As a young person who is one semester away from completing two master’s degrees, I constantly ask myself whether I can afford to move back to Illinois. I can easily list off the names of people who already left our communities to live in other states. According to a 2018 study conducted by the University of Illinois Springfield, my peers and I are not the only ones. 68% of the 18 to 34 age group have thought about leaving over the past year. Young people are already facing many fiscal issues. The implementation of a seven-tiered graduated income tax, that has failed in other states, should not be yet another concern.
A graduated income tax will contribute to the exodus of young people leaving the state.
According to the Chicago Metropolitan Survey’s 2050 Snapshot, the 20 – 34 age group grew by 0.1% between 1990 to 2014 – and that is a fairly low number when considering Chicago is a highly attractive metropolitan area. This slow growth is coupled with the overall decline in the population by an estimated 1.2% in urban and suburban areas according to the US Census.
Our state budget increased by 7.5% this legislative session. The proposed graduated income tax was introduced as a vehicle to reduce Illinois’ deficit. Yet, the increase in the state budget this year farther widens the gap that the proposed graduated income tax is expected to fill.
Compounding this issue, the budgetary estimates are based on the current population and, with the continued migration of 20 – 34 year-olds out of Illinois – tax revenue projections will fall short and the financial gap will necessitate more residents and businesses being taxed at a higher rate to re-coup the needed revenues to meet the budget demands.
The ratification of a graduated income tax will punish young people starting businesses.
In Illinois, small businesses pay individual graduated income tax on their small businesses. Bracket creep will punish business scaling up due to their revenue qualifying at a higher graduated income tax bracket. If the small business classifies as a corporation, it will have to pay 10.45% or the third-highest corporate tax in the country. Since small businesses comprise a majority of the Illinois employment, the tax will shift an inequitable tax burden on the most vulnerable in society. Adopting the graduated income tax will create an unfriendly business climate. Tax policy experts project that our state will drop from the 36th best business climate to the 48th. The change in climate will contribute to the migration of young people out of the state.
Naperville is a great community to build a life. But many young people do not share the same viewpoint.
The state is pushing my peers and I to our financial limits. The introduction of a graduated income tax will keep pushing us away by creating an unfriendly business environment, punishing small businesses, and failing to create a solution to the state’s mounting debt. A deficit is not debt, but debit promulgates from deficits. Since the money raised from the GIT goes towards the General Fund, how will we know that the Governor will keep his promise to pay the state’s outstanding debt? Instead of constitutional ratification, the state should attempt pro-growth strategies to reduce the migration to neighboring tax-friendly states. We want to grow something in our hometowns. We just need the opportunity and state support to do so.
Guest writer, Erik Ehrman, has been our summer intern and a true asset to NACC. Erik has an impressive academic resume which includes his current work on a double master in Public Administration and Environmental Studies from Indiana University. He is planning a career in impacting environment policy. Erik shares his perspective of a graduating college student, entering the workplace and possible negative impacts of a graduated income tax in Illinois on his career plans.