* Daniel Kay Hertz at the Center for Tax and Budget Accountability…

Because 97 percent of Illinois workers would see a tax cut as a result of the Fair Tax proposal, opponents have had to argue that that a graduated state income tax would make it more likely for Illinoisans to see tax increases at some unspecified point in the future.

This concern, however, is baseless. For one, Illinois’ flat tax has not prevented the state from enacting income tax increases in the last ten years. Instead, the flat tax has ensured that those tax increases have been borne by everyone, rather than targeted to the wealthiest who can most afford them.

This argument also relies on simply averaging together all changes in income taxes over the last century, rather than acknowledging that different time periods have seen radically different trends in income tax rates. In particular, it assumes that changes to the income tax more than 75 years ago are a more reliable predictor of what will happen in the 21st century than what has happened, well, in the 21st century — or even the second half of the 20th. Since 2003, states with graduated income taxes have cut taxes nearly two and a half times more often than they have raised them on the middle class. In any given year, a state with a graduated income tax had a roughly 13 percent likelihood of cutting taxes — versus just a five percent likelihood of increasing them on the middle class. […]

A better approach to understanding how a graduated state income tax is likely to change over time in Illinois in this century is to take a comprehensive look at the experience of other states during a more recent timeline. Helpfully, the Tax Foundation has a database of state personal income tax rates and brackets going back to 2002. […]

Using that database, CTBA recorded every instance of states with a “Fair Tax” raising or cutting taxes since 2003 (the first year in which we can do a year-over-year comparison with Tax Foundation data). […]

Our key finding: Since 2003, states with graduated income taxes have cut taxes nearly two and a half times more often than they have raised them on the middle class. In any given year, a state with a graduated income tax had a roughly 13 percent likelihood of cutting taxes — versus just a five percent likelihood of increasing them on the middle class.

Another way of looking at this is at the total change in averages rates — just to make sure that, for example, the smaller number of tax increases aren’t larger in size than the more numerous tax cuts. […]

The answer: No, they’re not. In fact, states with graduated income taxes have seen their average rates fall — both at the top and the bottom of their brackets — since 2002.

In short, only by ignoring the recent track record of all states with graduated income taxes, and cherry-picking one or two states or a particular, long-ago time period, can one support the claim that graduated income taxes tend towards ever-higher rates. The full picture shows that this argument simply doesn’t stand up to scrutiny.

The full list of states which have cut or raised their graduated rates over the years is here. Just four states plus DC have raised rates on $250K+ income since 2003.

…Adding… Illinois Policy Institute…

Yet again, progressive income tax backers are reinforcing why Gov. J.B. Pritzker’s “fair tax” amendment would open the floodgates for massive tax hikes on Illinois’ middle class.

1) CTBA’s list of progressive income tax states that have cut taxes makes use of the same lie that earned Think Big a “mostly false” rating from PolitiFact. They include states that essentially have flat taxes because their top rate affects most income earners, e.g. Georgia ($7k), Idaho ($10,890), Arkansas ($35k) and Louisiana ($50k). It’s not reasonable to compare these states to Illinois, where politicians have run up huge deficits and the push for a progressive tax is motivated primarily by a desire for more revenue.

2) The CTBA’s own analysis shows that when progressive tax states raise income tax revenue, the middle class overwhelmingly pays the price (33 tax hikes on income below $250,000 vs. 10 increases on income above $250,000.) CTBA Executive Director Ralph Martire has repeatedly stated that Illinois should raise far more revenue than even Pritzker’s plan would bring in.

3) The CTBA research shows that in progressive tax states, tax cuts disproportionately go to the wealthy and tax hikes disproportionately hit the middle class.

4) The most reasonable apples-to-apples comparison in Illinois’ current debate on whether to adopt a progressive income tax is Connecticut, which is the only state to swap a flat tax for a progressive tax in the last 30 years, and did so in the face of similar fiscal circumstances. It is noticeably absent from the CTBA’s tax cut list.