In a surprise Memorial Day Illinois House of Representatives debate and vote, the Graduated Income Tax legislation SJRCA 1 passed. Now, voters get to decide in November if they want to change Illinois Constitutional amendment to allow income tax to be graduated based on the income. The companion bill (SB 687) provides language that would set the specific rates for the tax has not yet reached a House vote. We will keep you posted on this bill.
We are strongly opposed to adopting a graduated income tax due to this being a potential bridge to higher taxes regardless of the rates stated in initial legislation like SB687. Removing the protection of a flat (predictable) tax rate can cause businesses to be less likely to invest in Illinois or expand their current operations here.
In addition, it would allow multiple taxation on same dollar earned and make certain industries vulnerable to additional tax rates as the need for additional tax dollars grow in future years. For small business owners, who currently report earnings through a schedule on their personal income taxes, could find themselves in a higher tax bracket paying significantly higher taxes which could deter innovative new businesses from launching in Illinois.
As always, your chamber continues to keep their eye on policy that impacts your business!