Illinois Needs a “Fair Tax”

Replacing the Flat Tax With a Graduated State Income Tax

The 2% tax increase had to be paid by everybody

Even with the tax increase many programs have had to be cut

FLAT TAX RATE HURTS THE POOR

What’s Wrong with Illinois’s

Tax System?UNFAIR

INEFFICIENT

INADEQUATE

Who has benefitted from economic growth?

Our Current Income Tax Structure

The Tax Burden for the Top 1% in Illinois is 2 to

3 Times Less

Because Illinois Taxes are Unfair, They are Inefficient

EDUCATION (preK through higher ed.) 35% HEALTHCARE

30% HUMAN SERVICES

21% PUBLIC SAFETY 5%

91%

FACT: Over $9 out of $10 of the General Funds are spent on 4 core

services:

Category 2013($

Millions)

2000 Adjust for Inflation & Pop

Growth

$ Diff FY2013 –FY2000 Adjust for Inflation & Pop Growth

% Change

Net Public Services excluding Pensions and Group Health

$23,539 $30,915 -$7,376 -23.86%

P-12 $6,542 $7,464 -$922 -12.35%Higher Ed $1,980 $3,315 -$1,335 -40.28%Healthcare (excluding Group Health) $6,852 $8,934 -$2,082 -23.30%

Human Services (excluding all Healthcare) $4,749 $7,086 -$2,337 -32.98%

Public Safety $1,606 $2,081 -$475 -22.82%Sources: FY 2013 Budget as passed in HR 706, SB2348, SB2413, SB2443, SB 2454, SB2474, SB 2332, SB2378, SB2409, and June 2012 Communications with Legislative staff.

How Much have we Cut?

Local and State Share of Education Funding Spending

Source: National Center on Education Statistics, 2011. “Revenues and Expenditures for Public Elementary and Secondary Education: School Year 2008-2009 (Fiscal Year 2009).”

And the Income Tax Increase Expires in 2015

Rate Structure Change In 2015, the personal income tax rate

drops from 5% to 3.75% In 2025, the personal income tax rate

drops from 3.75% to 3.25% Revenue Impact

In 2015, along with reduction in the corporate tax rate, this will result in a loss of... $4

billion

What’s The Solution?

How Can We Make Illinois Taxes More Fair, More Efficient, and

Fiscally Sustainable?

Graduated Income Tax

Makes the system more fair; account for a person’s ability to pay

Helps repair the state budget long term

Spurs the economy by putting money back in the pockets of middle and low-income Illinoisans

Most Other States Have Graduated Rates

Our Neighbors:Iowa: 9 Rates (0.36% to 8.98%)Kentucky: 6 Rates (2.0 to 6.0%)Missouri: 10 Rates (1.5% to 6.0%)Wisconsin: 5 Rates (4.6% to 7.75%)

Federal Income Tax Rates are Graduated

35 of the 42 States with Income Taxes have Graduated Rates

No tax on first $5,000 5% tax rate up to $100,000 7,5% up to $150,000 8.5% up to $200,000 9.5% up to $300,000 10% up to $500,000 10.5% up to $1,000,000 11% over $1,000,000

A Specific Proposal

Graduated Rates Could Mean that Most Illinoisans Would

Pay Less

(Center for Budget and Tax Accountability, January 2012)

We Can Win a Fair Tax

Preamble of Illinois’ Constitution

We, the People of the State of Illinois - grateful to Almighty God for the civil, political and religious liberty which He has permitted us to enjoy and seeking His blessing upon our endeavors - in order to provide for the health, safety and welfare of the people; maintain a representative and orderly government; eliminate poverty and inequality; assure legal, social and economic justice; provide opportunity for the fullest development of the individual; insure domestic tranquility; provide for the common defense; and secure the blessings of freedom and liberty to ourselves and our posterity - do ordain and establish this Constitution for the State of Illinois.

Current Illinois Constitution: Article IX -- Revenue Section 3. Limitation on Income Taxation (a) A tax on or measured by income

shall be at a non-graduated rate.

Change requires a constitutional amendment

1. Constitutional amendments can only be placed on the ballot in November with approval by 60% of the General Assembly (71 votes in the House and 36 votes in the Senate)

2. Referendum in November must be approved by 60% of voters

We need to win both voter approval

and legislative support

Constitutional Amendment Process

1. Build Momentum and Educate our Communities

2. Win Legislative Approval (January 2014 to May 2014)

3. Win Voter Approval (May 2014 to November 2014)4. Propose and Pass Fair Tax Bill

Four Phase Plan:

Our Voices Have to Be Heard

Our stories have to be told

FIRST: Endorse the Campaign

Then educate,energize, organize and mobilize!

Next Steps – The Path to Victory