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Voters will choose whether to hike taxes by $3.5 billion when they go to the polls on November 3rd when they decide to whether to approve a new graduated income tax that could increase the tax rate by 61 percent.

The Illinois Manufacturers’ Association opposes the graduated income tax proposal supported by Governor Pritzker and his allies for a variety of reasons and encourages a NO vote in November for many reasons:

  1. This will significantly increase taxes on manufacturers, family farmers, and thousands of small businesses across Illinois.
  2. This income tax hike does not include any property tax relief.
  3. Taxpayers cannot trust politicians with $3.5 billion in new money when those elected officials have created a $7 billion budget debt and a pension debt of more than $140 billion. They need to balance a budget and live within their means.
  4. Hiking taxes on businesses will hamper economic growth and job creation during the worst economic crisis in generations.
  5. Illinois has led the nation in outmigration of residents for five years and this will hasten the movement of businesses and residents out of Illinois.
  6. A graduated tax makes it easier to tax low and middle income families.
  7. The Democrat State Treasurer has already discussed using the graduated income tax as a way of taxing retirement income.

If enacted, Illinois will have the 3rd highest corporate tax rate (10.49 percent**) in the United States, trailing only Iowa (12 percent) and New Jersey (11.5 percent). However, Iowa’s top rate is scheduled to drop to 9.8 percent in 2021** tax rate plus CPPRT

With the Constitutional amendment language allowing an 8:5 ratio between the corporate and individual rates, the General Assembly could make corporations pay a whopping rate of 15.2 percent.

Under the tax hike, corporate tax rates will be 10.49 percent (7.99 percent plus the 2.5 percent corporate personal property replacement tax) while many small businesses will pay a rate of 9.49 percent (7.99 percent plus 1.5 percent corporate personal property replacement tax). Illinois’ top individual tax rate would be the 8th highest nationally.

More than 75 percent of Illinois businesses file taxes under the individual income tax rate such as Subchapter S corporations, partnerships, and LLCs. The Governor’s proposed rates are as follows:

Single Filers: Income Tax Rate
$0 – $10,000 4.75 percent
$10,001 – $100,000 4.90 percent
$100,001 – $250,000 4.95 percent
$250,001 – $350,000 7.75 percent
$350,001 – $750,000 7.85 percent
$751,000 or more 7.99 percent*
Joint Filers: Income Tax Rate
$0 – $10,000 4.75 percent
$10,001 – $100,000 4.90 percent
$100,001 – $250,000 4.95 percent
$250,001 – $500,000 7.75 percent
$500,001 – $1,000,000 7.85 percent
$1,000,000 or more 7.99 percent*

*Once income for single filers reaches $750,000 million, or $1 million for joint filers, the entire income is taxed at the 7.99 percent. Employers with income at this level will see the entire amount taxed at the maximum rate plus the CPPRT.

In an attempt to address the skyrocketing cost of property taxes, the Governor is proposing to increase the current property tax credit from 5 percent to 6 percent. However, this credit is only available to taxpayers with incomes of $500,000 or less (married filing jointly) or $250,000 (single). In total, the Governor is offering only $100 million in property tax relief in exchange for $3.4 billion in higher income taxes. Many Illinois businesses will not see a single penny of property tax relief.

The IMA is leading the fight against the new “blank check” tax on Illinois businesses and families. Click here to get more information or make a contribution.