Far too many Illinoisans are struggling to make ends meet and, as we stare down the economic recession forced on us by COVID-19, our state’s financial position is becoming more precarious as the fiscal year goes on.
We were disappointed that the Illinois Fair Tax ballot initiative did not pass in November, as that was an opportunity to generate an additional $3B of much needed revenue from additional taxes on the wealthy and make a much-needed structural change to our tax system.
Without additional revenue, Illinois is at serious risk of cutting or underfunding critical services – like health and human service programs – that are meant to provide a safety net for the most vulnerable people in our state. The inability of Congress to pass a stimulus package that would provide much-needed state and local aid makes the current outlook that much worse.
But we continue to believe that people with low incomes should be taxed at a lower rate so they can use their money to support their families – it’s that simple.
So what policy solutions are left to help Illinois keep its doors open while protecting Illinoisans who are struggling to make ends meet?
The General Assembly can raise income taxes for everyone. However, a tax increase should be combined with an expanded Earned Income Credit.
The Earned Income Credit (EIC) already provides cash relief to Illinois households that are most in need. Currently structured as a supplement to the federal Earned Income Tax Credit (EITC), the state EIC provides hard-working families, the majority of whom earn less than $55,952 per year, with a tax return of up to $1,157. There is an opportunity to expand this credit to include working Illinoisans age 18-24 and 65 and older; immigrants who pay taxes, but do so using an ITIN (Individual Taxation Identification Number) rather than a Social Security Number; unpaid caregivers who forgo opportunities to earn income outside the home in order to care for their children, elders, or disabled family members; and MAP grant-eligible students. If legislation like this passed, we could bring more tax relief to hundreds of thousands of Illinoisans who need it the most.
Expanding the EIC would be an antidote to the regressive taxation Illinoisans face and, when we as a society must meet the basic human needs of our fellow Illinoisans during the pandemic, it can be an important tool for putting money back in people’s pockets while balancing the needs of the State of Illinois to raise much-needed revenue.
