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· Legislation currently being considered in Illinois would amend
the state Constitution to allow for a graduated rate individual
income tax. Plans being discussed would move Illinois from
a single rate tax to a graduated rate structure with top rates
ranging from 8 percent to 11 percent.
· Sixty-one percent of employers in Illinois are pass-through
entities, meaning they pay business taxes through the individual
income tax. Implementing the graduated rate structure would
increase taxes on many of these businesses.
· On average, 38 percent of employment at businesses with at least
one employee are pass-through entities in Illinois.
· Share of pass-through employers varies based on industry, with
the highest concentration occurring in the construction sector.
Other highly-impacted industries are professional, scientific, and
technical services; agriculture, forestry, fishing, and hunting;
administrative and support and waste management services; and
real estate and rental and leasing services.
· Pass-throughs tend to be smaller in size, with the majority of
pass-through employees less than 10 people. Small businesses’
performance in Illinois has lagged when compared to the rest of
the country, and hiring prospects have worsened since last year.
· The Illinois economy is underperforming in comparison to other
states in the region and the country as a whole. Experts express
caution over using taxes as a solution to the state’s large and
rising pension debt.
Moving to a Progressive Income
Tax Would Increase Taxes on the
Majority of Illinois Employers
By Liz Malm
Legislation currently being considered in Illinois would amend the state’s
constitution to allow for a progressive individual income tax. Main rate
structures being discussed would institute top rates ranging from 8 to 11
A large share of Illinois employers would be impacted by this tax legislation,
since 61 percent of employers in the state are