Graduated Tax on Illinois Ballot

Oct 15, 2020

from the pamphlet mailed to all state residents.
Credit Illinois Secretary of State

Illinois residents are deciding whether to amend the state constitution and replace the current flat tax with a graduated system, similar to our federal income taxes.

Let's face it, Illinois's finances are a mess, and that was before the pandemic, so any change in taxes is likely to raise a lot of concern, and opposition.

Currently all Illinois tax payers pay a flat rate of 4.95 per cent, no matter what their income is. If the amendment passes, Illinois could adopt a graduated or progressive system with different rates for different income levels. And the General Assembly has already approved some graduated brackets, IF the amendment passes.

Supporters of the change, like Kathy Griffin, President of the Illinois Education Association, say it's unfair that low income people pay the same rate as wealthier people. 

"97 per cent of people in Illinois will pay the same or less but the top three per cent, and that shows you how much wealth there is in the top three per cent, that just by making this change you will be able to help 97 per cent of Illinoisans."

Figures from the IEA show 98 to 99 per cent of taxpayers in the Illinois Quad Cities and nearby counties would pay the same or less in state taxes under the new system. 

Taxes would only go up for those earning more than 250,000 dollars per year. Their rates would increase from the current flat rate of 4.95 per cent up to 7.75 and 7.85, and 7.95 per cent for those earning more than one million dollars. 

Paul Rumler, President and CEO of the Quad Cities Chamber of Commerce, says his members strongly oppose the change.

"And what we're hearing is a lot of bad timing - first off we're in the midst of a pretty big pandemic and businesses across the state of Illinois and here in the Quad Cities are not doing well. So now is not the time to be proposing a tax increase."

And he worries that allowing for separate rates, instead of the same rate for all, could tempt the General Assembly and governor in the future.

He admits raising revenue would help Illinois with its serious financial problems, but thinks other reforms should be made first.

"There's no limit, there's no cap. There's also no resolution to the long-standing financial issues in the state of Illinois. So there's been no reform to the outstanding issues like the second highest in the nation property taxes that we have across our state, the backlog of bills out there the state owes on, and the unfunded pensions. And so right now they have not addressed the spending side of what's going on and they want to increase the revenue side and that's just not a responsible path to go down."

With the constitutional change, and graduated rates, Griffin says additional revenue could really help the state in  many ways. 

"And obviously it's much easier to say "no" to something than it is to say "yes." And this will make a positive difference not only in our state but it will make a positive difference in our schools throughout the state and allow us to take care of our most precious resource which is the education of our future, our kids."

By some estimates, the change could generate 3.4 billion dollars a year in revenue for the state. 

Rumler says the current flat rate income tax in Illinois provides a competitive advantage over Iowa in the Quad Cities because Iowa has graduated rates. 

Nothing in the amendment, or the proposed rates, affects retirement income.

To pass, the amendment needs at least 60 per cent "yes" votes.