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Ballot Breakdown: Understanding the proposed income tax amendment on Illinois ballots this year

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ROCKFORD (WREX) — A race on Illinois ballots this year is stirring up debate among voters across the state, and it doesn't contain a single candidate. The proposed income tax amendment aims to change the state's current flat rate to a graduated income tax rate.

It's no surprise the topic of taxes in Illinois sparks strong opinions from voters.

"I voted no for it," says Winnebago County Resident Dennis Hasenyager. "I don't want them raising my taxes without some kind of representation. To me it's just crazy."

"I'm going to vote for the progressive tax I think it would be a fair situation for all of Rockfordians and Illinoisans," says Winnebago County resident Jesse Favre. "There's a lot of people struggling below poverty level, some people who can't afford to pay their bills. They can't afford to pay the same as someone who's making thousands and hundreds of thousands in year."

"It's just not fair," says farmer Julie Newhouse. "There's nothing fair about it. We are taxed enough, you have to cut spending. There's been no suggestion they will cut spending or make a balanced budget."

Currently, Illinois income is taxed at a flat rate of 4.95%.

"The flat tax says someone making a huge amount of money, say $1 million, pays the same percentage of income of someone making $30,000 a year," says Northern Illinois University Public Administration Chair, Professor Kurt Thurmaier.

If the amendment is approved, not everyone will pay the same percentage rate. The rate you pay will be dependent on your income. For example, here's what a single filer would face in the proposed system:
A person making less $10,000 or less they'd be taxed 4.75%. If they make more than that to $100,000 they'd pay 4.9%. The next tier would be above $100,000 to $250,000 where residents would pay the current rate of 4.95%. Following that range, residents making $350,001 to $750,000 would be taxed at 7.85%. The highest proposed rate is for single-filers: those making annual income of $750,001 or above, facing a 7.99% on net income.

"Which is vertical equity," explains Thurmaier. "Which is the thought that the more someone has the ability to pay, the more they ought to pay. Or the reverse; the less someone has the ability to pay, the lower should be their tax liability."

Governor Pritzker's office has said the change is estimated to bring in roughly $3.4 billion per year. Proponents of the amendment say the flat rate is outdated, pointing to Illinois being one of only nine states in the country to still use one. Supporters also argue the flat rate prevents the state from properly funding public services.

"This can cause budget deficits at every level of government," says Shriver Center on Poverty Law President and CEO Audra Wilson. "It pushes up property taxes and can force harmful cuts to education, human services, healthcare, infrastructure, public safety, and jobs."

Wilson says the proposal does not give lawmakers any power they don't already have. She believes the the graduated structure holds the power to alleviate property tax burdens and provide relief to many families, especially low-middle class working families.

"97% of tax payers would actually get a tax cut," stresses Wilson. "Whenever you start talking about taxes, people will naturally get nervous and concerned. Some have tried to say it's tax increase on the middle class when in actuality it's the opposite. Where actual 97% of the tax filers will be the same or less. Only the wealthiest 3% will pay a little more on income that's over $250,000 a year."

While some opponents claim the graduated system would open up retirement income to new taxes, Wilson says that's not factual.

"Illinois is one of only of a dozen states that does not collect income tax on any retirement income such as 401K, IRA, pension, and social security benefits," says Wilson. "The fair tax does not change that."

But opponents of the proposal firmly disagree, saying Illinois is overtaxed.

"Make no mistake this is going to affect everyone," says Lissa Druss with the Coalition to Stop the Proposed Tax Hike Amendment. "Our gas tax just doubled, our vehicle licensed fee almost doubled. A cigarette tax was levied. We are already paying the second highest property taxes in the country and now they want to raise taxes even higher?"

Druss argues the amendment provides legislators unregulated power and no limits on tax rates they could set.

"We are not voting on tax rights we are voting on giving Springfield unyielding power to raise taxes whenever they want and create as many brackets as they want and change them whenever they want. If they were serious about the rates they'd be baked into the amendment. But they're not."

Druss argues voters would be giving the state a blank check due to the amendment failing to indicate where the revenue would be spent and believes the state needs to reel in its spending before looking for new revenue.

"We're going through COVID. We're in an economic crisis and this is the worst possible time to raise taxes."

If the amendment fails, Thurmaier believes voters would be naïve to think this will be the last income tax tweak the state floats in the coming years.

"If they expect the flat rate will stay the same, I think they're mistaken because the state needs more money to pay pensions and handle property taxes."

A "No" vote on this issue means the amendment would fail and the flat income rate will remain intact. A "Yes" vote would approve the amendment and therefor introduce the graduated system to Illinois starting in 2021.

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