Have you ever read Illinois’ State Constitution in its entirety? Be honest. And it doesn't count if the last time you "read" it was in 8th grade history. Well, go ahead and take a few moments to read over the preamble—it's only a paragraph. Not surprisingly, it's saturated with language relating God's providence and extolling lofty ideals of justice and equality. And unless you're a political history buff or you're over the age of 55, then you, like me, might assume that it was written way back in the day (more precisely, 1818) when Illinois was incorporated into the Union. But you’d be wrong. In fact, our current Constitution was written a mere four decades ago in 1970. And that little historical detail, to put it bluntly, gives me the urge to smash something in rage.
You see, when I thought the Constitution was written in 1818, I had an easier time swallowing the first sentence of Article IX Section 3: “A tax on or measured by income shall be at a non-graduated rate.” Being the generous man I am, I was going to give the 1818 authors of the Constitution the benefit of the doubt and presume that this edict outlawing a graduated income tax was not in direct conflict with some of the core values put forth in the preamble (i.e. the elimination of poverty and inequality, and the assurance of economic justice). But for those holding the pens in 1970, living in a modern society not all that different from our present one, this incongruity could not possibly have escaped them. Now, I will—once again, on account of my generosity—concede that modern Illinoisans are significantly more unequal (in terms of their pre-tax incomes) than their 1970 counterparts, which means that a flat income tax would have been less unfair 40 years ago than it is today. However, a regressive tax system is...well, regressive. It is inherently unequal and cannot engender real economic justice by any stretch of the imagination.
Many of my fellow Illinois citizens agree with me that our tax system is unfair. However, some contend that it is unfair not for the poor, but for the wealthiest taxpayers. They decry a tax system that allows the average person in the bottom 20% of earners to pay only $1,300 a year in state taxes, while the average person in the top 1% forks over $102,000 in state taxes.[1] Although that line of reasoning certainly makes it seem as though the wealthy are paying more than their fair share, we must consider effective tax rates to understand what a 'fair share' really is.
Effective tax rates are the most accurate measure of tax burden because they reveal just how much of a person's total income he or she is spending on taxes. So, the average person in the bottom 20% of earners may only pay $1,300 a year in taxes, but since he only makes $10,100 a year, he’s paying an effective state tax rate of 13.0%. Conversely, the average person in the top 1% of Illinois earners who pays $102,000 a year in taxes earns $2,084,700, which makes her effective rate only 4.9%. So even though wealthy Illinois taxpayers contribute a much greater sum of money to the state, the poorest taxpayers give more than two and a half times as much when taxes are considered as shares of their incomes.
To put it in different terms, after taxes the average person in the bottom 20% is left with $8,787 to live on while the average person in the top 1% has $1,982,549.70.
So, we must ask: “Is this tax structure really the best we can come up with to ‘eliminate poverty and inequality’ and ‘assure economic justice?’”
/ryan wallace/
[1] Primary state taxes in Illinois include sales and excise taxes, property tax, and both personal and corporate income tax. For more information on Illinois’ tax system, read this report from the Institute on Taxation and Economic Policy.
