Gov. J.B. Pritzker’s effort to shift Illinois from a constitutionally mandated flat-rate income tax to a structure where higher incomes are taxed at higher rates cleared its first legislative hurdle Wednesday.
The state Senate’s Executive Committee voted 12-5 along party lines to approve a proposed amendment to the Illinois Constitution that would allow for a federal-style graduated-rate income tax. It’s the first of many steps necessary before voters can have their say on the issue, which can’t happen until the November 2020 election at the earliest.
Wednesday’s debate showcased the talking points that are already becoming familiar as the state moves toward what likely will be the most expensive ballot measure fight in Illinois history. Pritzker’s Democratic allies argued that the so-called fair tax is the best way to address the state’s many financial challenges without increasing the burden on middle- and working-class taxpayers. Republican opponents countered that they’re the ones trying to protect the middle class from future tax increases.
“This is something many of us have been working on for the better part of a decade, and it is long overdue,” said state Sen. Don Harmon, an Oak Park Democrat who’s sponsoring the proposed amendment. “It is not a radical departure. It is, in fact, the common tax practice in most every other jurisdiction, and I believe that it will give us some nimbleness in our tax policy to allow us to close our structural deficit and begin to tackle the problems that Illinois faces.”
The measure passed by the committee, if approved by three-fifths majorities in the full Senate and the House, would place a question on the ballot asking voters whether the change to the state constitution should be made. Tax rates would be handled in separate legislation.
While Pritzker has proposed a plan that would dramatically raise taxes on people earning more than $250,000 a year and give a slight break to the remaining 97 percent of taxpayers, his plan has yet to be introduced in the General Assembly. Negotiations over the legislation that would set tax rates are ongoing, but state Rep. Robert Martwick, a Chicago Democrat, has said he hopes to file a bill this week.
Republicans and their supporters in the business community argued during Wednesday’s hearing that doing away with the state constitution’s flat tax provision would open the door to future tax increases on the middle class.
“It should be hard to raise taxes, and a graduated system … will make it easier,” said Sen. Dale Righter, a Mattoon Republican.
“Politicians, not just in Illinois but nationally and everywhere, are pretty good at the class-warfare game,” Righter said. “And if you can point to them and say, ‘Well, we’re going to get more money for your schools, but we’re going to make the guys over there pay for it,’ that makes it easier to do.”
Among those joining GOP lawmakers in opposing the plan were representatives of the Illinois Manufacturers’ Association and the Illinois Chamber of Commerce.
“Illinois manufacturers are strongly opposed to a graduated tax that will take billions of dollars out of the hands of hardworking residents and job creators,” said Mark Denzler, president and CEO of the manufacturers group. “There’s been a lot of talk about billionaires, but let’s talk about who this proposal really impacts: small and medium-size businesses across Illinois — manufacturers, retailers, family famers, car dealers, beer distributors, nursing homes, hotels and more.”
Organized labor and social service providers backed Democrats in supporting the proposed amendment.
“Opposition to a graduated income tax fails to recognize the ability to reduce the tax burden for the vast majority of taxpayers,” said Jason Keller, legislative director for the Illinois AFL-CIO. “This opposition stems from a desire to protect the status quo for the wealthy.”
Sen. Jason Barickman, a Bloomington Republican, pressed Deputy Gov. Dan Hynes, Pritzker’s budget point man, for a commitment that the administration wouldn’t raise income tax rates down the road to fix future budget problems.
“If the governor has come forward and says, ‘I have a plan that solves this problem, and I’m telling you taxpayers that some number of you are going to pay no more and many less,’ … does that commitment last a few months? A year? The term in office? … Could the commitment change tomorrow? What’s the commitment there?”
Hynes replied, “This is not just a commitment or proposal of the governor. … The General Assembly is involved, and the General Assembly would be having to decide not only today but in the future.”
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April 10, 2019 at 05:06PM