If you read much about taxes and spending in the state of Illinois, you know that the state’s in a world of hurt. The state government has dramatically underfunded its pension system for state government workers. Sometime in the next decade, the government will likely need to rein in state pensions, cut the growth of other spending to come up with funds to finance those pensions, or raise taxes.
I’m sure the state’s elected officials will consider all of those options in the future. But fortunately, there is one major barrier to raising taxes: the Illinois state Constitution.
This is from David R. Henderson, “Constitutions Matter for Tax Rates,” IPI, TaxBytes, January 25, 2023.
Another excerpt:
But that’s not the only advantage. The other major advantage is that it makes a legislature think twice, or at least once, before imposing higher tax rates. The legislators know that what’s sauce for the high-income goose is also sauce for the low-income gander. Most people don’t like having their taxes raised, but many people don’t object to having other people’s taxes raised. The requirement for a flat tax rate on individual and corporate income means that people who support raising taxes on others know that they will also end up being taxed more.
That’s where a constitution comes in awfully handy. Under the Illinois Constitution, all individuals must pay the same rate on their individual income and all corporations must pay the same rate on their corporate income.
Read the whole thing, which is short.
