Democratic Gov. J.B. Pritzker on Tuesday took a more aggressive stance in advocating for his graduated-rate income tax plan, accusing Republicans and other opponents of demagoguery, fearmongering and “waging a misinformation campaign.”
Pritzker was joined by a host of Democratic lawmakers at a statehouse news conference to introduce a proposed amendment to the Illinois Constitution that would do away with the state’s flat income tax requirement and allow for a system where higher incomes are taxed at higher rates.
“Let the people vote,” Pritzker said. “We have a constitutional amendment process that ultimately puts this decision to the voters. It’s time to let the people of Illinois — our taxpayers — decide.”
The proposed constitutional amendment, filed by state Sen. Don Harmon, an Oak Park Democrat, would eliminate the requirement of a single rate for all income-tax payers. A Senate committee hearing on the proposal is set for Wednesday morning.
The proposal would require approval from three-fifths majorities in both the House and Senate before going before voters in the November 2020 election. The tax rates would be set in separate legislation.
While lawmakers have more than a year to place a referendum on the ballot, Pritzker has made the graduated income tax the cornerstone of his plan to stabilize the state’s chronically shaky finances. He has called on lawmakers to vote on the constitutional amendment and tax rates before adjourning their legislative session on May 31.
“The governor has done a tremendous job of leading on this issue,” Harmon said in an interview. “I’ve been working on a fair tax for the better part of 10 years, but it’s with the leadership of Gov. Pritzker that we’ve gotten real traction.”
Last month, Pritzker unveiled a plan he says would generate $3.4 billion in new annual revenue by raising rates dramatically on the wealthiest 3 percent of taxpayers and giving everyone else a modest tax cut. Most of the new revenue — an estimated $2.7 billion — would come from taxing those who earn more than $1 million per year at 7.95 percent of their total income. The current rate is 4.95 percent for all taxpayers.
Pritzker’s proposal would drop the personal tax rate to 4.75 percent for the first $10,000 of income for single and joint filers. Income between $10,000 and $100,000 would be taxed at 4.9 percent, and the rate would remain 4.95 percent for income between $100,000 and $250,000. From there, the top rates jump to 7.75 percent for income up to $500,000 and 7.85 percent for income between $500,000 and $1 million.
The governor also wants to increase the current property tax credit by 1 percentage point, from 5 percent to 6 percent. But in closed-door negotiations, some Democratic lawmakers have been pushing for greater property tax relief because Illinois residents face one of the highest property tax burdens in the country.
A group of Senate and House Democrats is still negotiating over the legislation that would set the income tax rates. State Rep. Robert Martwick, a Chicago Democrat, said he hopes to file a bill on rates by the end of the week.
Pritzker is expected to begin meeting soon with individual lawmakers to firm up support. Democrats holds 74 seats in the House and will need 71 votes to approve the proposed amendment, assuming Republicans make good on their promise of unified opposition. Senate Democrats, who hold 40 seats and need 36 votes, historically have been more in lockstep on the issue than their House colleagues.
“The House Democratic caucus stands ready to work with the governor, and we look forward to enacting a fair tax in Illinois,” said Rep. Mike Zalewski, a Riverside Democrat who serves as a lead negotiator on the issue.
GOP lawmakers and a pro-business political committee called Ideas Illinois, run by former Illinois Manufacturers’ Association chief Greg Baise, have attacked Pritzker’s proposal as a “jobs tax” and argued that it would push businesses and wealthy residents out of state.
“For those who will oppose a fair tax by waging a misinformation campaign, it is transparent that you are defending an unfair status quo that benefits the wealthiest Illinoisans instead of offering your own ideas for how to fix our state’s problems,” Pritzker said.
The governor cited a report from PolitiFact Illinois that rated the “jobs tax” claim as false.
Pritzker said that without a graduated income tax to generate new revenue, the only available options to address the state’s $3.2 billion budget deficit, more than $8 billion in unpaid bills and $134 billion in unfunded pension liabilities would be a 15 percent across-the-board spending cut or a 1 percentage-point tax increase on everyone.
“The Republicans don’t come with solutions,” Pritzker said. “They only demagogue the issue.”
He added: “Where’s their plan? Tell me where their plan is. … Do they not believe in protecting the middle class? Because that’s what we’re doing. We’re protecting the middle class. That’s what this plan is about.”
Senate GOP leader Bill Brady of Bloomington said his members are trying to protect the middle class by trying to preserve the flat income tax, which he said makes it heavier political lift to raise tax rates across the board.
“It’s easier for the Democrats to raise the rates under a graduated income tax, as they’ve tried to articulate in their presentation,” Brady said. “But we believe that puts middle-income families at severe risk, and the current constitution provides safeguards and protections for middle-income families that we desperately need to keep in Illinois.”
Lawmakers’ first hearing on the graduated income tax amendment happens to come on the same day as Chicago Mayor-elect Lori Lightfoot’s first visit to Springfield since she won a landslide election last week. Lightfoot has been a supporter of a graduated income tax, though Pritzker’s plan would generate only about $40 million in new revenue for the city.
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April 9, 2019 at 07:39PM