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Illinois lawmakers fear more spending, strain on middle class under graduated tax

Northwest Herald

Friday, March 8, 2019  |  Article  |  By DREW ZIMMERMAN

Governor (44) , Taxes, Graduated/Progressive , Taxes, income (86) DeWitte, Donald--State Senate, 33 , McSweeney, David--State House, 52 , Skillicorn, Allen--State House, 66 , Wilcox, Craig--State Senate, 32
On Thursday, Gov. J.B. Pritzker outlined his plan for a graduated income tax system expected to generate about $3.4 billion in tax revenue and offer tax relief to more than 97 percent of Illinois taxpayers.

If approved, this “fair income tax” would replace the state’s flat tax structure and set tax rates ranging from 4.75 percent to 7.95 percent depending on income. It also would offer property tax credits and credits for families raising children.

Under Pritzker’s graduated tax plan, a family of four with a household income of $61,000 would see $271 in total tax relief.

In contrast, a family of four with a household income of $500,000 would see a $6,526 tax increase, according to an eight-page presentation from the governor’s office.

“People like me should pay more, and people like you should pay less,” said Pritzker, a billionaire Hyatt Hotels heir. “That’s what a fair tax is all about, and that’s what this will be.”

Pritzker may have touted the plan as a path toward “firm fiscal footing,” but critics of the plan, including state Rep. David McSweeney, R-Barrington Hills, said it is nothing more than a Trojan horse that will open the door to increasing tax rates for all residents. There also is a fear that greater revenue will beget even greater spending.

The flat-rate system is required by the state Constitution. Pritzker’s plan would need approval by three-fifths of the General Assembly before the idea to amend the Constitution would be put to voters, possibly in November 2020.

McSweeney pointed out that a constitutional amendment would set no limits on the brackets, and that this would be only the first of many tax increases the governor plans.

“[Pritzker has] promised $10 billion in spending, and this is the first step toward ... just dramatically increasing the rates for all taxpayers,” McSweeney said. “I’m convinced of that.”

In February, all GOP House members co-sponsored a resolution opposing any measure that would allow the creation of a graduated income tax on Illinois residents.

Rep. Allen Skillicorn, R-East Dundee, said in a statement after the resolution’s filing that the progressive income tax system will be a deceptive way to conceal a middle-class tax increase.

“Projections within the Pritzker administration make it obvious they will have to raise taxes on the middle class to get the revenue they claim to need,” Skillicorn said in the statement. “Couple that with the fact that the one piece of legislation that was filed by a House Democrat last year to set progressive tax rates was estimated to increase income taxes on
77 percent of Illinois taxpayers.”

Skillicorn said these numbers came from a report by the Commission on Government Forecasting and Accountability, which projected that taxpayers would see an increase in their income tax liability for a total of more than $5.2 billion in new taxes.

“If we don’t fight this ‘progressive’ income tax hike on the middle class, then you can bet another 700,000 people will leave Illinois over the next decade, just like they did in the last decade,” Skillicorn said in the statement.

Critics also have said that the graduated tax will be a tax on job creators. Small businesses such as S-corporations, limited liability corporations and partnerships would pay individual income tax rates. Those businesses also create 80 percent of the jobs in Illinois, McSweeney said.

“That’s why I call it a jobs tax,” McSweeney said.

Pritzker said opponents of the plan should come to the table in good faith and with a specific counterproposal, not a pie in the sky.

“[Opponents] ignore the fact that people and businesses are fleeing our state now under our current regressive tax system, yet states with fair tax systems on average grow faster and create more jobs than Illinois,” Pritzker said. “It’s time that we stabilized our state’s finances so we can give businesses and new entrepreneurs the certainty that Illinois has its fiscal house in order.”

State Sen. Don DeWitte, R-St. Charles, said he is unsure whether a $3.4 billion tax increase with little to no real property tax relief is helpful, which is the No. 1 concern of his constituents.

“Without assurances for the middle class of this state, without assurances about things like the proposed rates being changeable, the current proposal is a nonstarter,” DeWitte said.

State Sen. Craig Wilcox, R-McHenry, said even under the rates being proposed, there is no guarantee that middle-class families will enjoy those rates for any period of time without spending cuts or significant reforms.

Now that a tax plan has been presented, Wilcox said Senate Republicans will take time to review it and engage in any taxpayers’ protections that may need to be part of the plan.