Graduated income tax proposal failing as more votes pour in
A proposal that would pave the way for Illinois to enact graduated income tax brackets on earnings is failing in early vote counting.
With less than 80% of precincts reporting unofficial results, more than 4.1 million votes have been tallied showing 54.5% against the measure and 45.5% in favor.
"I think it's going to be very close, but I'm very encouraged that voters of Illinois are seeing through this tax scheme," said Leslie Munger, former Republican Illinois comptroller and a consultant with the Illinois Opportunity Project.
The unofficial totals do not include mail-in ballots that have yet to arrive. Ballots postmarked by Tuesday will be counted if they arrive by Nov. 17.
State GOP leaders were declaring victory late Tuesday, though.
"With Pritzker Democrats no longer able to use taxpayers to bail them out of our state's financial disaster and a Supreme Court no longer stacked with a majority of Madigan pawns, Illinois now has a chance to enact much needed reforms," said state GOP Chairman Tim Schneider. "We hope the governor, speaker and Democratic leaders finally join us in the effort to put taxpayers first."
The ballot question is a vote to change a requirement in the state Constitution that income is taxed at a single rate. Illinois is one of the few states with a flat income tax, currently 4.95%.
To pass, the proposal needs at least 60% yes votes on the ballot question or support from a simple majority of all those who voted in the election.
The proposal was a cornerstone campaign issue for Gov. J.B. Pritzker in 2018. Before the COVID-19 pandemic wreaked havoc on state budgets throughout the country, state officials estimated the graduated income tax plan would generate an additional $3.6 billion a year for the state while 97% of Illinois residents would see modest tax cuts or pay the same as they had with a flat rate.
If the measure fails, Democratic leaders have suggested another across-the-board income tax rate hike that could increase state income tax burden as much as 20% on all taxpayers.
"As I've said many times before, the options for Illinois without the fair tax are not good," Pritzker said Monday. "There's no doubt that Illinois would need revenue in addition to obviously looking at cuts in state government as we have."
Critics have argued that creating a graduated rate system would make it easier for legislators to raise rates piecemeal on some to avoid upsetting all voters simultaneously.
The Democratic-led state legislature and governor have set the tax rates that will be used if the graduated tax ultimately is approved by voters.
The first $10,000 in income would be taxed at 4.75%, the next $90,000 would be taxed at 4.90%, and the next $150,000 would be taxed at 4.95%, the current rate. Any income over $250,000 would be taxed at 7.75%. The rate would climb to 7.85% for income over $350,000 for single filers and $500,000 for couples.
The biggest tax increase would be for single filers with income over $750,000 and married couples with incomes over $1 million. Their tax rate would be 7.99%, and, unlike people in lower income brackets, they would pay that flat rate on all of their income.