* The Center for Tax and Budget Accountability has a new report out about how a graduated income tax could be used to lower taxes for 98 percent of Illinoisans. Here’s the Tribune…

Under one model, the state would keep its current 4.95 percent rate for income of up to $300,000. It would raise the rate to 7.5 percent for income between $300,000 and $400,000; hike it to 8 percent for income between $400,000 and $500,000; increase it to 9.25 percent for income between $500,000 and $1 million. Income above $1 million would be taxed at 9.85 percent. The top rate is what is used in Minnesota.

In that plan, a $300 credit would be applied to lower incomes, and that amount would get smaller as a taxpayer’s earnings got higher.

A second model from the group would levy a 4.5 percent tax on income up to $100,000; 4.95 percent on income between $100,000 and $300,000; 8 percent on income between $300,000 and $500,000; 9.25 percent on income between $500,000 and $1 million; and 9.85 percent on income of $1 million or more.

The group said under that model, anyone making under $314,000 of taxable income would see a tax cut of up to $450.

* CTBA press release…

· It is textbook capitalist policy that to be fair, a tax system should impose tax burden according to ability to pay—that is, it should impose higher tax burdens on affluent households than it does on low- and middle-income households, when tax burden is measured as a percentage of income. Illinois fails this basic standard of fairness, in large part because of its flat rate state income tax.

· Illinois’ unfair, flat rate income tax contributes to structural deficits. This is because a flat rate income tax cannot—by design—respond to the significant growth in income inequality that has occurred over the last three decades. This in turn has forced decision makers to underfund or cut the core public services of education, healthcare, human services, and public safety, which collectively account for over 90 percent of all General Fund spending on current services.

· Illinois’ unfair, flat rate income tax harms the private economy. Overtaxing low- and middle-income families, who are both good spenders and have flat to declining real incomes over time, reduces their consumer spending. The research shows that for every dollar the state cuts in General Fund spending on current services, the private sector loses an average of $1.36 in economic activity. Since most General Fund spending on core services covers the wages of the teachers, social workers, health care professionals, correctional officers, and other workers who provide public services, when Illinois’ structural deficit compels the state to reduce spending, it is for the most part cutting the earnings of these workers.

· Illinois’ flat income tax rate is out of the mainstream. Of the 41 US states that impose an individual income tax, Illinois is one of just eight that impose the same flat rate on the income of all earners, regardless of how much they make or their ability to pay.

I’d tell you more, but the group’s website was apparently hacked this morning. Not a good sign if you believe in omens.

…Adding… The full report was just sent via e-mail and is accessible online, so click here.

* The Tribune editorial board is, of course, dead set against a progressive income tax, profiling a suburban “chief revenue officer for a financial services company” who has “bought property in Florida and likely will move there” in its latest screed…

Illinois is one of eight states with a flat income tax rate. Pritzker hasn’t disclosed his proposed income tax brackets, but the conversation has some Illinoisans looking at real estate websites.

The most recent Illinois Department of Revenue numbers for tax year 2016 show 1,111,515 filers reported adjusted gross incomes of $100,000 or more, for a total of $262.8 billion.

Note to everyone else: These people pay a lot in Illinois taxes. Rank-and-file taxpayers should be trying to keep them rather than sending them to Texas, Nevada, Florida and other states that don’t tax income. High-income earners help pay for the state services that the General Assembly loves to approve but not fund.

…Adding… Greg Hinz…

Similarly, the report disputes the notion that raising taxes to pay for needed services hurts the state’s economy, pointing to what happened in Kansas, which slashed taxes, and Minnesota, which raised them. When people earning more than $300,000 a year leave Illinois, they generally don’t go to low-tax states but higher-tax localities including New York and California, [CTBA research director Daniel Kay Hertz] told me. “In those income brackets, people leave for opportunity, not because of taxes.”

*** UPDATE *** Rauner campaign…

Remember when the Pritzker campaign said they had “detailed plans” back in early January? Those were great times.

Well, it’s been four months since that bold claim and JB Pritzker still won’t give a single detail about his plans for a graduated income tax.

Check out his impressive dodging in this interview with the Belleville News-Democrat.

* Pritzker did, however, give some hints in that video, saying people who make $40-60K a year shouldn’t “bear the brunt” of the need for revenue.

He also suggested that a “small increase” has “very little impact” on wealthier people. But, he said a decrease in taxes for those in the middle class and those trying to get there “has a big impact on their standard of living.” The video is here.

* I asked Galia Slayen at the Pritzker campaign for a response to the CTBA study…

JB believes we need a progressive income tax system that asks those who can afford it to pay more, while providing a tax cut for the middle class and those striving to get there. This study shows examples of how a progressive income tax can raise additional revenue and provide a tax break to almost all Illinoisans. It’s no surprise that Bruce Rauner is once again lying about a tax break for Illinois families after his failed leadership decimated our state’s economy.

…Adding… Illinois Policy Institute…

“The CTBA’s progressive income tax plan promises more tax revenue for a bloated state government in exchange for much weaker economic growth. From 2006 to 2016, states without a progressive income tax saw 36 percent more GDP growth than states with a progressive income tax, according to data from the Bureau of Economic Analysis. Over the same time, employment grew 37 percent faster in states without a progressive income tax, and wages increased 21 percent more in states without a progressive income tax. Productivity (or output per worker) – a measure of the quality of jobs – increased 28 percent more in states without a progressive income tax.

“CTBA claims Illinois’ economy would see a boost under a progressive income tax because the proposal would stimulate consumption, but they are mistaken to believe consumption alone accounts for a truly strong economy. In reality, investment – in things like businesses and housing – does much more to strengthen a state economy than surface-level goods consumption. Tax hikes at any level are a huge deterrent to investment. From 2006 to 2016, states where a smaller share of household incomes went to consumption saw faster economic growth than states where households spent a larger share of their incomes on consumption, according to the BEA. Those latter states were more likely to be progressive tax states.

“In addition to proposing a plan that would tank the state’s economy, the CTBA also mistakenly assumes that Illinois politicians can be trusted not to go back to the well and hike the tax rates under a progressive income tax structure. That is a fatal error that could leave middle-class families in the lurch.

“The truth is Illinois doesn’t have a revenue problem, it has a spending problem. State government spending grew 25 percent faster than personal incomes from 2005 to 2015, which is unsustainable. The right way to get Illinois’ government spending problems under control while also encouraging economic growth is to cap state spending to what taxpayers can afford, a solution that has gained bipartisan support this legislative session and that can be adopted in principle immediately under the plan outlined in SJRCA 21 and HJRCA 38.”