How to raise revenue to pay for services needed/desired by the people of Illinois? Various proposals have been floated. I’m partial to the Financial Transaction Tax (LaSalle Street Tax) that would impose a small tax on contracts traded at the Chicago Mercantile Exchange and the Chicago Board of Options Exchange. Lots of money changes hands at these two exchanges and the state just watches from the sidelines. We should tax the traders for each contract traded. This would raise revenue and it might also tamp down some of the most speculative gambles taking place on these two exchanges.

Another proposal is a change to the state income tax. State Senator Don Harmon suggests a “fair tax” that would tax those with greater personal income at a higher rate than those with lower incomes. This seems reasonable. Illinois is one of a few states with a flat-tax rate system. All wage earners are taxed at the same percentage of their income. For fiscal year 2015, the personal income tax rate is 3.75% of personal income. This tends to take a bigger bite out of low-wage income earners than those with high or middle incomes. Senator Harmon’s proposal would require a constitutional amendment, unlike the LaSalle Street Tax.

A way around the amendment hurdle might be to stick with a flat tax but base an exemption rate at a level that would allow the working poor and struggling middle-income workers to keep more of their earnings.

Illinois has an estate tax. The Illinois Legislature got rid of the Illinois Estate Tax in 2010. They brought it back in 2011 but exempted the first $2,000,000 from state taxes. In 2012, our legislature raised the exemption to $3,500,000 and then raised the exemption to $4,000,000 in 2013. So our legislators are familiar with granting hefty tax exemptions to those who simply inherit familial wealth.

While working toward a “fair tax,” we should look at raising the Illinois flat tax in such a way as to generate income from the wealthier Illinois residents while providing relief to the working poor and the struggling middle class. I don’t know the best exemption level, but surely we have some bright citizens who could weigh our needs and desires and then plot out some scenarios. 

Tom Broderick

Oak Park

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