Ben VanMetre
Senior Budget and Tax Policy Analyst

Illinoisans should pay attention to what’s happening in California, where voters will soon decide on Proposition 30 – an effort to make the state’s income tax even more progressive. Certain people and groups in Illinois, including Gov. Pat Quinn, want to introduce a tax structure just like California’s current setup.  

Under California’s current progressive income tax structure, the second-highest marginal rate of 9.3 percent kicks in at just $48,000 (Table 1).

Government officials in California aren’t raking in the revenue they were looking for with the current version of the progressive income tax scheme. Their solution? Creep down the income ladder with higher taxes. 

Gov. Jerry Brown is asking voters in California to add three more brackets to the state’s already steep progressive structure, increasing the top marginal rate to 13.3 percent (Table 2). The millionaires rate of 10.3 percent would apply to individuals earning $250,000. 

 
Although the progressive tax structure currently being pushed in Illinois (Table 3) isn’t as steep as California’s, Illinoisans can expect it to creep down the income ladder just as its doing in California. Remember, individuals making $48,000 a year pay California’s second highest marginal rate. This is hardly a tax that only affects the rich. Under Illinois’ flat tax system, an individual making $48,000 today is taxed at a rate of 5 percent, which is set to go down to 3.75 percent. 

Illinois lawmakers already “temporarily” raised incomes tax rates by a record 67 percent on individuals in 2011. Illinois law requires the income tax hike to sunset in 2015. 

To be clear, the temporary nature of the 2011 tax hike is more than a promise, it’s the law. 

The progressive income tax plan pushed by a union-funded liberal policy group wants to make Illinois’ temporary income tax hike permanent. The income tax rate would remain at 5 percent rather than sun-setting to 3.75 percent. 

Regardless of how liberal groups want to sell their progressive tax plans, paying an income tax rate of 5 percent instead of 3.75 percent is a tax increase. To say that a progressive income tax wouldn’t increase taxes on Illinoisans is a lie.

The reality is that the 2011 tax hike wasn’t enough to satisfy the culture of habitual overspending in Illinois. That’s why lawmakers want to make the temporary tax permanent and push through a progressive income tax hike.

If you think a progressive tax is good for Illinois, ask yourself whether or not you think our state should use California as a role model for fiscal policy. It’d be like looking to a frat party on Saturday night as a model of responsible behavior. Unfortunately, if Illinois adopts a progressive tax, the fiscal hangover would last much longer than an afternoon.