All Illinois voters will have the opportunity to vote for the Fair Tax this fall. This ballot amendment would establish a graduated income tax structure that would raise over $3 billion in additional revenue. Importantly, 97 percent of Illinoisians will either see a decrease in their taxes or no change. Only the wealthiest 3% of residents, those earning 250,000 dollars or more in income, would experience an increase. Sierra Club is in this fight because Illinois’ broken tax system has eroded the ability for our state environmental agencies to fulfil their mission and protect the health of communities. Read our op-ed in the Chicago Tribune here.
How is the Fair Tax connected to environmental concerns?
The Illinois EPA’s budget has been cut drastically and its staff reduced by half since 2003, changes which hinder its ability to most fully and effectively perform crucial services such as air pollution and water quality monitoring and to defend against environmental violations. It is therefore critically important to pass measures that increase Illinois’ budget. The Fair Tax will lead to over $3 billion in additional revenue for the state, funding which will enhance the IEPA’s ability to protect environmental welfare in Illinois.
Why is the Sierra Club supporting the Fair Tax?
The Sierra Club supports the Fair Tax because not only will its enactment provide critical funding for the improvement of environmental protection in Illinois, but additional state revenue will enhance vital public services and systems at large such as education and senior care programs. Furthermore, it is simply a more just system of taxation that will lead to a fairer distribution of tax rates, thus helping to reduce the strain on middle and low income households which currently pay nearly double that of the wealthiest 1% in terms of percentage of income. As an organization that recognizes the intersections between equity and the environment, the Sierra Club fully supports a Fair Tax in Illinois. See our full slide deck here.
How will my taxes change if this measure is passed?
Households:
Under the Fair Tax, only residents whose incomes exceed $250,000 will experience a rise in their taxes. For 97% of Illinoisians, their income tax will remain constant or decrease. Below you will see the Fair Tax rate distribution (the current rate for all Illinois residents is 4.95%). If rates remained uniform, taxes for all residents would need to increase by 20% in order to achieve the same revenue increase as the Fair Tax.
To find out how your rate may or may not change under the Fair Tax, you can use this online calculator provided by the Office of the Governor.
Businesses:
Many small businesses are “pass-through” which means the owners themselves pay income taxes on their businesses’ profits according to the rate distribution for individuals. For larger businesses such as C-corporations, the rate is currently 7% but under the Fair Tax would increase to 7.99%.
Will the Fair Tax Hurt Small Businesses?
Only businesses whose profits exceed $250,000 will experience a tax increase. For the vast majority of small businesses, taxes will remain the same or decrease.
Will the Fair Tax Cause wealthier Illinoisians to move out of the state?
There is no evidence to suggest that higher income residents choose to move based on tax rates. In fact, according to the Center for Budget and Tax Accountability (CBTA), Illinois families whose income exceeded $100,000 annually have a higher likelihood of relocating to cities on the East and West coasts, areas which have much higher income tax rates.
Is the Fair Tax a “blank-check” measure that will allow Illinois policy-makers to simply raise tax rates whenever they wish?
The Fair Tax does not give lawmakers any more power to change tax rates than they already do. Its passage allows policy-makers to alter income taxes to establish a more equitable rate distribution that does not disproportionately strain middle and lower income households. Fair Tax rates are already explicitly set forth in the measure, so these are the payments that Illinoisians would make if this policy is passed. With respect to concerns regarding the potential for future increases, a study conducted by the CBTA found that “states with graduated income taxes are more than twice as likely to cut taxes on the middle class as to raise them, (and have) cut taxes nearly two-and-a-half times more often than they have raised them on the middle class.”
Do we know how Fair Tax money will be spent?
While it is currently unclear how funds would be allocated specifically, when the state has more revenue to spend overall, it gives advocacy groups like the Sierra Club greater leverage to push for the funding that agencies like the IEPA deserve. There are statutory requirements to do many good things to protect our environment and people, but without resources, the state hasn't been able to comply with those laws. If resources are available, we will be better positioned to enforce them. A tighter state budget makes environmental protection exceedingly difficult.
How can I help advocate for the Fair Tax?
Thank you for supporting this important policy! We encourage you to talk to friends and family about this measure and the important benefits it will bestow on Illinois. If you would like to get involved in the Sierra Club’s Fair Tax advocacy efforts, sign up for our weekly phonebanks here or reach out to David Teeghman at davidteeghman@gmail.com and we will be happy to share more information with you about how you can contribute.
More information can be found at:
www.YesForFairTax.org
www.VoteYesForFairness.com