By Ted Dabrowski and John Klingner | Wirepoints
“Should the Illinois Constitution be amended to create an additional 3% tax on income greater than $1,000,000 for the purpose of dedicating funds raised to property tax relief?”
That’s the wording of a new advisory referendum that will be on the November ballot. The referendum question is just one part of a contentious bill that changed several election laws and was rapidly passed by a supermajority of Democrats this week.
While the referendum might end up being nothing more than a political distraction, it could also be that lawmakers are gauging Illinoisans’ appetite for another bite at a progressive income tax hike – this time with lower property taxes as a sweetener.
The problem with a tax swap like the one proposed is it would do nothing to lower Illinoisans’ overall tax burden, already the nation’s 7th-highest. Expect Illinoisans to continue to leave, and for the wealthy to leave even faster if they eventually become a target of such a law.
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Here’s what Illinoisans should know before voting on this advisory referendum:
In the end, the proposal totally ignores the cost drivers that continuously push Illinois taxes higher, which is the real problem that ultimately needs fixing. Like the overwhelming power of Illinois’ public unions and their rapidly rising contract costs. Or the guaranteed, multi-million dollar lifetime pensions that keep rising as government salaries jump (see CTU). Or the number of local government units in Illinois, the most-in-the-country, which continue to bloat.
For one, the proposal would change Illinois’ current flat income tax structure into a progressive tax structure. The proposal would create two tax brackets: taxpayer incomes up to $1 million would be taxed at 4.95%. Every dollar above $1 million would be taxed at a marginal rate of 7.95%.
If that sounds familiar, that’s because it is.
Gov. J.B. Pritzker already tried to get a progressive income tax hike passed in 2020, but Illinoisans rejected the governor’s “Fair Tax” amendment 55 to 45 percent. Illinoisans simply didn’t trust lawmakers to not hit the middle class with higher marginal tax rates.
Read on here.