5/1/19
Illinois lawmakers are one step closer to putting Gov. J.B. Pritzker’s signature campaign promise on the 2020 ballot: A proposed change to the Illinois constitution that would allow for higher income tax rates on higher levels of income. “This is the next step in a more than decades-long effort to modernize our tax code,” said Sen. Don Harmon, D-Oak Park. The Senate passed the measure 40-19. Republicans, who are a superminority in the chamber, were unanimous in opposition. “I applaud the Senate taking a major step forward to create a fair income tax system in Illinois, ensuring that 97 percent of taxpayers will pay the same or less and only those making $250,000 will pay more,” Pritzker said in a statement after the vote. “I look forward to continuing our conversations with stakeholders in the House as we take action on the fair tax.” The change is estimated to bring in $3.57 billion. Raising the corporate income tax from 7 percent to 7.99 percent is estimated to bring in an additional $350 million.
While there are no proposed rates in the constitutional change, lawmakers have tied the change to legislation that was passed shortly after that would set income tax rates at a graduated rate structure that starts at 4.75 percent on income up to $10,000 and tops out at 7.99 percent on all income over $750,000. Joint filers would see similar rates but with a top rate that starts at $1 million. That measure was approved 36-22. Along with the progressive tax, the Senate approved legislation that would eliminate Illinois’ estate tax. The Illinois Attorney General’s office collected $315 million from that tax in 2018. The Senate also passed a measure that would, on condition that the state fully funds the school funding formula and other categoricals, local school districts would be subject to a property tax freeze. It would exclude property tax hikes to raise funds for pension payments or debt service. All of the changes would take effect in 2021.
