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Facts & Fallacy: The Graduated Income Tax Amendment

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Since the launch of our Graduated Income Tax Amendment campaign, I have heard from Illinoisans all across the state. While we’ve heard from many who wholeheartedly support the graduated income tax ballot initiative because they know it will protect their retirement income from being taxed, I’m deeply concerned about the folks that have been fed misinformation and are afraid of what the ballot initiative  will do. That ends now.

To fight back against these fear-mongers, we’ll be stepping up our communications to continue to push out the truth. And, I’m asking each of you to help us fight back by sharing this with as many family and friends as you can. The only way we can rise above fear tactics is to come together to shine a light on these simple truths:

Fact #1 - the graduated income tax ballot does not allow the state to tax retirement income. No matter who has said it or how they have said it, the simple truth is that switching to a graduated income tax does not allow the state to tax retirement income. And, it does not make it easier to tax retirement income in the future. AARP Illinois adamantly opposes taxation of retirement income, and we would not support the graduated income tax if it did.

Fact #2 – only those who can afford it will pay more under the graduated income tax. This fact applies to everyone in Illinois - workers, older Illinoisans, and small businesses. A small business does not pay income tax in Illinois. Instead, the income tax is paid by the small business owner who will be paying the same new graduated tax rates as all other Illinois taxpayers. Under the graduated income tax, tax rates would only be higher for those with incomes over $250,000. Those making less than $250,000 will see no increase in their state income taxes, and some will see a small decrease. And, the data doesn’t lie. Under the graduated income tax structure, only those who can afford it will pay more – the wealthiest 3% of households.

Let’s be frank. Even before COVID-19, Illinois was drowning in debt. The pandemic has caused large parts of the economy to shut down and significantly reduced many sources of state revenue, like from income and sales taxes, as well as gaming.  As a result, Illinois now faces a budget shortfall of $6.2 billion.  If the graduated income tax ballot initiative does not pass, this shortfall will climb to $7.4 billion.

If Illinois doesn’t find a way to fix its budget crisis, that’s when state lawmakers may be forced to consider adding a retirement income tax or more drastic spending cuts that will especially hurt those 50+ and their families. We need a plan to get out of this budget mess, without shifting the burden to our older and middle-class residents. The graduated income tax is a step in the right direction.

Voting YES on the Graduated Income Tax amendment will help fix Illinois’ budget, raising around $3 billion a year, protecting your retirement income, and making sure that taxes don’t go up for small businesses and older citizens.

Paid for by Yes To a Financially Responsible Illinois

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