Governor JB Pritzker releases graduated income tax plan, reaction mixed

CHICAGO (WLS) -- Illinois taxpayers are reacting to Governor JB Pritzker's graduated income tax plan, which would raise taxes on the rich to fix the state's budget problems.

As the corned beef is dished up at Manny's Deli Friday, customers are dishing out their opinions about Pritzker's state income tax plan. Two men had a friendly argument over whether the proposed graduated income tax is better than the current flat tax.

"I'm for it, I think it is a long time coming, there has been less asked of people on the top", said Mark Pulito.

"The more taxes you impose, whether it is an income tax, real estate tax, it will just chase people away," said Burt Hochberg.

As he promised in his campaign for governor, Pritzker is proposing a graduated rate income tax that he says will raise revenue and be more fair.

The current flat tax rate in Illinois is 4.95 percent. Rates under Pritzker's plan would go down to 4.75 percent for the first $10,000 and 4.9 percent for income between $10,000 to $100,000. The rate will stay at 4.95 percent for incomes of $100,000 to $250,000, then a big jump, 7.75 percent for income between $250,000 and $500,000. The tax rate will be 7.85 percent for income between $500,000 and $1 million and 7.95 percent for earners over 1 million.

"I think people that make more should pay more," said Bonnie Roelle.

With a huge hike on the wealthy, Pritzker estimates his plan would generate $3.4 billion in revenue, an amount Michael Belsky with University of Chicago's Harris School of Public Policy said the state desperately needs. But the revenue numbers may not add up.

"There are economic assumptions that they make about growth in the economy and how many people will be employed, all those things need to be vetted," said Belsky.

The proposal also asks corporations to pay more. Business groups and Illinois Republicans vowed to fight the governors plan. They said a higher tax rate could drive businesses out of Illinois, but some taxpayers don't buy it.

"They are not going to move their base of operations because they have to pay a few thousands of dollars in taxes, think about the cost of moving from one location to another," said Patrick McClurkin.

Switching from a flat tax to a graduated one, the state constitution needs to be amended. If the state legislature approves it, the measure would then go to the voters. The earliest that would happen would be November 2020, a presidential election year.