Illinois Democrats passed onto voters the question of whether the state constitution’s flat income tax should be changed to a structure that allows for higher rates for higher earners.
The measure passed the House, 73 to 44, along party lines Monday. It needed 71 votes, a super-majority, to advance to voters. All but one Democrat in the House voted in favor of the constitutional amendment. State Rep. André Thapedi, D-Chicago, did not vote. State Reps. Sam Yingling, D-Grayslake, and Jonathan Carroll, D-Northbrook, both voted in favor of the constitution amendment. Both had previously raised concerns about the graduated income tax proposal. Republicans were united in opposition.
Gov. J.B. Pritzker has made the progressive income tax the linchpin of his future spending plans. The governor and Democrats have said what they call a “fair tax” would generate about $3.4 billion in additional revenue for the state each year.
During a three-hour Memorial Day debate in the House, state Rep. Delia Ramirez, D-Chicago, said the progressive income tax will be more equitable than the existing 4.95 percent flat income tax by reducing tax rates for 97 percent of taxpayers.
“Folks, I wish we would have been taxing at a higher rate,” Ramirez said. “I wish we would have been able to go to $1 million and [tax them at] 10 percent. We’re not there. We’re at 7.95 percent.”
Lawmakers have yet to finalize proposed graduated income tax rates. The rates the governor proposed in March had the top tax bracket start income of more than $1 million. That’s different than what the Senate sent the House, where the top tax bracket was $750,000. The House has yet to pass proposed rates.
State Rep. Andrew Chesney, R-Freeport, said the proposal would lower taxes for the working poor by less than $7 a year, not enough to buy a sandwich at a restaurant. For those making less than $100,000, Chesney said they’d save less than $38.
“That’s a heck of a negotiation, but the $37.38 will be erased when the Democratic majority passes the gas tax,” Chesney said.
Lawmakers are considering proposals to double the state’s gas tax, increase vehicle registration fees and add a 7 percent tax to streaming media services. Those taxes would be used to pay for a statewide infrastructure bill.
Republicans also said because of years of fiscal irresponsibility, taxpayers in their district don’t trust state government with more of their money. They wanted cuts to spending, not more taxes.
With at least $136 billion unfunded pension liabilities and local governments reporting more of their share of property taxes are going to pension, another area Republicans focused on during the debate Monday was the need for an amendment to repeal the state constitution’s pension protection clause before raising an estimated $3.4 billion from taxpayers.
State Rep. Chris Welch, D-Hillside, said that was a nonstarter.
“[Public employees] work for those pensions,” he said. “Those pensions are a promise and we need to keep that promise and pay for those pensions. That’s what the fair tax will help us do.”
State Rep. Jeff Keicher, R-Sycamore, said amending the constitution to reduce pension benefits isn’t the only constitutional issue Democrats have blocked. He said there was citizen support for a legislative map drawing proposal several years ago, but lawyers connected to leading Democrats got the courts to toss that proposed amendment.
“The will of the people has been denied time and again,” Keicher said. “The hypocrisy is obvious to any of the voters.”
Proposals for independent maps, term limits, pension reform and other constitutional amendments haven’t advanced in the legislature.
Voters will decide whether or not to adopt the progressive tax amendment on the November 2020 general election ballot. To change the state’s constitution, either three-fifths of those voting on the question or a majority of those voting in the election must approve the proposed amendment.
The state Senate previously approved the constitutional amendment, also on a party-line vote.
Illinois has on net lost tens of thousands of residents in each of the past five years, according to U.S Census estimates, and opponents of the progressive tax have said that it will further accelerate out-migration. According to some studies, Illinoisans pay the second highest property taxes and among the highest combined local and state taxes in the country.
