Voters will decide next year whether to ditch Illinois' flat-rate income tax in favor of one that hits the wealthy hardest following House action Monday that gave Democratic Gov. J.B. Pritzker his top campaign pledge and biggest victory since taking office.
On a 73-44 roll call, the Democrat-led House approved asking voters to weigh in on a state constitutional amendment allowing a graduated tax structure . Pritzker called it a "fair" tax because it would replace the current 4.95% flat rate, which critics contend eats up a greater share of income at lower wages.
The question won't appear on ballots until the November 2020 election, but Pritzker wanted legislative approval before Friday's scheduled adjournment to give voters plenty of time to digest the changes .
Crippling debt associated with years of skipping required pension contributions, overspending, a 2015-17 budget dispute that has resulted in $15 billion associated with past-due bills, and rising costs which existing revenue can't catch hangs over Illinois. Pritzker said harmful spending cuts or hikes in the flat tax might also fix the problem.
"As Illinois faces down a multibillion-dollar budget deficit into the foreseeable future, we cannot do nothing," Pritzker said. "I choose fairness. And I believe that Illinois will, too. And thanks to today's vote, Illinois will get to make that choice."
The constitutional amendment doesn't mention rates or levels of income — those issues must be addressed in separate legislation. But Pritzker intends to tap incomes over $250,000 for a greater share of tax revenue. The changes proposed by Pritzker would allow the 97 percent of Illinois taxpayers that fall under the $250,000 threshold to pay the current 4.95% tax rate or less.
The governor claims the changes would generate more than $3 billion a year to pay bills. But the GOP spent Monday afternoon lashing out at the opportunity it gives Democrats to spend whatever they want and adjust tax rates to cover the bills.
"People can portray it like it's magic money, like it's free," said Republican Rep. Tom Demmer. "The reality is that for every dollar this government takes in, it's $1 that comes out of the pocket of a taxpayer in Illinois. We're saying give your money to us and let the state decide how to spend it."
Democrats have repeatedly remonstrated that it's never easy for a General Assembly to raise taxes. The measure's sponsor, Chicago Democratic Rep. Robert Martwick, noted that since the Illinois income tax was initiated at 2.5% a half-century ago, it's been increased a handful of times and reduced at others.
That makes the case for keeping the flat rate, said Rep. Ryan Spain, a Peoria Republican.
"It acts as a very powerful disincentive to continue adjustments and manipulation of tax rates to feed the whims of the General Assembly and the appetite for spending," Spain said.
Rep. Yehiel Kalish, a Skokie Democrat, said those are all things voters can weigh when they cast their ballots.
"We're asking the people," Kalish said. "Can you tell me why someone would oppose the will of the people?"
