‘Millionaire tax’ being backed by Illinois voters

The “millionaire tax” was being OK’d by Illinois voters, with 62.4% voting “yes” on the advisory question about raising taxes on residents earning over $1 million a year to fund property tax relief. The problem is, millionaires would not be the only tax targets.

With 74% of the statewide vote tallied, 60.4% of Illinoisans were approving the non-binding “millionaire tax” question Nov. 5, opening the door for state lawmakers to potentially change Illinois’ income tax structure from a flat tax to a progressive structure.

The non-binding referendum on the ballot asked voters whether they wanted to change Illinois’ income tax structure to a system that would allow for income to be taxed at varying rates by proposing an additional 3% income tax on those with incomes more than $1 million.

Illinois voters were giving state lawmakers the political OK to potentially implement the “millionaire tax,” with 60.4% voting yes and 39.6% voting “no.” The Associated Press estimated 74% of the votes had been tallied.

This was just an advisory question which will not change any laws. But lawmakers could use the results to pursue a constitutional amendment, opening Illinoisans and businesses up to higher taxes without guaranteeing any property tax relief despite the referendum’s promise.

Changing the Illinois Constitution from a flat tax that treats everyone the same to a progressive tax structure would require lawmakers in the House and Senate to pass the amendment with three-fifths support. Then it would go back to voters for approval in a future referendum.

Illinois Policy Institute analysis of the “millionaire tax” found the proposal to increase taxes on residents earning more than $1 million in income would fall at least $2 billion short of offering homeowners any property tax relief.

A “millionaire tax” would also hike taxes on nearly 24,000 Illinois small businesses and could push Illinois’ corporate income tax rate to the highest in the nation.

The change to a progressive tax structure opens Illinoisans up to a retirement tax as it would empower state lawmakers to tax income at varying rates and expand the income types taxed to include retirements or other income brackets when they wanted to spend more money.

The Illinois Policy Institute found all 32 states with a progressive tax also have retirement taxes.

A graduated tax allows politicians to decide who should be taxed how much and allows them to gradually increase taxes on smaller segments of the population, eventually hitting the middle class where most taxable income resides.

Voters rejected a similar measure in the 2020 election when Gov. J.B. Pritzker and state lawmakers wanted to switch Illinois to a progressive income tax structure.

State lawmakers will return to Springfield for veto session Nov. 12. They should take the opportunity to forge a real solution to Illinois’ too-high property taxes by controlling the root cause with constitutional pension reform.