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Two paths to approval for progressive income tax amendment

Staff Writer
State Journal-Register
Gov. JB Pritzker is flanked by members of the Illinois House and Senate as he answers questions in the governor's office at the Capitol after announcing legislation has been filed to change the state's flat income tax to a progressive rate structure.

Before voters saw anything else on the ballot Tuesday, they were asked to weigh in on the biggest change to the state income tax in its 51 year history.

Voters were asked if the state should change from a flat tax system to one where different rates are charged at different income levels.

It comes in the form of an amendment to the state Constitution and it could be a while before there is an answer because of the way amendments are approved. The tax amendment can be approved in one of two ways. It will be approved if 60% of those voting on the amendment vote “yes.” It could also be approved if the amendment gets the approval of a majority of people voting in the election.

By either measure, the vote could be close, meaning the outcome may not be certain on Election Day.

The proposed amendment would scrap the state’s flat income tax system where everyone pays the same rate regardless of income level.

In its place the state would have a graduated income tax system in which different tax rates would be applied to different income levels. The higher a person’s income, the higher the tax rate that person would pay. It is the system used by the federal government and most of the states that have a state income tax.

Lawmakers approved tax rates that will be applied if the amendment is approved. Proponents said those rates would result in 97% of taxpayers paying the same or less than they do now. Only those making more than $250,000 would see a tax increase.

The new tax rates are estimated to raise an additional $3.4 billion to $3.5 billion for the state. Proponents said that it is revenue badly needed for the state to cope with its ongoing financial problems, including pension debt and a large bill backlog.

Proponents called the graduated income tax the “Fair Tax” because they said it would force millionaires and billionaires to pay their “fair share” of state taxes.

Opponents largely ignored that argument and played to voter cynicism about state government. They conducted an expansive campaign in which they said graduated rates will make it easier for lawmakers to raise income taxes on all income levels in the future, particularly the middle class, despite a study that showed lawmakers reluctant to raise income taxes regardless of the system their states used.

Opponents also raised the specter of Illinois beginning to tax retirement income which is currently exempt from state income taxes. Ads said the amendment would give lawmakers “new power” to tax retirement income even though they already have that power.

The fight for and against the amendment made it one of the most expensive ballot propositions in the nation’s history. Billionaire Gov. JB Pritzker, a proponent, and billionaire hedge fund manager Ken Griffin, an opponent, poured millions of dollars into the campaigns for and against the amendment.