PEORIA (WEEK) -- The Illinois Allow for Graduated Income Tax Amendment, better known as the Fair Tax, is on the statewide ballot this November. The TV ads have been constant, one side arguing the rich need to pay their fair share, the other saying this new tax hike amendment gives Springfield far too much power.
So what is the Fair Tax? Peoria-based accountant Bonnie Lee described it as a graduated, or progressive income tax.
"[It] means as your income goes up, so does your tax rate, so say someone making $10,000 is going to be taxed less than someone making $10,001, so it will be like the federal tax," said Lee.
Currently, Illinois has a flat tax, meaning everyone in the state is taxed at 4.95%. The state constitution mandates that all incomes are taxed at the same rate. The state legislature has the ability to change that rate, which they have done three times in the last ten years. If the fair tax is approved by voters, this new tax bracket, detailed below, will go into effect in 2021.
|INDIVIDUAL FILERS||JOINT FILERS|
|UP TO $10,000||4.75%||UP TO $10,000||4.75%|
The first five brackets are taxed at a marginal rate, meaning tax payers pay different rates on the first $10,000 they make, then a rate for the next $100,000, and so on. Individuals making more than $750,000 or couples that earn more than $1,000,000 would have their entire incomes taxed at a rate of 7.99%.
"Right now, everyone in Illinois pays 4.95% and that's simply not fair, and it is putting an undue burden on lower and middle income families in the state of Illinois," said Quentin Fulks, Chairman of Vote Yes For Fairness.
Fulks added that with the financial losses caused by COVID-19, the amendment is needed now more than ever.
"The state needs revenue and we believe that the fair tax is the best way to address that revenue need, by asking those who can afford to pay more, to pay more, while lowering the burden for those who have been shouldering it for far too long," said Fulks.
However, that view is not shared by everyone. Paola Hinton owns Five Senses Salon and Spa in Peoria. She is also a member of what they call the Coalition to Stop the Proposed Tax Hike Amendment. She says after having to shut down for months because of the pandemic, the last thing she can handle is a higher tax rate.
"This is the worst time to ever introduce anything like this...it's going to force business owners to increase prices, cut jobs, hours, and the benefits that we work super hard to get," said Hinton.
And she also worries that if this amendment does pass, it will be easier for the state to tax different income groups more, say a year or two down the road.
"It gives Springfield more power to change that, and change it on all brackets at any point at anytime," she added.
"No, I don't think it makes it any easier at all, the rules and procedures of increasing taxes aren't changing," said Fulks.
Both sides agreed this increase will not solve all of the state's financial woes. So it will be up to the voter to decide if this is the best first step to take.