In separate press conferences in Springfield Monday, Gov. Bruce Rauner spoke of his opposition to a progressive tax in Illinois while Democratic Reps. Lou Lang and Christian Mitchell voiced their support. The House is expected to vote on a constitutional amendment to allow a progressive income tax on Tuesday.
The effort to change the Illinois constitution to allow a progressive income tax system in Illinois is expected to get its first big test Tuesday, when the House votes on a constitutional amendment to lift the prohibition on a graduated-rate income tax.
It's the first step in a process that only will move forward if (A) three-fifths majorities of the Illinois House and Senate vote to put the constitutional amendment before voters on Nov. 8 and (B) voters approve it.
The 1970 Illinois Constitution required that any state income tax be applied to all taxpayers at the same rate, so Illinois never has had a system similar to that of the federal government, in which income tax rates rise along with taxpayers' incomes. Currently, the individual income tax rate in Illinois is 3.75 percent.
The requirement that Illinois have only a flat-rate income tax was the product of much negotiation at the Constitutional Convention of 1970. The state had only implemented its first income tax, at 2.5 percent, in 1969, and there was fear among those who supported the income tax that attempting to establish a graduated-rate system would kill the whole concept.
For years, however, there's been a steady drumbeat to change the constitution by those, almost exclusively Democrats, who argue that a graduated-rate system is a more fair way of taxing because it taxes according to a taxpayer's ability to pay. This year, Democrats have introduced a constitutional amendment to allow a progressive tax and a bill that, if voters approve the amendment, establishes tax brackets from 3.5 to 9.75 percent.
"This is an issue whose time has come," said state Rep. Christian Mitchell, D-Chicago, who is the sponsor of the constitutional amendment. "With the current tax structure that we have in Illinois what happens now is that middle class families, once you count sales taxes, property taxes, taxes that are paid on things like a gallon of gas, middle class people are paying twice as much as a share of their income as the top 1 percent" of income-earners.
Rep. Lou Lang, D-Skokie, is sponsor of the companion bill that could set the rates of a progressive system if the constitutional amendment is approved by voters. He says implementing the graduated tax would amount to a tax break for "99.3 percent of all taxpayers." Lang estimates his plan will bring in $1.9 billion more in tax revenue than the current system.
"This proposal was not created to solve all of our problems," Lang said at a May 2 press conference. "This isn't about balancing the budget. It's about a fair tax." (View Lang and Mitchell's entire press conference here.)
But just as Democrats have massed forces behind a progressive tax, so have Republicans over the years mounted opposition. This year that's especially true, as Gov. Bruce Rauner says the progressive tax push is another example of Democrats trying to get more tax revenue without implementing any business or government reforms that will help Illinois' overall economy in the long-term.
"I really don't support a graduated income tax. I think that could well be the straw that breaks the camel's back for Illinois' economic competitiveness," said Gov. Bruce Rauner at his own press conference May 2. "If we go to a graduated income tax that will quickly spike up and put our income tax among the highest in America. And that would be devastating to recruiting companies and growing our economy.
"And if we put a high income tax on successful people -- business owners, small business owners -- many more will leave; many more than have already been leaving." (Rauner's complete remarks are here.)
Variations of this debate have played out for years in the General Assembly, but this year it appears headed for action in the General Assembly.
The difference is that this year the state faces an unprecedented financial crisis. Comptroller Leslie Munger has said the state may close the fiscal year on June 30 with a $10 billion deficit. Lang's plan won't make much of a dent in that. And with 1 percentage point of a flat tax increase bringing in an estimated $3.2 billion, it'll take a hefty increase in the current system to begin chipping away at the debt.
Even Rauner, a staunch opponent of taxes, has said that Illinois can't fix its budget problems with cuts alone. If Democrats would pass some parts of his Turnaround Agenda, he has said he'd discuss tax increases.
So what's your choice? Do you believe Lang and Mitchell, that a progressive tax is a "fair tax" that'll bring in more revenue and give all but .7 percent of taxpayers a tax break?
Do you favor a flat tax system, and want it to stay that way even if it almost certainly will increase from the current 3.75 percent?
Keep in mind that the income tax changes, if they happen, likely will be part of a much bigger package of tax reforms. An updating of the sales tax code is only one among many ideas that have been discussed. Numerous other spending reforms, from changing the state's purchasing system to closing corporate tax loopholes, also have been discussed for potential savings.
Don't sit idly by while your lawmakers in Springfield make this decision.
We've updated our Sound Off tool to let you voice your opinion on how the General Assembly should handle the tax question. Just click the link and choose this tab:
You'll find background on the budget, taxes and spending. Enter your address and Sound Off will look up your state senator and representative. Then it'll send your message -- you can write it yourself or use the one already filled in -- to your legislators, Gov. Bruce Rauner, House Speaker Michael Madigan, Senate President John Cullerton, House Republican Leader Jim Durkin and Senate Republican Leader Christine Radogno.
Believe it or not, your representatives in Springfield really do listen to their constituents.
The FY 2017 budget officially is due in four weeks. We hope you'll use Sound Off and take an active part in getting Illinois government working again.