Taxes matter: Illinoisans respond to higher tax rates

Ben VanMetre Senior Budget and Tax Policy Analyst Proponents of higher taxes often argue that tax increases don’t influence how individuals behave. But recent revenue numbers in Illinois show that’s simply not the case. According to the Associated Press, Illinois’ income tax revenue for 2013 will exceed previous forecasts by $1.3 billion. But revenue isn’t higher...

Ben VanMetre
Senior Budget and Tax Policy Analyst

Proponents of higher taxes often argue that tax increases don’t influence how individuals behave. But recent revenue numbers in Illinois show that’s simply not the case.

According to the Associated Press, Illinois’ income tax revenue for 2013 will exceed previous forecasts by $1.3 billion. But revenue isn’t higher because Illinois’ economy is booming; the revenue is higher than expected as a result of businesses and individuals avoiding higher federal taxes by selling assets and taking early dividends.

Tax rates influenced behavior.

That’s why Gov. Pat Quinn should take these revenue numbers into consideration when he advocates for a multibillion dollar tax increase in Illinois, known as a progressive income tax.

Pushing income taxes even higher for families in Illinois would most definitely change behavior. Progressive taxes are contrary to sound tax policy because they penalize the ingredients of self-sustaining prosperity — work effort, saving, investment, risk-taking, entrepreneurship and population in-migration.

If success is punished, fewer people will be successful. If growing a business is punished, fewer businesses will grow. If creating jobs becomes more expensive, fewer jobs will be created.

People respond to incentives. And, ironically, a progressive income tax disincentivizes progress.