Reports

Analysis of Berkeley Research Group Graduated Rate Income Tax Impact Report

Release: October 21, 2020

In early August, the Illinois Chamber of Commerce issued a press release arguing against ratification of the proposed amendment to the Illinois Constitution that will permit the state to utilize a graduated rate structure for its income tax. According to the Illinois Chamber, such ratification, coupled with implementation of the specific graduated rate structure identified in P.A.101-0008, which is called the “Fair Tax” by proponents, would “somehow” shrink the Illinois economy, and disproportionately harm women and minorities. But the press release based these claims on largely unsubstantiated findings contained in an Executive Summary of the report, “Illinois’ Proposed Graduated Income Tax: Impacting Jobs and the Economy,” which the Illinois Chamber paid the Berkeley Research Group (BRG) to produce.

 

Unfortunately, the Executive Summary does not provide much in the way of support for the conclusions it reaches, nor does it regularly cite its sources, or even provide insight into the model BRG used to reach its conclusions which is particularly problematic in this instance, given that the main findings contained in the Executive Summary are contrary to prior research on migration, tax burden, and the economy.

 

CTBA decided to reached out to both the BRG and the Illinois Chamber to request a copy of the full report, however, neither the Illinois Chamber nor BRG was willing to make the full report available to either CTBA or the public. CTBA chose to respond to the BRG Executive Summary released by the Illinois Chamber anyway. To find out more about how, when compared to the body of research conducted by credible sources in the relevant areas, the Key Findings presented in the Executive Summary are revealed to be either inaccurate or misleading, please read CTBA’s new Issue Brief, “Analysis of Berkeley Research Group Graduated Rate Income Tax Impact Report.”

Debunking the Myth that Tax Policy Causes Out-Migration

Release: October 14, 2020

On November 3, 2020, voters will have the chance to ratify an amendment to the Illinois Constitution which would allow the state to use a graduated rate structure for its income tax. Ratification of this amendment would  permit implementation of Public Act 101-0008 (“P.A. 101-0008”) which was signed into law on June 5, 2019. If implemented, this legislation which is frequently referred to as the “Fair Tax” by proponents, would replace the state’s current flat rate income tax with a graduated rate structure that: is tied to ability to pay; in normal economic times would raise around $3.5 billion in new revenue annually; and would effectively help eliminate some of the long-term structural flaws that have consistently made Illinois’ overall tax system one of the most unfair and poorly performing in the nation.

Many of those opposed to the Fair Tax have tried to mislead Illinoisans into voting against ratifying the proposed amendment to the state’s constitution this November, by relying on arguments that have emotional appeal but are not supported by either evidence or the vast body of research. One such specious argument consistently made against the proposed Fair Tax is that the change to a graduated rate income tax structure will cause a mass exodus of middle-income households and millionaires from Illinois.

This claim, however, is exposed for the baseless canard it is when evaluated against the body of research covering the relationship—or as it turns out lack thereof—between tax policy and migration, as well as the relevant data from the Internal Revenue Service (“IRS”), U.S. Census Bureau, and the Illinois Department of Revenue (“IDOR”).  People (including millionaires) move for many complicated, interrelated reasons, least of which is because of tax policy.

Analysis of Illinois’ FY2020 Enacted General Fund Budget

Release: October 31, 2019

In his first year in office, Governor J. B. Pritzker signed a General Fund budget that the General Assembly passed into law — something it took his predecessor four years to accomplish. And while both the General Fund budget for fiscal year (“FY”) 2020 and the Governor are new, the fiscal problems which continue to afflict the General Fund are not. In fact, these problems are both longstanding and structural.

Governor Rauner's FY2019 General Fund Budget Proposal Neither Balances Nor Addresses Long-Term Structural Fiscal Issues

Release: May 24, 2018

Fiscal Year (FY) 2019 marks the fourth General Fund Budget proposed by Governor Bruce Rauner. For the first two years of Governor Rauner’s administration, FY2016 and FY2017, the state went without a full General Fund Budget. That gave Illinois the dubious honor of going the longest that any state in the country had ever gone without a budget.  This budget impasse led to an explosion in the state’s deficit under Governor Rauner’s watch. The state’s backlog of bills was $5.97 billion on July 1, 2015, when the impasse began.

Cutting Taxes for the Middle Class and Shrinking the Deficit: Moving to a Graduated State Income Tax in Illinois

Release: April 30, 2018

This report makes the case for a graduated rate state income tax in Illinois, and illustrates two possible rate structures that would accomplish each of three major objectives:

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