Illinois House committee advances graduated-rate income tax plan approved earlier by Senate

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SPRINGFIELD — An Illinois House committee on Friday advanced a rate plan for Gov. J.B. Pritzker’s graduated-rate income tax proposal, while a leading Democrat indicated efforts to provide broader property tax relief to help sell the plan to reluctant lawmakers and voters probably will remain on hold until this summer.

The House Revenue and Finance Committee voted 9-6 to forward the same rates measure passed earlier this month by the Senate, which represented a slight adjustment to the numbers that were part of Pritzker’s initial proposal.

The shift to a graduated income tax, which increases rates for higher incomes, requires a change to the state constitution. A measure to put that question to voters in November 2020 is being handled in separate House legislation.

Still awaiting consideration is a property tax relief measure approved by the Senate that would freeze local school district property tax rates if voters approve the constitutional amendment and if the state takes on more of the overall funding for education in Illinois. The property tax relief piece remains in play in the House “for now,” said Rep. Mike Zalewski, a Riverside Democrat who chairs the committee and is sponsoring the bill.

Ultimately, Zalewski said he anticipates the two parties will attempt to deal with property tax relief through a task force this summer.

“I think what’s been demonstrated this spring is property tax relief cannot really be addressed in state income tax code. It’s a very hard bridge to gap,” Zalewski said. “So we’re going to try to work on a solution where we address property tax relief, it should be part of the conversation, but it’s hard to entwine the two.”

Pritzker and proponents of the graduated tax structure have said they view the constitutional amendment and the rates proposal as necessary companions, so that voters know far in advance of weighing in on a constitutional amendment what their tax bill will look like, Zalewski said.

“It’s been a part and parcel of the conversation throughout the session of the value of presenting the rates along with the amendment,” he said. “We, as a caucus, feel like if you don’t do that, the voters next fall won’t have the opportunity to know what they’re voting for.”

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Gov. J.B. Pritzker hands a pen to state Rep. Lance Yednock, D-Ottawa, after signing a bill Friday in his Capitol office in Springfield that prohibits local governments in Illinois from enacting right-to-work ordinances. State Sen. Ram Villivalam, D-Chicago, left, was lead sponsor of the bill in the Senate.

Peter Hancock, Capitol News Illinois

The plan advanced by the House committee Friday sets the top rate at 7.99%, which applies to single filers who earn more than $750,000 annually and joint filers earning more than $1 million.

The current flat income tax rate is 4.95%.

Under the bill, single and joint filers would be taxed at 4.75% of their first $10,000 of income, 4.9% on income between $10,000 and $100,000 and 4.95% on income between $100,000 and $250,000.

For single filers, the rates in the plan are 7.75% on income between $250,000 and $350,000 and 7.85% on income between $350,000 and $750,000. Illinoisans who earn more than $750,000 annually would see their total income taxed at 7.99%.

Joint filers would be taxed at 7.75% on income between $250,000 and $500,000, and 7.85% on income between $500,000 and $1 million. Joint filers whose income surpasses $1 million would see a 7.99% tax rate on their total income. The corporate tax rate would rise to 7.99% from 7%.

The plan differs from what Pritzker rolled out in March, which he said would generate $3.4 billion in new revenue by raising tax rates for the highest earners, while giving a modest break to 97% of taxpayers.

The House is slated to reconvene in Springfield on Sunday afternoon with a lengthy agenda to address for the final week of the legislative session that is scheduled to adjourn May 31.

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May 24, 2019 at 07:29PM

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