Interactive dashboard: State income tax rates

Illinois’ competitive flat rate income tax is protected in the state’s constitution. But there is a growing movement to increase income taxes in Illinois by swapping out the state’s flat-rate income tax for a progressive tax. The progressive tax plan is being sold as a tax on the rich. But the data tell a different...

Illinois’ competitive flat rate income tax is protected in the state’s constitution. But there is a growing movement to increase income taxes in Illinois by swapping out the state’s flat-rate income tax for a progressive tax.

The progressive tax plan is being sold as a tax on the rich. But the data tell a different story.

Illinois’ flat-rate income tax is currently 5 percent, and is legally required to decrease to 3.75 percent in 2015. Most progressive income tax states tax middle and low incomes at a higher rate than Illinois. Consider the following examples:

• Georgia has six income tax brackets, the highest being 6 percent on incomes of more than $7,000
• Louisiana has three income tax brackets, the highest being 6 percent on incomes of more than $50,000
• Mississippi has three income tax brackets, the highest being 5 percent on incomes of more than 10,000
• Missouri has 10 income tax brackets, the highest being 6 percent on incomes of more than $9,000
• Montana has seven income tax brackets, the highest being 6.9 percent on incomes of more than $16,400
• Nebraska has four income tax brackets, the highest being 6.84 percent on income of more than $27,000
• Virginia has four income tax brackets, the highest being 5.75 percent on income a of more than $17,000

A similar story is true for Alabama, Arkansas, Idaho, Kentucky, New Mexico and many other progressive tax states. A progressive income tax is not just a tax on the rich; it’s a tax on middle and low incomes.

States with progressive incomes taxes are also less competitive than low tax states. Compared to high income tax states, states that don’t tax personal income experience greater population growth, economic growth and cumulative job growth.

That’s why North Carolina recently abandoned its progressive income tax for a flat-rate income tax.

The interactive dashboard below can be used to compare and contrast the different methods of collecting income taxes in the states.