Suburbs could pay more under graduated income tax

  • A graduated income tax being debated for Illinois could push more of the total tax burden onto the suburbs, some say.

    A graduated income tax being debated for Illinois could push more of the total tax burden onto the suburbs, some say. File photo

  • An Illinois Department of Revenue employee offers assistance to income tax payers at the the agency's offices in Springfield.

    An Illinois Department of Revenue employee offers assistance to income tax payers at the the agency's offices in Springfield. Associated Press, 2012

Updated 3/4/2014 8:05 PM

A growing campaign for a graduated income tax in Illinois could push more of the total tax burden onto some areas of the suburbs, where median incomes far outpace state averages, critics say.

But supporters argue middle-class Illinoisans, no matter where they live, could see a tax cut under the plan as they try to raise taxes on the wealthiest people to make up for it.


Some Democrats support a plan to ditch Illinois' 5 percent flat income tax rate and replace it with tax rates that would vary depending on income. People who make more money would have higher tax rates, which supporters say is more fair than the current system.

The plan would require amending the state constitution and new rates wouldn't be set until afterward, so there's no way to know yet how people of varying incomes would be affected by a tax change.

The suburbs' higher incomes suggest a graduated tax, whatever it eventually looked like, could be a battleground issue locally.

The issue could be a part of a heated campaign for governor. All the Republican candidates in the March 18 primary race oppose the idea, and Democratic Gov. Pat Quinn supports it, setting up a key point of conflict in the race to the November election.

The median annual household income in most suburban counties is higher than the Illinois average of $56,853, census data from 2008 to 2012 shows.

The median household income is $78,538 in DuPage County, $68,674 in Kane County, $83,835 in Kendall County, $79,085 in Lake County, $77,325 in McHenry County and $76,352 in Will County.

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In Cook County including Chicago, the median household income is $54,648. However, it's higher in most suburban Cook County towns, like a median of $71,306 in Streamwood and $81,105 in Hoffman Estates, for example.

"My constituents are going to pay more in taxes, and we ask for the least amount of services," said state Rep. Ed Sullivan, a Mundelein Republican.

Supporters say they'd want middle-income people to pay less in taxes than they do now. Taxes would go up on the biggest incomes to provide relief to everyone in the middle, said Kelly Steele, spokesman for A Better Illinois, which is pushing the plan.

"What we're looking for here in the state of Illinois is to help balance our budget in a fair manner," said state Sen. Mike Noland, an Elgin Democrat. "Those higher net worth households ... they really shoulder their fair share of the burden, which currently they're not."


The disagreement reflects a national political debate over what is best for the middle class and who exactly makes up that group. People from a wide swath of income levels consider themselves middle class, but people toward the bottom of that range aren't likely to think people at the top end face the same financial challenges they do.

To change the state's flat tax to a graduated tax, the General Assembly would have to muster 60 percent majorities to put the question on November's election ballot. That could be a tall order. State Rep. David McSweeney, a Barrington Hills Republican, has already amassed enough supporters on a resolution to block it.

If enough lawmakers' minds changed and the proposal got on the ballot, Illinois voters would have to approve before a change could be made.

Then, lawmakers would set new rates, which would not be part of the ballot question.

The state's 5 percent individual income tax rate, set in a 2011 hike, is set to roll back to 3.75 percent at the end of this year, and the prospective lost revenue in a state that has among the worst finances in the union is fueling the debate over a graduated tax both at the state Capitol and on the airwaves.

The conservative Americans for Prosperity has been running Internet ads trying to beat the proposal back.

A lead supporter, state Sen. Don Harmon of Oak Park, told the Daily Herald editorial board last month that he wouldn't want to take in more money in income taxes than the state does now. Instead, he said, the state should take it in from different people, lowering tax rates for people who make less and raising them for people who make more.

If the debate gets to that point, the question of who should pay what rate is likely to spark ongoing disagreements over what income levels should be considered rich, poor and middle class.

"It would hurt middle-class suburban families, there's no question about it," said state Sen. Matt Murphy, a Palatine Republican.

In the Midwest, Illinois is among a group of states, including Michigan and Indiana, that has flat income tax.
Wisconsin, on the other hand, has different rates for different income levels. The rates range from 4.4 percent for families who make up to $14,540 per year to more than 7.6 percent on an income of more than $320,250 per year.
Iowa, similarly, has nine brackets.

The true battle over the issue is likely to stay dormant until after the March 18 primary election. Democratic Gov. Pat Quinn is set to give his annual budget proposal to lawmakers a week later, and it's unknown how he'll handle the tax hike rollback and whether a graduated tax will be part of his plan.

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