It's hard to avoid the debate about a proposed change to the way income is taxed in Illinois. You may have already voted one way or the other. Gov. JB Pritzker, one of the wealthiest politicians in the country, has made it a pet issue. He and other proponents of the proposal, which would lead to a graduated income tax rate that would mean higher taxes for the wealthy, call it the "fair tax."
If you've watched television lately then "you've seen an onslaught of TV ads that are talking about who will pay higher and lower taxes if the proposed amendment is passed," said Kent Redfield during a Citizens Club of Springfield debate he moderated last month. "You might be confused." Redfield, an emeritus University of Illinois Springfield political science professor and author, said some $80 million has been raised to campaign either for or against the proposal. The average voter could indeed have a hard time making sense of what's at stake based on conflicting and insidious messaging that has also made its way to social media advertisements.
Opponents – such as the Illinois Policy Institute, a libertarian nonprofit organization funded by the ultra-rich, including former Gov. Bruce Rauner's foundation – have framed it as a "tax hike." They have claimed the amendment to the state's constitution would open the door to more taxation. Illinois Policy Institute is a plaintiff in a lawsuit meant to derail the effort.
To pass, the constitutional amendment needs either 60% approval from those who vote on the proposal, or 50% of all those who vote in the election. If passed by voters, in 2021 an already approved law would go into effect. Tax rates would rise in steps, with the first $10,000 for a single filer taxed at 4.75%. Single filers with a net income of $10,001 to $100,000 would have a rate of 4.90%. And those with an income of more than $100,000 and up to $250,000 would trigger the current flat rate of 4.95%. Income more than that, for an individual, would mean a rate of 7.75%, which would rise to 7.85% for income at more than $350,000. For single filers, the largest increase would be for income greater than $750,000, with a rate of 7.99%.
Most Illinois residents, who make less than $250,000 annually, would see a decrease in their income taxes. But opponents claim it would open the door to further tax increases. "Removing the constitutional flat-tax protection would lead to large tax hikes on middle-class Illinoisans," an August article from Illinois Policy Institute claimed. When it comes to income taxes, that argument is unlikely, according to the Institute of Government and Public Affairs, or IGPA, based at the University of Illinois at Urbana-Champaign.
IGPA released an October report that found states don't often increase their income tax rates. "The debate over Illinois' graduated tax proposal made me wonder, do other states change their personal income tax rates frequently?" said report author and IGPA senior scholar David Merriman in a release. "It turns out the answer is no, and that goes for states with graduated-rate structures and flat-rate structures. Changes to personal income tax rates just aren't that common."
During the Sept. 25 Citizens Club debate in Springfield that Redfield moderated, state Sen. Andy Manar, a Democrat, and state Sen. Steve McClure, a Republican, encapsulated arguments on either side of the issue. Potential additional tax revenue "just goes into the state piggy bank, which is constantly mismanaging and destroying our future as a state because it's very poorly run, unfortunately," said McClure. Manar, a proponent, said it would "provide revenue to take the place of property taxes to fund public schools in Illinois." Both legislators represent parts of central Illinois.
Keri Tate heads the Springfield chapter of the League of Women Voters. The league advocates for civic engagement and abstains from partisan issues. The league has been supportive of a progressive income tax for 50 years, she said. "The way taxes are structured right now, moderate and low-income families are being taxed on ... a larger proportion of their income," said Tate. "It's definitely an equity issue."
In the midst of conflicting messaging, one thing seems certain. Taxes for Illinois residents could increase one way or the other. In late September, Lt. Gov. Juliana Stratton warned that if the state is not allowed to move forward with a new income tax plan, all Illinoisans could face a 20% across-the-board hike in their income taxes.
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