Flat or graduated personal income taxes have varying effects on the annual individual tax liabilities of taxpayers at different income levels. Less examined is how tax structures affect income inequality and racial wealth gaps. This brief illustrates how Illinois’s historic flat income tax structure compares to the proposed Fair Tax through a multi-year retrospective analysis. It shows that Illinois’s flat income tax in lieu of a graduated rate tax used by most states amounts to a tax subsidy for the wealthiest Illinoisans that compounds income inequality and racial wealth gaps.
Publications
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report September 17, 2020 Illinois’s Flat Tax Exacerbates Income Inequality and Racial Wealth Gaps
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report September 12, 2019 Promoting Greater Economic Security Through A Chicago Earned Income Tax Credit: Analyses of Six Policy Design Options
A new report reveals that a city-level, Chicago Earned Income Tax Credit would boost the economic security of 546,000 to 1 million of the city’s working families. ITEP produced a cost and distributional analysis of six EITC policy designs, which outlines the average after-tax income boost for families at varying income levels. The most generous policy option would increase after-tax income for more than 1 million working families with an
average benefit, depending on income, ranging from $898 to $1,426 per year. -
report June 16, 2011 Illinois Must Ignore CME’s Tax Tantrum
How much is enough? On top of the close to $500 million in corporate tax breaks Illinois doles out each year, Governor Pat Quinn now finds himself confronted by a… -
report March 24, 2011 Should Illinois Tax Retirement Income?
Earlier this month, Illinois Senate President John Cullerton suggested that limiting the state’s generous income tax break for retirement income “would just be a matter of fairness.” Senator Cullerton’s suggestion… -
report October 19, 2009 A Progressive Strategy for Meeting Illinois’ Current and Future Revenue Needs
Over the course of the past year, Illinois’ personal income tax has received a great deal of attention. In March, Governor Pat Quinn put forward a plan to raise the… -
report May 15, 2009 Ready, Set, Reform – How the Income Tax Can Help Make the Illinois Tax System Fairer and More Sustainable
The Illinois tax system faces a crisis of both adequacy and equity. The state must confront a projected $11.6 billion budget shortfall over the next two fiscal years that will… -
report March 20, 2007 ITEP Testimony on Tax Reform Bill HB750 in Illinois
My testimony today focuses on the revenue-raising tax reform bill, House Bill 750 and Illinois’ current tax structure. In particular, my testimony will discuss the state’s current tax structure and… -
report February 15, 2002 Balancing Act: Tax Reform Options for Illinois
The current fiscal shortfall represents a shortterm challenge to Illinois lawmakers—but it also provides an opportunity for lawmakers to craft tax reform solutions that will ensure the longterm solvency of…