Taxes play a big role in take-home pay. Because of this, the federal government taxes individuals based on various income brackets. Illinois has made the recent proposal to get on board with this. One of the big, supporting arguments for graduated income tax is that it takes some of the pressure off the lower and middle class while moving a higher portion of the tax burden to the wealthy.
The Illinois governor believes that graduated income tax could improve the financial stability of the state, according to WTTW News. Note that the current flat rate is 4.95%.
What the problem is
People who support the move say that the current tax plan simply does not work as it allows billionaires to pay the same tax rate as the working class. Those who oppose the plan claim that Illinoisans already pay high levels of taxes. They believe that if the law passes, the wealthy will take their big businesses out of the state.
How it works
Also known as a progressive tax structure, the new plan would mean increases for higher income brackets. NBC Chicago notes the following of how the new bill might work:
- 75% tax rate for first $10,000 earned by single and joint filers who make less than $250,000; then, 4.9% tax rate up to $100,000 and a 4.95% tax rate up to $250,000
- 75% for single filers making from $250,000 up to $350,000
- 75% for joint filers making $250,000 up to $500,000
- 85% for single filers making more than $350,000 and up to $750,000
- 85% for joint filers making more than $500,000 and up to $1 million
- 99% beyond $750,000 for single filers and beyond $1 million for joint filers
Note that at the highest tax bracket, the entire income might get taxed at the highest tax rate, in place of the tiered tax structure. The vote on whether this passes takes place in November of 2020.