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Is a Progressive Income Tax a Modern Fix for Illinois Economy?

November 10, 2008

Chicago, IL - As Illinois struggles with its $1.4 billion budget gap, a new poll suggests a possible solution. The survey by the Paul Simon Public Policy Institute finds that 66 percent of respondents favor a progressive income tax in Illinois, to replace the present flat tax.

The executive director of the Center for Tax and Budget Accountability, Ralph Martire, says the poll shows most Illinois residents think it's a good idea to change the basis for the income tax.

"They just sort-of generally understand the fairness behind it; that, if your income has really grown a lot faster than everybody else's, you should have a slightly higher burden than anyone else, to support the system that effectively lined your pockets."

Martire says Illinois needs to find a modern solution to its revenue growth problem.

"The state's tax system is designed for about an 1890s economy and that economy doesn't exist anymore. If your revenues don't grow with the modern economy, you can't continue to support public services because service costs go up with inflation every year.'

Despite having one of the biggest state economies in the country, according to Martire, Illinois continues to lose money.

"You can't have the fifth-biggest economy ranked 45th in revenues and expect to meet the needs of your population – and we don't. And that's why we underfund schools, we underfund transit, we underfund health care; we underfund everything."

Opponents of a progressive income tax argue it would pave the way for a tax increase, and hurt small business and job creation. Illinois is one of only seven states in the nation to impose a flat income tax rate.

Mary Kuhlman/Steve Powers, Public News Service - IL