Come November, Illinois voters will decide whether to change the state’s income tax structure from the current flat tax to a new progressive or graduated model.
Gov. JB Pritzker has said 97% of Illinois residents would see their income tax liability stay the same or shrink under his proposal, which would generate $3.4 billion of annual revenue.
Republican state elected officials warn, if it sounds to good to be true, it is.
Bloomington Republicans Sen. Bill Brady, Sen. Jason Barickman and Rep. Dan Brady, and Decatur Republican Dan Caulkins all spoke on the proposed amendment at a meeting of about 40 McLean County Republicans Saturday morning at the Bloomington DoubleTree Hotel.
All four elected officials voted “no” in May when the Illinois General Assembly approved legislation allowing the proposal to be added to November’s ballot.
Bill Brady said Pritzker “manipulated beautifully” the issue when he first spoke to Brady about his proposal, touting it as a “fair tax” that only increases taxes for the state’s wealthiest residents. But Brady said he doesn’t believe that will remain the case if voters approve the proposal.
“Eventually the politicians, after they’ve driven out some of the million-dollar incomes, have to go back down to lower incomes,” he said.
Thirty-three states and Washington, D.C., all have some form of a progressive income tax.
Brady cited Oregon as an example of what he sees in Illinois’ future. “In 2012 its highest bracket included anyone more than $250,000,” he said. “Oregon expanded the upper tax bracket to a levy, the highest being 9.9% on anyone making more than $125,000.”
Dan Brady echoed the concern. “The cost-shift burden is going to be aimed directly at those that this proposal is supposed to protect, and that’s going to be the middle class,” he said.
Caulkins framed the proposal as “a test of the will of the people” of Illinois. He said when lawmakers return to Springfield in May for the next budget session, “we’re going to have huge deficits going forward. And I believe that the Democrats are going to use that as a way to bludgeon the taxpayers, the voters of this state, into believing, if you only give us this authority, just pass this constitutional amendment, we’re going to be able to balance this budget.”
The state currently faces $7 billion of unpaid bills, as well as a $134 billion unfunded pension liability.
Caulkins said even if the voters approve the amendment in November, the state won’t collect any income from the new tax to drive down those numbers until January 2021.
“What in the world are we going to do for the next 18 months?” he said. “There’s no plan.”
Bill Brady said Republicans face the same hurdle they did in the 2018 race for governor, when Pritzker spent $180 million of his own money on his campaign.
“He will use his unlimited resources to try to pull this wool over the people of Illinois, and we have to use our voices to stand in opposition,” Brady said. Pritzker has already spent $5 million on a campaign supporting his income tax proposal.
Even so, Barickman said he believes Republicans still stand a chance.
“I think this is a proposal that absolutely can be defeated in November,” Barickman said. “It’s not a solution to our state’s problems, and the public recognizes that.”
WGLT reached out to Erik Rankin, chair of the McLean County Democrats, for comment following the event.
Rankin said it would be “the kiss of death” for Democrats to raise taxes on incomes below $250,000 after pledging to preserve or lower those rates.
“Given the fact that the population in the state of Illinois, just like every other state in the union, is made up of mostly middle class, the Democrats would destroy any chance they had at winning public offices,” he said.
And while that may be the case that such a thing has happened in other states, Rankin said the comparison is nearly apples to oranges, particularly in the case of Oregon, which Rankin said has no real massive city center like Chicago.
“When we talk about people making $250,000 and over, the bulk of them are going to be found in the Chicago/Chicagoland area,” he said. “And because of that ... I just don’t see the state of Illinois going that route.”
It’s true that many former Illinoisans cite taxes as a reason for leaving the state. But that’s not the only reason the state is losing residents to states like Florida and Texas, Rankin said.
“If you take a step outside today, it’s probably a pretty good indicator, we know why people are leaving the state,” he said, referring to the weather. “The research doesn’t show that when a program like this is put in place that wealthier people are moving out at any faster of a clip than what they’re already moving out.”
It’s also undeniable that Illinois is in a structural budget deficit, Rankin said.
“We have very serious funding problems, and I think that those funding problems, the burden has been left on lower and middle income Illinoisans. And the only way to try and make more money is to try and have the wealthy pay their fair share.”
Making additional spending cuts isn’t a viable option, he said.
“State government has been cut to the quick. It has been, offices have been reduced in terms of staffing size, budget allocations, all of those things have happened.”
Rankin said the McLean County Board ran a nearly “austere” budget over the course of the 10 years that he served as a board member.
He noted both the legalization of marijuana and the progressive income tax were proposed as a way to begin moving toward a balanced state budget. Until revenues from the new tax structure, if passed, come in in 2021, it’ll be up to the General Assembly to continue looking for other ways to balance the budget.
“Government is not something that ever moves quickly,” Rankin said. “So any change almost always requires a year or two years to see something implemented fully.”