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Vote Yes for Fair Tax Reform To Advance Racial Equity

By John Bouman, Vote Yes for Fair Tax Chair

The Illinois tax code is both a symptom and instrument of systemic racism: Our unfair system siphons wealth from communities of color while failing to provide the resources needed to make every community strong. But we have the opportunity now to restructure our tax code and advance race equity by passing the Fair Tax constitutional amendment.

A recent study by the Institute for Tax and Economic Policy examines what would have happened had Illinois had a Fair Tax structure for the past 20 years instead of the current flat tax.  It found that the flat tax levied $4 billion more from Black and Latinx communities than they would have paid under the Fair Tax. Over the same period, it allowed the state’s wealthiest, largely White, households to pay $27 billion less. Using the funds from this tax break, the study estimates that these wealthy households were able to generate more than $50 billion in wealth.

In other words, the flat tax has been shifting wealth from lower-income households, especially households of color, to the wealthiest, mostly White, households.

The study also found that the current flat tax system is making the already historically huge income gap wider, exacerbating the institutional inequities already baked into our economy.

Racial disparities infest just about every measure of economic and social well-being. That’s starkly evident in outcomes for health, infant mortality, life expectancy, educational attainment, income, wealth, home ownership, criminal legal involvement, child welfare, exposure to environmental hazards, hunger, access to credit, and on and on. The strikingly disproportionate death rates from COVID-19 in among Black and Latinx patients shows the devastating impact of chronic disinvestment and discrimination.

Changes to systems and policies are necessary, but many of them will be empty without investments. By restructuring our tax system to address systemic inequity, we can also take strong steps toward fair funding for all our communities.

The Fair Tax is a Step in the Right Direction

Illinois currently has a constitutional provision that requires the income tax to charge the same rate for every household regardless of their income (the “flat tax”).  Grocery store clerks, nurses and other essential workers pay the same tax rate as millionaires and billionaires. The Fair Tax amendment now on the ballot would eliminate this constitutional requirement of a flat tax. Instead it allows for a Fair Tax, where people with higher incomes would pay a higher rate, and those with lower and moderate incomes pay a lower rate.

Under the Fair Tax system that would take effect if the amendment passes, the 97% of all taxpayers with income below $250,000 get a tax cut, and the 3% of taxpayers making more than that would pay more than they do now. This new system would generate around $3 billion a year that can address chronic disinvestment and support schools, health care, human services and jobs in every community.

Fair Tax reform promotes racial equity in two powerful ways. First, by makes the tax structure fairer for those with lower incomes—disproportionately Black and Latino families—it’s a huge step toward rectifying decades of how the current system has perpetuated and worsened the racial wealth gap. Second, the Fair Tax will allow Illinois to better invest in the elements of equal opportunity, including education, child care, economic development, jobs, job training, health care and social services, among others.