Illinois families making more than $1 million a year would see their state income tax rate rise three percentage points — a 60 percent increase in the rate — and those earning up to $100,000 a year would see their rate drop a fraction of a percentage point, a dip of 1 percent.
And some of those in the middle — families making more than $250,001 a year — would see the income made past that amount be taxed from the current 4.95 percent levied on all taxpayers to 7.75 percent.
Those were some of the highlights of Gov. J.B. Pritzker’s long awaited proposal for a graduated income tax, which he argues will make the tax structure more “fair,” but Republicans are denouncing as a job killer.
After more than a year of dodging specifics on the campaign trail, Pritzker on Thursday unveiled the proposed tax rates, which he’s touted as an essential fix for the state’s dire finances. And he noted that he, as a billionaire, would be paying 3 percent more in income taxes.
“Instituting a fair tax as I’ve proposed will improve the arc of our state’s finances forever and make our system more fair for everyone,” Pritzker said at a Springfield press conference. “It’s wrong that I would pay the same tax rate as someone earning $100,000 — or even worse pay the same tax rate as someone earning $30,000 — which is why 33 states and the federal government use lower rates for lower earnings and higher rates for higher earnings.”
And to those who already oppose the plan, the governor said he hopes their minds can be changed.
“I think that the revelation of what this plan might look like will give them an opportunity to reconsider,” Pritzker said.
Pritzker has said he wants a progressive income tax approved before the Illinois General Assembly adjourns in May. And he has the support of Illinois House Speaker Mike Madigan and Illinois Senate President John Cullerton. Should it pass, it would set a start button on a lengthy public campaign leading up to a November 2020 referendum seeking the required change to the state constitution.
And like clockwork, the unveiling of proposed rates prompted a war with Republican lawmakers and business groups.
The governor’s office on Thursday released a spreadsheet about the proposed rates, claiming it would provide tax relief for 97 percent of Illinois families, or those who make $250,000 or less. The plan proposes dropping the personal tax rate for the first $10,000 of income for single and joint filers to a 4.75 percent rate; income above $10,000 to $100,000 would be taxed at 4.9 percent; income between $100,000 and $250,000 would be taxed at 4.95 percent; income between $250,001 and $500,000 would be taxed at 7.75 percent; and income from $500,001 to $1 million would be taxed 7.85 percent. Income over $1 million would be taxed 7.95 percent.
The proposal also includes a 20 percent increase in the current property tax credit from $500 million to $600 million. It also includes a $100 per child Child Tax Credit for single filers under $80,000 and joint filers under $100,000.
Pritzker’s office framed the tax change to a way to generate $3.4 billion in additional revenue, while noting that 33 other states have enacted a graduated income tax structure.
Republicans and business groups balked at the proposed changes, saying it’s another way of punishing families and businesses. And many criticized the emphasis on bringing in revenue, instead of reducing spending and finding ways to grow the economy.
Illinois House Republican Leader Jim Durkin said in a statement that his caucus “stands united in opposition to a $3.4 billion tax increase on Illinois families and businesses.” And Illinois Senate Republican Leader Bill Brady, R-Bloomington, said simply, “Without guaranteed protections for middle class families, we are opposed to the governor’s $3.4 billion tax increase.”
Ideas Illinois, a dark-money group led by former Illinois Manufacturers’ Association head Greg Baise, called the plan a “massive jobs tax on Illinois families.”
“We can’t trust Springfield politicians — the same people who in the last eight years have raised taxes twice — with a blank check,” Baise said. “Today’s proposal is just a massive jobs tax on Illinois families and will destroy the Illinois economy and further accelerate people fleeing the state.”
Think Big Illinois, a pro-graduated income tax dark money group which is in part receiving funding from Pritzker, applauded the rates, while chiding its detractors.
“Today’s proposed tax rates are an important step toward creating a fair tax system that works for everyone, so it shouldn’t come as a surprise that outside groups funded by the wealthiest Illinoisans are quick to launch, desperate, false attacks,” the group’s director Quentin Fulks said in a statement. “While these outside groups and their wealthy donors will say anything to avoid finally having to pay their fair share, the fact is Illinois needs a fair tax to modernize our tax code, boost the economy, and address the dire financial situation we’ve been left in after years of irresponsible governance and mismanagement.”
Unions also applauded the rates, including the Services Employees International Union Healthcare Illinois and the American Federation of State, County and Municipal Employees Council 31.