Illinois Needs a “Fair Tax”

1. Illinois Needs a “Fair Tax” Replacing the Flat Tax With a Graduated State Income Tax

2. FLAT TAX RATE HURTS THE POOR The 2% tax increase had to be paid by everybody Even with the tax increase many programs have had to be cut

3. What’s Wrong with Illinois’sTax System? • UNFAIR • INEFFICIENT • INADEQUATE

4. Who has benefitted from economic growth?

5. Our Current Income Tax Structure

6. The Tax Burden for the Top 1% in Illinois is 2 to 3 Times Less

7. Because Illinois Taxes are Unfair, They are Inefficient

8. FACT: Over $9 out of $10 of the General Funds are spent on 4 core services: EDUCATION (preK through higher ed.) 35% HEALTHCARE 30% HUMAN SERVICES 21% PUBLIC SAFETY 5% 91%

9. How Much have we Cut?

10. Local and State Share of Education Funding Spending Source: National Center on Education Statistics, 2011. “Revenues and Expenditures for Public Elementary and Secondary Education: School Year 2008-2009 (Fiscal Year 2009).”

11. And the Income Tax Increase Expires in 2015 $4 billion • Rate Structure Change • In 2015, the personal income tax rate drops from 5% to 3.75% • In 2025, the personal income tax rate drops from 3.75% to 3.25% • Revenue Impact • In 2015, along with reduction in the corporate tax rate, this will result in a loss of...

12. What’s The Solution? How Can We Make Illinois Taxes More Fair, More Efficient, and Fiscally Sustainable?

13. Graduated Income Tax Makes the system more fair; account for a person’s ability to pay Helps repair the state budget long term Spurs the economy by putting money back in the pockets of middle and low-income Illinoisans

14. Most Other States Have Graduated Rates • Federal Income Tax Rates are Graduated • 35 of the 42 States with Income Taxes have Graduated Rates Our Neighbors: Iowa: 9 Rates (0.36% to 8.98%) Kentucky: 6 Rates (2.0 to 6.0%) Missouri: 10 Rates (1.5% to 6.0%) Wisconsin: 5 Rates (4.6% to 7.75%)

15. A Specific Proposal No tax on first $5,000 5% tax rate up to $100,000 7,5% up to $150,000 8.5% up to $200,000 9.5% up to $300,000 10% up to $500,000 10.5% up to $1,000,000 11% over $1,000,000

16. Graduated Rates Could Mean that Most Illinoisans Would Pay Less (Center for Budget and Tax Accountability, January 2012)

17. We Can Win a Fair Tax

18. Preamble of Illinois’ Constitution We, the People of the State of Illinois - grateful to Almighty God for the civil, political and religious liberty which He has permitted us to enjoy and seeking His blessing upon our endeavors - in order to provide for the health, safety and welfare of the people; maintain a representative and orderly government; eliminate poverty and inequality; assure legal, social and economic justice; provide opportunity for the fullest development of the individual; insure domestic tranquility; provide for the common defense; and secure the blessings of freedom and liberty to ourselves and our posterity - do ordain and establish this Constitution for the State of Illinois.

19. Change requires a constitutional amendment Current Illinois Constitution: Article IX -- Revenue Section 3. Limitation on Income Taxation (a) A tax on or measured by income shall be at a non-graduated rate.

20. Constitutional Amendment Process 1. Constitutional amendments can only be placed on the ballot in November with approval by 60% of the General Assembly (71 votes in the House and 36 votes in the Senate) 2. Referendum in November must be approved by 60% of voters We need to win both voter approval and legislative support

21. Four Phase Plan: • Build Momentum and Educate our Communities • Win Legislative Approval (January 2014 to May 2014) • Win Voter Approval (May 2014 to November 2014) 4. Propose and Pass Fair Tax Bill

22. Our Voices Have to Be Heard Our stories have to be told

23. Next Steps – The Path to Victory FIRST: Endorse the Campaign Then educate, energize, organize and mobilize!