the November 2020 ballot for consideration (SJRCA 1). If approved by the public, this proposal would amend the state constitution by repealing the current flat-rate income tax and replacing it with a graduated-rate tax based on income.
In a separate action, both chambers of the General Assembly passed Public Act 101-0008, which proposed the tax rates should the graduated system be enacted. If SJRCA is approved, these rates would take effect on January 1, 2021.
Income above the outlined thresholds will be taxed at that specific rate until individuals hit the $750,000 mark or joint filers make $1,000.000. At that point all income will be taxed at 7.99%. For example, for an individual making $300,000 a year, the first $10,000 is taxed at 4.75%, the next $90,000 at 4.9%, $150,000 at 4.95% and the final $50,000 at 7.75%.
Additionally, the corporate tax rate will increase from 7% to 7.99%.
SBAC members and small business advocates have concerns and many questions related to the proposal for a graduated income tax. Our members would like answers these and other questions as they assess the issue:
1. Is the progressive income tax tied to systematic reforms that will stabilize the Illinois economy?
2. Is the increased revenue going to be used to pay down debt, including the state’s unfunded pension liability?
3. Will a graduated income tax be tied to property tax relief for our state’s residents?
The SBAC will hold a series of town hall meetings to discuss the ballot initiative, that if passed by voters, will pave the way for a graduated income tax in Illinois. We will conduct these town hall meetings in a non-partisan manner so that elected officials can present their positions to SBAC members and coalition partners. We will have dates and locations for these meetings solidified in short order. We hope you can join us and engage in this important conversation!