Flat tax vs. graduated tax: What`s best for Illinois? - Chicago News and Weather | FOX 32 News

Flat tax vs. graduated tax: What`s best for Illinois?

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CHICAGO (FOX 32 News) -

Republicans are vowing to block a proposal by Democrats in the State Senate to make dramatic changes in the Illinois income tax. At the end of next year, it's scheduled to drop from a flat 5% to 3.25%. Several Democrats have introduced a proposal to change all that by amending the state Constitution.

The Illinois Constitution now requires that everyone must be taxed at the same flat percentage of their personal income. Some Democrats in the State Senate call that unfair.

"I think it's a matter of tax fairness," says State Sen. Kwame Raoul. "I think we have one of the highest levels of consumption taxes, the sales tax, in this country, which is regressive. It has a greater impact on the middle income and low income people."

Kwame Raoul is among 13 Democratic co-sponsors of a proposed amendment to the state constitution. It would change Illinois's flat income tax to a graduated tax, quote, "where lower rates apply to lower income levels and higher rates apply to higher income levels."

The minority leader of State Senate Republicans said that would worsen Illinois's unemployment rate -- already worst in the Midwest -- by spurring employers to leave.

"Wealth is portable and, you know, people who make a lot of money can easily relocate and they do," says Senator Christine Radogno. "We've seen that happen in states that have very graduated taxes."

Radogno said the current flat income tax is fair.

"I mean, if you're making $100,000, you're paying more than if you're making $20,000 [under the flat tax]," Radogno explains.

This income tax debate is only beginning. Any amendment to the state constitution would have to be approved at the polls by 60% of voters. Illinois's big public employee unions are already planning to pour millions of dollars into the fight for it. Look for other groups to spend just as much against it.

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