Vote – Joanna's Journal

Reaction to the Endorsement of the Fair Tax by The Chicago Coalition for the Homeless

Keeping with the theme of Fair Tax for Illinois on my blog, I felt like I should react to a blog that focuses on all the positive aspects of the tax amendment.

The Chicago Coalition for the Homeless released a blog post not that long ago, where they cleared up some misconceptions and encouraged their readers to vote yes on the Fair Tax amendment.

They mention that the Fair Tax will not make it easier or harder for politicians to change the tax rate, but they do have the flexibility to change it based on their income. Basically if the politicians felt like people making less than $250,000 should be taxed at a higher rate, then they would have the right to change the threshold of each income bracket.

They argue that most states that used Fair Tax are more likely to make tax cuts on the middle class rather than raise them; however, they fail to acknowledge that Illinois is not like many of those states. Illinois is known for its crooked politicians and enormous debt, so we can’t really rely that those statistics will apply to Illinois.

In this same section, the blog mentions that without Fair Tax Illinois residents may see a tax increase of about 20% to relieve the structural deficit. Which leads back to my point, we should not have to be paying for a deficit that bad politicians created in the first place.

They also mentioned that there was no correlation between between a state’s tax rate and the probability that the rich would leave. They focused on the lack of tax migration within the billionaire community, and ignored what affects the Fair Tax would have on Illinois in terms of employment.

In a study co-authored by Joshua D. Rauh, a finance professor at Stanford, they found that an increase in taxes had an impact on the numbers of employees companies had and the number of establishments they had. While billionaires are more likely to stay in the state, the same could not be said for the corporation that provides employment for Illinois residents.

I will say that it is important for everyone to seek out multiple blogs that display the various sides of an issue, to be able to fully understand and create an informed opinion on it.

Fair Tax For Illinois: Debunking Two False Claims

On Nov. 3, Illinois residents will have to vote on whether they approve the Fair Tax for Illinois amendment. An article written by Orphe Divounguy and Bryce Hill on Illinois Policy, gives an amazing overview of the claims Governor J.B. Pritzker has used to encourage residents to vote in favor of the amendment. The article can be found here: Reality Check on 5 False Claims Used to Boost Pritzker’s ‘Fair Tax’

Jared Walczak and Katherine Loughead also wrote a more in depth article about the Fair Tax amendment. Their article can be found here: Twelve Things to Know About the “Fair Tax for Illinois”

For those that don’t know, Fair Tax refers to an amendment proposed by Gov. Pritzker that allows for a graduated-rate income tax. “Under this law, the current 4.95 percent flat individual income tax would be transformed into a six-rate tax, with rates ranging from 4.75 to 7.99 percent.” In essence, people who make more money would be taxed at a higher percentage than people who made less money.

The first claim is that the fair tax amendment will help with equality, but in reality it will not have a noticeable effect on the gap between the rich and poor. “Inflation can impose a hidden tax…the marginal income levels are not indexed for inflation, meaning that over time, taxpayers will pay an increasing amount of taxes as a percentage of income—even if their income has not increased in real terms”. Thus giving an example of how this amendment will not create any meaningful change in terms of equality between the rich and the poor. In the long run, people who are not making more money will still end up paying higher taxes.

The second claim is that this amendment will not harm the state’s economy. This is a claim that even people who know nothing about how taxes work, will know is not true. Companies and businesses that make a lot of money do not want to have to pay higher taxes; especially, if they are providing jobs. “If Illinois does approve the graduated rate structure, it will go from 36th to 47th on the State Business Tax Climate Index.” Businesses and companies will not want to be located in a state that is ranked low on this index, because it means that their taxes are going to be higher. Less companies in Illinois will then directly affect the working class people who rely on these jobs.

These are only two of the claims that you might have encountered when hearing about the Fair Tax for Illinois, but it is important to understand what this will mean in the long run. Before you go out and vote, make sure you know the facts.