Illinois voters to choose whether to change state's income tax from flat to graduated rate
Illinois—one of eight states that has a flat tax rate—may join the 33 states with a graduated income tax.
Voters in Illinois will decide on a constitutional amendment in 2020 that would repeal the current requirement that the state personal income tax be a flat rate and instead allow the state to enact legislation implementing a graduated income tax.
In 1970, Illinois held a constitutional convention and drafted a new state constitution, which voters approved on December 15, 1970. That document enabled the state to assess a flat-rate income tax but prohibits a graduated one. The constitution also set limits on the relationship between the tax rates imposed on corporations relative to individuals.
To approve the 2020 ballot measure, both chambers of the state legislature needed to approve it by a 60% supermajority. All 40 state Senate and 73 state House Democrats voted in favor, and all 19 Senate and 44 House Republicans voted against. In 2018, Democrats gained seven seats in the state House to achieve a supermajority in that chamber.
The ballot measure itself would not enact a graduated income tax, just allow for one. In 2018, the personal income tax in Illinois was a flat rate of 4.95 percent. On May 1, 2019, the state Senate passed Senate Bill 687 (SB 687), which would go into effect only if voters approve the constitutional amendment in 2020. SB 687 would change the state's income tax from a flat rate to six graduated rates—ranging from 4.75 to 7.99 percent—beginning on January 1, 2021. It is estimated that the new tax rates would bring in $3.3 billion of additional state revenue. The state House has not yet passed SB 687.
House Speaker Michael Madigan (D)—a supporter of the measure—issued a statement which said, "Middle-class families bear too much of the burden under the current tax system, and a Fair Tax will enable us to make the wealthy pay their fair share to balance the budget and invest in critical resources like education and health care—all while providing relief for 97% of taxpayers."
Republican representative Paul Schimpf (R), who opposed the initiative, told the Belleville News-Democrat, “Changing our taxing structure, without providing a means to limit spending or make it more difficult to raise taxes in the future, solves nothing. In fact, this plan will most likely only lead to more tax increases and higher spending in the future.”
In Illinois, a ballot measure amending the state constitution must be approved by either a 60 percent vote of those voting on the ballot measure or a simple majority vote of those voting in the election. The initiative allowing for a graduated income tax will be the 23rd constitutional amendment to be decided by state voters since 1970. Fourteen of the previous 22 amendments have been approved, while eight were rejected.
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