Earlier this year, ITEP released a report providing an overview of the impacts of state and local tax policies on race equity. Against a backdrop of vast racial disparities in income and wealth resulting from historical and current injustices both in public policy and in broader society, the report highlights that how states raise revenue to invest in disparity-reducing investments like education, health, and childcare has important implications for race equity.
blog May 14, 2021
State Tax Codes & Racial Inequities: An Illinois Case Study
blog October 22, 2020
Voters Have the Chance in 2020 to Increase Tax Equity in Arizona, Illinois, and California, And They Should
There’s a lot at stake in this election cycle: the nation and our economy are reeling from the effects brought on by the coronavirus pandemic and states remain in limbo as they weigh deep budget cuts and rush to address projected revenue shortfalls.
blog September 17, 2020
Illinois’s Flat Income Tax Amounts to a Tax Subsidy for the Wealthiest Illinoisans that Compounds Income and Wealth Inequalities
This November, Illinoisans will decide whether to amend the state constitution to allow a graduated income tax. A “yes” vote on the Illinois Fair Tax constitutional amendment will make effective legislation that will replace the current flat tax rate of 4.95 percent with graduated rates that cut taxes for those with taxable income less than $250,000 and institute higher marginal rates on taxable incomes greater than $250,000.
news release September 17, 2020
New 20-Year Study Provides Insight on How State Tax Systems Worsen Inequality and the Racial Wealth Gap
A new study finds that over the last 20 years, Illinois’s tax system has effectively sapped $4 billion more from Black and Hispanic communities than it would have under a graduated income tax while also allowing the state’s highest-income (mostly white) households to pay $27 billion less in taxes, the Institute on Taxation and Economic Policy (ITEP) said today.
report September 17, 2020
Illinois’s Flat Tax Exacerbates Income Inequality and Racial Wealth Gaps
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.
ITEP Work in Action February 28, 2020
Chicago Resilient Families Task Force: EITC Expansion and ModernizationExpanding and modernizing the Earned Income Tax Credit will put more money back in the pockets of the people who need it most. Recent polling suggests such policies would be…
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.
blog July 18, 2019
Many States Move Toward Higher Taxes on the Rich; Lower Taxes on Poor People
Several states this year proposed or enacted tax policies that would require high-income households and/or businesses to pay more in taxes. After years of policymaking that slashed taxes for wealthy households and deprived states of revenue to adequately fund public services, this is a necessary and welcome reversal.
ITEP Work in Action February 25, 2019
Chicago Resilient Families Task Force: Big Shoulders, Bold Solutions: Economic Security for ChicagoansPeople with low and middle-incomes are financially savvy in ways that are often underestimated, but despite this are on thin ice financially. Despite doing all the right things, they are…
ITEP Work in Action November 21, 2018
Voices for Illinois Children November Newsletter
The Institute for Taxation and Economic Policy (ITEP) released the sixth edition of its “Who Pays?” report on state tax systems. Voices’ policy analyst John Gordon detailed the findings of the report in a blog post. Illinois ranks #8 among ITEP’s “Terrible Ten” in terms of regressive state tax systems.
ITEP Work in Action November 1, 2018
Cherokee Tribune & Ledger-News: Financial Watchdog: Pritzker’s Spending Promises Would Raise Taxes on Middle Class
The Institute on Taxation and Economic Policy says Illinois has one of the most regressive taxes in the nation, largely due to its flat income tax. In its annual “Who pays?” report, the institute said the poorest 20 percent of Illinois households pay 14 percent of their income in taxes because of the flat tax in addition to high sales and property taxes.
ITEP Work in Action October 29, 2018
Voices for Illinois Children: Who Pays In Illinois? Mostly The Poor And Middle Class
A new report from the Institute of Taxation and Economic Policy (ITEP) shows the poorest 20 percent of Illinois households pay nearly twice as much in state and local taxes as the richest one percent. As a result, ITEP ranks Illinois as the eighth most regressive tax system in the country.
ITEP Work in Action October 25, 2018
News and Tribune: In Indiana and Illinois, Taxes Hit Low-earners Hard
TERRE HAUTE — Low-earning residents of Indiana and Illinois pay a greater share of state and local taxes than those in all other Midwestern states, and those in most states nationally, according to a new study by a non-partisan think tank.
media mention October 18, 2018
Chicago Tribune: A Key Issue in Illinois Governor Race — Gov. Bruce Rauner, J.B. Pritzker Have Very Different Plans for State Income Tax
Last year, state lawmakers raised income taxes and ended the state’s two-year budget impasse over the passionate objections and veto of Rauner. At the time, the governor called the move “another step in Illinois’ never-ending tragic trail of tax hikes.”
October 17, 2018
Illinois: Who Pays? 6th EditionILLINOIS Read as PDF ILLINOIS STATE AND LOCAL TAXES Taxes as Share of Family Income Top 20% Income Group Lowest 20% Second 20% Middle 20% Fourth 20% Next 15% Next…
September 26, 2018
Tax Cuts 2.0 – IllinoisThe $2 trillion 2017 Tax Cuts and Jobs Act (TCJA) includes several provisions set to expire at the end of 2025. Now, GOP leaders have introduced a bill informally called…
ITEP Work in Action April 30, 2018
Center for Tax and Budget Accountability: Cutting Taxes for the Middle Class and Shrinking the Deficit
According to the Institute for Taxation and Economic Policy, Illinois ranks as the fifth-most-regressive state and local tax system in the country — and the most regressive in the Midwest. In Illinois, the top one percent of income earners pay just 4.6 percent of their income in state and local taxes, while the middle 20 percent of workers pay more than double that, coming in at 10.8 percent of income, and the bottom 20 percent of earners have almost three times the tax burden of the wealthiest, coming in at 13.2 percent.
December 16, 2017
How the Final GOP-Trump Tax Bill Would Affect Illinois Residents’ Federal TaxesThe final tax bill that Republicans in Congress are poised to approve would provide most of its benefits to high-income households and foreign investors while raising taxes on many low-…
December 6, 2017
How the House and Senate Tax Bills Would Affect Illinois Residents’ Federal Taxes
The House passed its “Tax Cuts and Jobs Act” November 16th and the Senate passed its version December 2nd. Both bills would raise taxes on many low- and middle-income families in every state and provide the wealthiest Americans and foreign investors substantial tax cuts, while adding more than $1.4 trillion to the deficit over ten years. The graph below shows that both bills are skewed to the richest 1 percent of Illinois residents.
November 13, 2017
How the Revised Senate Tax Bill Would Affect Illinois Residents’ Federal Taxes
The Senate tax bill released last week would raise taxes on some families while bestowing immense benefits on wealthy Americans and foreign investors. In Illinois, 51 percent of the federal tax cuts would go to the richest 5 percent of residents, and 15 percent of households would face a tax increase, once the bill is fully implemented.
November 6, 2017
How the House Tax Proposal Would Affect Illinois Residents’ Federal Taxes
The Tax Cuts and Jobs Act, which was introduced on November 2 in the House of Representatives, includes some provisions that raise taxes and some that cut taxes, so the net effect for any particular family’s federal tax bill depends on their situation. Some of the provisions that benefit the middle class — like lower tax rates, an increased standard deduction, and a $300 tax credit for each adult in a household — are designed to expire or become less generous over time. Some of the provisions that benefit the wealthy, such as the reduction and eventual repeal of the estate tax, become more generous over time. The result is that by 2027, the benefits of the House bill become increasingly generous for the richest one percent compared to other income groups.
October 4, 2017
GOP-Trump Tax Framework Would Provide Richest One Percent in Illinois with 69.4 Percent of the State’s Tax Cuts
The “tax reform framework” released by the Trump administration and congressional Republican leaders on September 27 would not benefit everyone in Illinois equally. The richest one percent of Illinois residents would receive 69.4 percent of the tax cuts within the state under the framework in 2018. These households are projected to have an income of at least $651,700 next year. The framework would provide them an average tax cut of $84,170 in 2018, which would increase their income by an average of 3.1 percent.
blog September 13, 2017
State Rundown 9/13: The Year of Unprecedented State Budget Impasses Continues
This week, Pennsylvania lawmakers risk defaulting on payments due to their extremely overdue budget and Illinois legislators will borrow billions to start paying their backlog of unpaid bills. Governing delves into why there were more such budget impasses this year than in any year in recent memory. And Oklahoma got closure from its Supreme Court on whether closing special tax exemptions counts as “raising taxes” (it doesn’t).
August 17, 2017
In Illinois 54.9 Percent of Trump’s Proposed Tax Cuts Go to People Making More than $1 Million
A tiny fraction of the Illinois population (0.8 percent) earns more than $1 million annually. But this elite group would receive 54.9 percent of the tax cuts that go to Illinois residents under the tax proposals from the Trump administration. A much larger group, 41.0 percent of the state, earns less than $45,000, but would receive just 3.9 percent of the tax cuts.
July 20, 2017
Trump Tax Proposals Would Provide Richest One Percent in Illinois with 56.1 Percent of the State’s Tax Cuts
Earlier this year, the Trump administration released some broadly outlined proposals to overhaul the federal tax code. Households in Illinois would not benefit equally from these proposals. The richest one percent of the state’s taxpayers are projected to make an average income of $2,726,200 in 2018. They would receive 56.1 percent of the tax cuts that go to Illinois’s residents and would enjoy an average cut of $134,270 in 2018 alone.