Democrats' plan would raise taxes on wealthiest Illinoisans
Democrats say a new income tax plan for Illinois would raise rates on the top 1 percent of earners and provide a cut for most of the rest, starting a new debate over the state's finances as lawmakers remain deadlocked over the budget.
Illinoisans pay a flat 3.75 percent income tax, but the new plan would tax different incomes at different levels like the federal government does.
For example, a married couple would pay a lower rate, 3.5 percent, for income they earn up to $200,000. They'd pay the current 3.75 percent rate on income up to $750,000, at which point income would be taxed at 8.75 percent.
“We think this is fairer, particularly at a time when we want to create middle-class tax relief,” state Rep. Lou Lang, a Skokie Democrat, said.
Getting it done, though, will require an amendment to the state's constitution that would need approval by both the legislature in the coming weeks and voters in November.
The new rates, if approved by lawmakers, would take effect only if the constitutional amendment were approved, too.
The last time a graduated income tax was seriously considered in Illinois, opposition from some suburban Democrats prevented supporters from getting it on the ballot.
Republicans have already pushed back, with one arguing a change in the constitution would allow lawmakers to raise rates in the future.
“I think it's all about trying to gin up their base,” state Rep. Ron Sandack, a Downers Grove Republican, said.
An advocacy group for social service providers praised the tax proposal.
“This will allow the tools we need to not rely on low- and middle-income families,” Voices for Illinois Children spokeswoman Emily Miller said Monday during a conference call with legislators. “We truly believe this is one of the best ways to move our state forward.”
In Springfield, Democrats and Republicans have traded attempts to focus blame on the other as their stalemate over the state budget has dragged on since last summer. The new tax plan and the estimated $1.9 billion in new money it would create wouldn't be available until halfway through the next state fiscal year, at the earliest.
Democratic House Speaker Michael Madigan has argued the state needs new revenue in the new budget to deal with its deficit. Gov. Bruce Rauner says Democrats need to agree to some of his pro-business ideas before he'd sign off on a tax hike.
That spat has defined the 10-month budget fight.
Attempts to oust the flat income tax, as well as institute a so-called millionaires tax, have failed in Illinois before. An effort to let voters consider an income tax system overhaul died in the General Assembly in 2014, and Madigan has unsuccessfully pushed for a surcharge on annual personal incomes over $1 million.
Daily Herald news services contributed to this report.