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House panel OKs Madigan 'millionaire tax,' kills graduated tax

SPRINGFIELD — House Speaker Michael Madigan’s push to impose a 3-percent surcharge on nearly 14,000 Illinois millionaires advanced out of committee Thursday, but the same panel rejected a call for a graduated income tax.

Before the House Revenue Committee’s 6-4 vote in support, Madigan, D-Chicago, sold his proposed constitutional amendment targeting millionaires as a $1 billion windfall for Illinois’ underfunded schools.

Pressed by Republicans on why he chose the $1 million earning threshold instead of targeting those earning less or more than that, the Southwest Side Democrat said, “That just sounded like a good number.”

GOP members on the panel, who voted en masse against the speaker’s plan, said it would discourage the entrepreneurs needed to lift Illinois out of its long-running economic doldrums, such as those behind the 1871 digital incubator at the Merchandise Mart.

“We’re saying to them, ‘Fine, do it here. But guess what? We’re going to hit you hard,’” state Rep. David Harris, R-Arlington Heights, told the speaker during the hearing.

After the vote, Madigan told reporters that his plan to fund schools would not completely ease the state’s financial woes, particularly if the extension of the state income tax increase is not passed, as Gov. Pat Quinn wants, this spring.

“We’ll still struggle with a budget for the state of Illinois because there will be a great loss of revenue unless we extend the increase in the income tax,” Madigan said.

Meanwhile, the House sent a clear signal to the Senate that it isn’t supportive of imposing a graduated income tax in which higher earners would pay steeper tax rates than middle- and lower-income earners.

By a 3-6 vote, the House Revenue Committee rejected a proposed constitutional amendment that would scrap Illinois’ flat tax system and impose a graduated income tax based on income. The defeat came despite the legislation having more than three dozen co-sponsors.

“I think those of us who have an open mind about it will continue to have an open mind about it, but it didn’t happen today,” said Rep. John Bradley, D-Marion, chairman of the committee.