Know The Facts About The Fair Tax
This election season, Illinois residents have the opportunity to vote YES on a constitutional amendment to allow for a graduated income tax, known as the Fair Tax. There have been a lot of ads on TV and social media about the Fair Tax—some of which are just plain wrong. As you prepare to vote in Illinois, we want to make sure you have all the facts about the Fair Tax to help inform your choice!
Myth #1: The Fair Tax is a new tax for middle income taxpayers.
The Fair Tax amendment reforms the tax structure already in place to raise rates for the 3% of Illinoisans who make over $250,000 each year—and only on that income over 250k—while the other 97% of us will see the same or lowered rates.
Myth #2: The Fair Tax amendment gives more power to state legislators to raise taxes, and they will be more likely to raise them once it passes.
Legislators already have the power to raise and lower taxes—though they rarely use it. Since 1969, the rate has only risen four times. In fact, states with graduated income taxes like the Fair Tax are more than twice as likely to cut taxes than to raise them.
Myth #3: The Fair Tax will tax retirement income.
Illinois state law will continue to protect retirement income from taxation, including Social Security, pensions, 401(k)s, and IRAs, regardless of tax bracket. The graduated income tax proposal is supported by AARP Illinois as well as the Illinois Alliance for Retired Americans.
Myth #4: The Fair Tax will cause wealthy residents to leave Illinois for other states.
Multiple studies have shown that people rarely move solely because of income tax rates. While the state’s population is declining, Illinois’ higher income residents stayed when taxes were raised, and those who left did so for reasons such as job opportunities and family.
Myth #5: The Fair Tax will hurt small businesses.
Small businesses are subject to the Fair Tax just like any other Illinois resident: if you bring in less than $250,000 in profit, your taxes will stay the same (or less). For the less than 5% of small businesses earning more than a quarter of a million dollars, their taxes will go up.