Hinsdale will be among the communities impacted most profoundly by the proposed graduated state income tax structure, a Chicago Tribune study has found.
Nearly 30 percent of village residents, or 2,288 tax filers, in the 60521 ZIP code in 2016 earned more than $250,000, the threshold for higher tax rates if a constitutional amendment to change Illinois’ flat income tax to a graduated income tax is approved by voters in the November 2020 election. Currently the state taxes income at 4.95 percent for everyone.
In May, the Illinois Assembly passed legislation to put the amendment on the ballot and to institute the following tax rates for single/joint filers if approved:
• 4.75 percent for income $0 to $10,000
• 4.9 percent from $10,001 to $100,000
• 4.95 percent from $100,001 to $250,000
• 7.75 percent from $250,001 to $350,000/$250,001 to $500,000
• 7.85 percent for $350,001 to $750,000/$500,000 to $1 million
• 7.99 percent above $750,000/$1 million
According to the Tribune, roughly 85 percent of those facing higher tax rates under the graduated tax plan live in Cook County and the five collar counties. Hinsdale and Winnetka are tied with the second-largest concentration of high earners at 29 percent. Glencoe has the largest with 35 percent. In Western Springs, 21 percent of households would see an increased rate, along with 20 percent in Oak Brook and 16 percent in Clarendon Hills.
Proponents of the amendment say tax rates would be same or lower for roughly 97 percent of the state’s population under the graduated system.
But Rep. Deanne Mazzochi (R-Elmhurst), who voted against the amendment, said the change would punish many of her constituents in 47th District, which includes Hinsdale, simply for being successful. And it could backfire by actually driving them away.
“We’re actually very lucky that we have people that are top earners,” Mazzochi said. “They’re fiscally savvy, and many of them have the ability or opportunity to move to other states.”
Mazzochi said pension system reform should take priority over changing the tax structure.
“I’m just not in favor of a constitutional amendment that’s designed to give Springfield more power to tax and spend,” she said. “We’re not getting anything of value for it. There’s no upside for our district to vote in favor of this amendment.”
State Sen. Suzy Glowiak (D-Western Springs) voted in favor of putting the graduated income tax structure on the ballot but opposed the bill establishing tax rates if the amendment passes, breaking with many of her Democratic colleagues.
“I want to give people the chance to weigh in on it,” Glowiak said. “We need to see if there’s going to be support for the change or not. Instituting tax rates simply puts the cart before the horse.”
She said she was not surprised at the Tribune’s findings, knowing that the district she represents is home to a large number of high-income earners. She believes her constituents already carry a disproportionate burden in property taxes.
“We should be finding ways not to increase our taxes but, if we can, to lower them,” she said. “We’re looking at ways to not penalize the 24th Senate District.”
