In 2020, Illinoisans rejected Gov. J.B. Pritzker and his legislative allies’ push for a progressive income tax scheme in Illinois. And with it, they rejected claims a progressive tax would “modernize” Illinois’ income tax.
Right they were. Over the past decade far more states have moved to a flat tax structure than vice-versa. Since 2010 seven states have flipped or are in the process of flipping to flat income taxes from progressive ones: North Carolina, Kentucky, Mississippi, Arizona, Idaho, Georgia, and Iowa.
The list has the potential to grow further. Both Virginia and Oklahoma have proposed moving to a flat tax as well.
And the “flattening” of income taxes goes beyond just flat tax states. Many progressive tax states are decreasing their number of brackets in an effort to simplify their tax structure. Most notably Ohio, which once boasted nine tax brackets in 2010, is now down to just two, both with rates below 4 percent.
Other states, like Missouri, are already practically flat tax states. The Show-Me state applies its top income tax rate of 4.8 percent to all income above just $8,911.
In contrast, only one state, Massachusetts, has flipped to a progressive state income tax, and even then only barely. The state implemented a single new surtax on millionaires – a 9 percent rate on incomes over $1 million in 2023. All other income below $1 million has a flat rate of 5 percent.
The transition from progressive to flat has been referred to as a revolution in some circles. Revolution or not, it’s becoming increasingly clear that the trend is in favor of flat taxes.
It’s also more clear Illinois voters made the right choice by rejecting Gov. Pritzker’s “fair tax” push.