SPRINGFIELD — Using exclusively Democratic votes, the Illinois Senate on Wednesday approved a proposed constitutional amendment and three companion bills that could move the state to a graduated income tax system after 2020.
The Senate vote means the measures will now go to the House for consideration.
The key bill was a proposed constitutional amendment that calls for the state to scrap its current flat income tax and replace it with a graduated tax where wealthier taxpayers will pay more. Gov. JB Pritzker campaigned on a platform of bringing a graduated income tax to Illinois which he said is a fairer system than a flat tax where everyone pays the same rate regardless of income.
“It allows us to implement a fair tax where lower rates apply to lower income levels and higher rates apply to higher income levels,” said the amendment’s sponsor, Sen. Don Harmon, D-Oak Park.
If approved by voters, Illinois would join 33 other states that have a graduated state income tax.
Senate Republican Leader Bill Brady of Bloomington, said the current flat tax system protects taxpayers because lawmakers are reluctant to raise taxes on everyone and that a graduated tax amendment will be defeated by voters.
“We believe our current Constitution crafted by the 1970 constitutional convention wisely decided that Illinois taxpayers need protections against politicians,” Brady said. “The fact that our Constitution currently calls for a flat tax has given various protections to those individuals and protected, we believe, the middle class.”
He said a graduated tax will open the door to raising taxes on the middle class. Harmon, though, said it is false that a flat tax protects the middle class.
“It does exactly the opposite,” Harmon said. “If you are saying the flat tax is a good idea, you are protecting the uber rich, not the middle class.”
The amendment passed the Senate on a straight party line vote of 40-19. It needed 36 votes to pass. Brady and Sen. Chuck Weaver, R-Peoria, voted against it. Sen. Dave Koehler, D-Peoria, voted in favor.
The Senate also approved a schedule of tax rates that would go into effect if the graduated income tax amendment is approved. Together, the tax system will generate nearly $3.9 billion in additional revenue for the state. The bill also includes an increase in the child care tax credit and the property tax credit and also more money for local governments.
Sen. Dale Righter, R-Mattoon, noted that some of the rates and income levels changed from those proposed by Pritzker two months ago. That was also seized on by a number of business groups that issued statements criticizing the idea of a graduated income tax and saying the changing rates indicate more changes will be made to the rates.
“Going to a graduated tax makes tax increases more likely,” Righter said.
Sen. Toi Hutchinson, D-Olympia Fields, said there are no alternatives on the table for dealing with the state’s financial issues.
“There is no other plan on the table to deal with $3.4 billion in a structural deficit we all know we have,” she said. “There is no other plan on the table to deal with a $15 billion backlog of bills.”
The bill passed 36-22, with three Democrats voting against the bill and one who didn’t vote.
Senators also approved a bill sponsored by Manar that provides property tax relief if the state fully funds some education programs in a year. Under the bill, if the state provides full funding for the school aid formula and for categorical programs like school transportation, school districts cannot raise their tax rates during that budget year.
“This an incremental step. It is not going to solve the (high property tax) problem,” Manar said.
However, Sen. Jason Barickman, R-Bloomington, said he doesn’t think it will be even incremental relief.
“It is conditional property tax relief,” he said. “It relies on a series of ifs and contingencies that our constituents know are too unlikely to ever occur.”
Finally, the Senate approved a bill to end the estate tax in Illinois which would save people $305 million. Senate President John Cullerton, D-Chicago, said ending the tax is a reasonable thing to do since it falls on wealthier people and they will be asked to pay more under the graduated tax.
The tax amendment will need 71 votes to pass the House. House Republicans have said they are united in opposition to the amendment, meaning Democrats will have to muster the votes from among their 74 members.
If the House approves the amendment it will go on the 2020 ballot for approval by voters.