The Ultrarich Are Getting Cozy In America’s Tax Havens At Everyone Else’s Expense

More states are slashing or eliminating taxes, lessening the burden mostly for the wealthy. What does that cost the rest of us?

By Whizy Kim, Vox

In 2020, a proposed constitutional amendment in Illinois attempted to turn the state’s flat personal income tax of 4.95 percent into a graduated rate that rises with income. Democratic Gov. J.B. Pritzker, a billionaire himself, posed the amendment as a fight for tax fairness that would ask the state’s wealthiest residents to pay a greater share, but he had a formidable foe: Billionaire hedge fund manager Ken Griffin, who poured $54 million into defeating the measure, framing the amendment as an extra burden on Illinois taxpayers that would enable irresponsible government spending. In fact, it would have kept the tax rate the same or lower for Illinoisans making $250,000 or less. (ProPublica estimated that it would have cost Griffin, who currently is worth around $29 billion, an extra $51 million a year in taxes.)

The measure failed to pass.

Illinois’ flat income tax is one example of a regressive state tax system, in which the tax burden decreases the richer someone is. They are designed for the benefit of the wealthy — and sometimes by the wealthy — at the expense of low- and middle-income taxpayers.

The federal income tax is progressive because the share of income tax someone pays grows bigger the more money they make. But it’s a different story for state taxes. Not only do 14 states already have or plan to implement a flat income tax, the vast majority of them, like Illinois, also have regressive tax systems that serve to widen the wealth gap. What’s more, the past few years have been marked by a flurry of newly passed state tax cuts — in 2022, at least 35 states and DC have voted for some kind of cut. At least 13 have adopted income tax rate cuts, which usually benefit the wealthy more than the poor, and while a minority of states currently have no income tax, a growing number are trying to eliminate it.