Illinois lawmakers push retirement tax to keep spending more

As state lawmakers look to plug budget holes by removing limits on state income tax rates, Illinois’ spending is set to continue breaking records.

The state budget has grown by 35% since 2020, but Illinois lawmakers want more and hope to get it by amending the Illinois Constitution so they can potentially tax retirees and target income groups of their choosing.

The proposed amendment would end Illinois’ longstanding flat income tax. Supporters claim it would relieve property tax pressures and boost school funding. But voters statewide rejected progressive tax schemes because they promised to hit retirees, family farms and small businesses hard.

The flat tax makes it painful for state lawmakers to raise taxes, because when they do all taxpayers suffer and hold them responsible at the next election. Killing the flat tax gives lawmakers the power to divide and conquer taxpayers.

Illinois has record spending

The problem is not income but rather spending: Illinois’ budget has grown at an alarming rate. An influx of federal pandemic funds marked for temporary relief allowed lawmakers to add billions into the general funds baseline spending.

Since 2020, Illinois’ annual general funds spending has increased by over $15 billion and is projected to grow another $7 billion by 2029. That would mark a 55% spending increase in just 10 years.

With the state projecting nearly $11 billion in budget deficits through 2029, this level of unchecked spending is unsustainable.  That is, unless state lawmakers can force more taxation on Illinoisans.

New cash-grab attempts

Illinois’ economy has grown at one of the slowest paces in the nation during the past five years, dragged down by high taxes and people consistently moving out.

As sluggish economic growth is expected to continue and the state’s high unemployment is expected to rise, lawmakers continue searching for revenue grabs to fill in these budget holes. The latest attempt is to end the state’s long-standing flat income tax.

The flat income tax has been one of the state’s few competitive strengths. It offers simplicity, predictability and transparency while protecting small businesses and retirees from unexpected tax hikes.

Illinois’ sales taxes, corporate taxes and property taxes rank among the highest in the nation. They are major forces driving residents and businesses away.

This is why previous pushes for progressive income taxes were promptly rejected by voters. While property taxes absolutely remain too high, raising even more economically harmful taxes as a replacement is not the answer. It would only deepen the state’s structural weakness.

Illinois needs to control spending

If the state wants to truly create a sustainable economy built on growth rather than short-sighted revenue grabs, it must control spending. This means enacting spending caps that ensure spending does not grow faster than the economy. This would keep spending stable, provide predictability and reduce the cycle of perpetual crisis.

Other needed reforms include cutting administrative waste, reforming over-generous health care benefits, cutting harmful regulations and improving the tax environment to support sustained economic growth.

Illinois residents need stability, transparency and a stronger economy – not another harmful tax hike.