Fair Tax?
What is the real deal on this new tax proposal, I can’s seem to determine who is telling the “REAL” truth on how it will affect me, an average middle class person .
thx
Terry Says
I’ve answered this question several times about the pros and cons of Illinois proposed “Fair Tax” on the ballot next month. So I’ll just cut and paste the answer I posted a week ago. My thoughts haven’t changed! But since we are being barraged by TV commercials from both sides, I’ll approach it from an economic point of view, not an emotional one.
I’m not political –I’m economic. And on that basis I cannot think of one “pro” for a graduated tax — unless you’re the Governor trying to get re-elected for just one more term, and then move to Florida!! (where your wife already lives!)
A graduated income tax starts with only “the very rich” and quickly gets expanded to the middle class. That’s the history of EVERY tax in history– starting with the Federal income tax.
According to the Tax Foundation, The top marginal income tax rate in 1913, the first year the modern income tax was levied was7%. And that was levied on only the top 1% of earners. You know what happened along the way!
The thing about Federal income taxes is that you can’t do much about them — except vote the taxing party out. Sure, the Beatles left England, and Roger Federer lives in Dubai to escape high taxes. But few Americans are trying to leave the country (and if you do, you pay a huge tax on all your assets — an exit tax!)
BUT STATE TAXES ARE A DIFFERENT THING! The “rich” top earners who would be taxed are pretty smart. They can MOVE out of state! And they have the money to do it! So states like Florida, Texas, Nevada, Tennessee are gaining population, while NY, CT, NJ, and Illinois have been net losers of population.
Between the loss of deductions for state and local taxes, and the rising real estate taxes, and the prospect of a higher income tax — many smart middle-class people have already left the state. The ongoing violence in Chicago hasn’t helped the situation, and now people don’t have to go to an office to work — and might not be required to return. So the “attractions” of the “big city” aren’t a sticking point.
A graduated income tax would cause a trickle of leavers to become a swollen river of departing residents, reminding me of the old bumper sticker: “Will the last person out of Illinois please turn off the lights!”
