Illinois Senate delays voting on Pritzker progressive tax
Senate lawmakers chose to delay voting on an amendment that would allow Illinois’ income tax structure to go from flat to progressive.
Lawmakers in the Illinois Senate have stalled their push to advance Gov. J.B. Pritzker’s progressive tax.
Days after the Senate Executive Committee voted to send Senate Joint Resolution Constitutional Amendment 1 to the Senate floor, lawmakers in the upper chamber on April 12 decided against voting on the proposal that would clear the way so Illinois’ income tax system could be changed from flat to graduated, or “progressive.”
Pritzker has made enacting a progressive income tax, which he calls a “fair tax,” a top priority of his administration, urging lawmakers to pass such a tax by the end of May. The General Assembly is scheduled to return to Springfield April 30 after a two-week spring break.
While the reason behind the Senate’s delay is unclear, lawmakers are justified in tapping the brakes.
Whether tax rates under SJRCA 1 would be “fair” is still an open question, as the proposed amendment lacks any specific tax rates. In fact, given Illinois’ spending and debt problems, a tax hike on the middle class would be inevitable – with the typical family seeing an income tax increase of up to $3,500 to fund Pritzker’s spending promises.
What’s more, Pritzker’s proposal would remove language from the Illinois Constitution protecting Illinoisans against double taxation. The state would be able to impose additional taxes or fees atop income taxes, effectively taxing Illinoisans more than once on the same dollar earned. The state could adopt a surcharge on income dedicated entirely to shoring up Illinois’ $134 billion pension debt, for example.
Business owners would also lose a significant protection under Pritzker’s proposal. The Illinois Constitution currently caps the corporate income tax rate at 1.6 times the individual income tax rate. SJRCA 1 would change that to the highest marginal rate, which Pritzker would like to raise to 7.95%. Factoring in the state’s 2.5% Personal Property Replacement Tax, this would spike Illinois’ corporate rate to 15.22% – the highest in the nation.
Pritzker initially pledged tax relief for 97% of Illinoisans under his plan. But after weeks of struggling to show the math supporting that claim, the governor’s own office has begun walking it back. Regardless, his promised relief would be wiped out by typical growth in property tax bills. Pension costs and other benefits, along with debt, drive the majority of Illinois’ property tax growth.
Given the state’s severe fiscal problems, Illinoisans are right to be skeptical of handing lawmakers a blank check to raise income taxes indefinitely. Polling shows likely voters in seven critical House districts held by Democrats are opposed to or split on Pritzker’s progressive tax plan.
The choice between a progressive income tax hike and austere spending cuts is a false one. Unless state leaders pursue meaningful pension reform, a progressive tax would give lawmakers carte blanche to hike taxes endlessly as they chase down soaring pension costs.
Fortunately, genuine reforms exist: The Illinois Policy Institute’s Budget Solutions 2020 offers a bipartisan five-year plan that would balance the state budget while reducing debt and allowing for tax reductions.
Pritzker and other state leaders should shelve their progressive tax plans and find the political courage to lead the state toward fiscal stability – starting with real, lasting pension reform.