Last night, California Gov. Jerry Brown asked Californians to pay higher income taxes. Fifty-four percent of voters opted for the tax increase. A similar scenario is beginning to play out in Illinois.
Under California’s current progressive income tax structure, the second-highest marginal rate of 9.3 percent kicks in at just $48,000. To put that into perspective, under Illinois’ current flat tax system, an individual making $48,000 is taxed at a rate of 5 percent. In 2015, Illinoisans can expect this rate to drop to 3.75 percent under current law.
California’s highest marginal rate of 10.3 percent currently applies to individuals making more than $1 million. Proposition 30, however, introduces three new tax brackets to the California’s progressive income tax structure. The millionaires’ tax of 10.3 percent will now apply to individuals making $250,000.
Politicians often sell progressive income tax structures as policy that only increases taxes on the wealthy. But California is a perfect example of how the highest marginal rates creep down the income ladder and have detrimental effects on the middle class.
Unfortunately, Gov. Pat Quinn said passing a progressive income tax is “one of my goals before I stop breathing.” If successful, this tax hike would punish success while taking billions in higher taxes from Illinoisans.
Illinoisans can, and should, avoid a California-style tax structure. Illinois doesn’t need higher taxes. It needs leaders that can balance a budget and cut wasteful spending.