What is Illinois’ path forward? Option 3: Fair Income Tax Illinois would change its system so the wealthy pay more, like in 33 other The amendment on the November 2020 ballot in Illinois proposes a change from a flat tax to a graduated tax. Should voters approve the change, the constitution would give state legislators a wider door to set tax rates, such that the General Assembly could “provide by law for the rate or rates of any tax on or measured by income.”. In a blow to Gov. Armed with an M.A. Currently, Illinois has a flat tax, which means that all income is taxed at the same rate, currently 5% for people and I think 7% for businesses. Illinois taxpayers charged $1.8M for misleading ‘fair tax’ amendment pamphlet Illinois taxpayers charged $1.8M for misleading ‘fair tax’ amendment pamphlet The … Armed with an M.A. Illinois is by far the most fiscally mismanaged state in the union. The General Assembly passed a measure last May to enact the graduated tax, if voters approve a constitutional amendment on Nov. 3. actuarial credential, with 20 years of experience at a major benefits consulting firm, and having blogged as "Jane the Actuary" since 2013, I enjoy reading and writing about retirement issues, including retirement income adequacy, reform proposals and international comparisons. Concurrent with the proposed constitutional amendment, the Illinois legislature passed legislation setting a new set of graduated income tax rates t… Video: Arguments for and against a graduated income tax rate. With 98% of precincts reporting Wednesday morning, the question was trailing 55% to 45% in favor – a hurdle too high to clear, even as outstanding ballots continue to be counted. • The amendment does not hurt small businesses. With about 72% of precincts reporting, around 290,000 more people have voted against the measure than for it, according to the AP. #mc_embed_signup{background:#fff; clear:left;width:100%;font-weight:normal;}, The Great Chicago Fire: A Chicago Stories Special, Dividing Party, Republicans Poised to Challenge Biden Win, Many More in GOP Rejecting Trump’s Bid To Undo His Defeat, Trump Pressures Georgia Elections Chief: ‘Find 11,780 Votes’, Cruz Leads 11 GOP Senators Challenging Biden Win Over Trump, Chicago’s Tumultuous Year: Looking Back on 2020, Electoral College Makes It Official: Biden Won, Trump Lost, City Council Supermajority Urges Lightfoot to Rethink School Reopening Plan, The ‘Wildebeest of the Great Lakes’ Is Just One of the Region’s Unsung Aquatic Wonders, Beach or Habitat? Ralph Martire, Keynote Speaker. Per that law (Public Act 101-008), joint filers with incomes of $250,000 or less would see their tax rate decrease slightly or remain at 4.95%. The Fair Tax Amendment is on the ballot for Illinois voters to decide in November. The Fair Tax Amendment would have introduced a progressive income tax in the state, gradually increasing tax rates for those who make $250,000 and above. J.B. Pritzker’s most campaigned-for issues. J.B. Pritzker and to his hopes of injecting billions of dollars more revenue into the state budget, Illinois voters rejected a constitutional amendment to overhaul how the state taxes income – a result that portends budget cuts, an overall income tax hike, or a combination of both. Voters have rejected the Fair Tax proposal to abolish Illinois' flat-rate income tax for one that would take a greater share from wealthier taxpayers. Option 2: Flat Tax Increase Illinois would raise the flat tax rate from 4.95 percent to 5.95 percent –meaning that every family in the state would pay higher taxes. I write about retirement policy from an actuary's perspective. Of the 42 states that have an income tax, 32 and Washington, D.C., have a graduated rate structure, while Illinois is one of nine that impose a flat tax. Illinois Voters Reject ‘Fair Tax’ Amendment. The amendment would have supported allowing the state government to impose a graduated-rate income tax structure that would tax different brackets of income at … Pritzker’s easy blaming of Republicans and millionaires and billionaires, rather than recognizing that Illinoisans made the only rational choice in a state with such a legacy of mismanagement and without any willingness for reform, certainly indicates that the state has a long way to go. Advocates Want Park District to Add Plovers’ Nesting Site to Neighboring Protected Nature Area. ), armed with the comment of Illinois State Treasurer Michael Frerichs in June that a graduated income tax would make it politically easier to begin to tax retirees. ILLINOIS — More than 3 million Illinois residents have already voted, but Tuesday is the big day: Election Day 2020. Pritzker spent $56 million of his personal money to promote moving to what he’d dubbed a “fair tax” as it would allow the state to charge higher rates on those in higher income brackets and lower rates for lower-income filers. in medieval history and the F.S.A. But by the next morning, Fulks was out with an updated statement. Practicing Poverty Might Help, Why HECM Reverse Mortgage Borrowers Make Mistakes, Biden Plans To Fix Social Security’s Short-Fall In 2034. Does it even have a path to fill the budget hole it was hoping to fill with the next tax rates? “Illinois is in a massive budget crisis due to years of a tax system that has protected millionaires and billionaires at the expense of our working families, a crisis that was only made worse by the Coronavirus pandemic,” he said. The constitutional amendment itself merely removed a constitutional mandate that all personal income be taxed at a flat rate. The outcome of Tuesday's Nov. 3, vote handed Illinois Gov. Follow. The wrong amendment is on the ballot, in other words. But a 2019 law was in place, and would have taken effect in January should the constitutional amendment have been approved. It sounds like an astronomical sum: $100 million spent by opposing campaigns to try to influence Illinois voters about whether the state should amend the constitution to allow income to be taxed at a graduate rate. “Now lawmakers must address a multi-billion dollar budget gap without the ability to ask the wealthy to pay their fair share. And, what’s more, at the same time, “purple” state Arizona has approved a new tax rate that would have more-or-less matched what Illinois proposed. No. Under that, millionaires’ income would be taxed at rate of 7.99%, while individuals with incomes of $250,000 or below would see marginal tax rates at or below the current rate of 4.95%. Meanwhile, at least 97% of Illinois … Clearly there was sizeable crossover among those voting against the amendment. The Chicago Tribune reminded its readers repeatedly of the state’s failed promises and indifference to reform — everything from the failure to reform pensions, to failures to reform property taxes, rejection of redistricting reform, rejection of consolidation of local governments. By Editor | November 4, 2020 | 1 . The outcome of Tuesday's Nov. 3, vote handed Illinois Gov. And refusal to reform pensions, treating the future pension accruals as sacrosanct even as other state needs are crowded out by the spending that requires, is not lost on voters, either. Governor Pritzker is making good on his promise to protect working families and make our system more fair. 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What the Fair Tax Amendment would allow would be a modest increase in income taxes for those with incomes over $250,000. the comment of Illinois State Treasurer Michael Frerichs in June, listed one abandoned promise after the next, Battle Of The Billionaires In Illinois: The Governor, A Hedge Fund Tycoon, $112 Million And The Income Tax Initiative That Voters Rejected. J.B. Pritzker and to his hopes of injecting billions of dollars more revenue into the state budget, Illinois voters rejected a constitutional amendment to overhaul how the state taxes income – a result that portends budget cuts, an overall income tax hike, or a combination of both. And, of course, regular readers will recall that just last week, I learned that Pritzker’s promise to boost the state’s pension funding by asset transfers, likewise quietly failed. “Because we won’t know how many people voted in the election but didn’t vote on that ballot question, we’re almost certainly going to have to wait a couple weeks to find out the math on that situation,” said Scott Kennedy of Illinois Election Data. In advance of the November 2020 ballot question facing Illinois citizens, Ralph Martire will explore Governor J.B. Pritzker’s proposal to amend the Illinois State Constitution. That lag time is in part because Illinois allows two weeks for ballots postmarked on or before Nov. 3 to arrive at local election authorities’ mailboxes. J.B. Pritzker and to his hopes of injecting billions of dollars more revenue into the state budget, Illinois voters rejected a constitutional amendment to overhaul how the state taxes income – a result that portends budget cuts, an overall income tax hike, or a combination of both. Currently, 46.23% of votes reported support the amendment. As I’ve also mentioned here before, Michael Madigan, the state House speaker for 35 of the last 37 years, has had his fingers on every state budget, and every failed pension fix, for decades. With around 50% of Illinois precincts reporting, votes in favor of the constitutional tax amendment trail those against it by roughly 42,700, according to the AP. Pritzker and other supporters rejected this and instead claimed that rejecting the amendment would make a tax on retirement income more likely, because the state would have to find other revenue sources.). The Illinois Fair Tax was a proposed amendment to the Illinois state constitution that would have changed the state income tax system from a flat tax to a graduated income tax. And, yes, over and over again, I say that pension funding isn’t just an isolated issue removed from the rest of state governance, but that you can’t build a properly-fiscally-managed state, and gain the trust of state residents in the process, without proper pension funding. 13. There are two ways for the change to make it into the state’s constitution: The question either needs to win support from 60% of those who voted on the question, or a majority (over 50%) of everyone who cast a ballot (meaning those who cast a ballot in the 2020 election but who skip the constitutional amendment question). When Illinois voters head to the polls on Nov. 3, 2020, they will vote on an amendment to the Illinois Constitution which would allow state lawmakers to impose a graduated income tax. The arguments against the Fair Tax Amendment on the ballot in November — when voters will decide whether to amend the state constitution to allow a progressive income tax — often hinge on distortions of reality. (Of course, Gov. In a set of tweets this afternoon, Pritzker claimed that the only remaining options are to “immediately make billions of dollars in cuts” or “impose a higher flat tax, which falls disproportionately on working and middle-class families.” He then blamed “the millionaires and billionaires” for opposing it and accused them of “deceiving the public about its purpose.”, “Republicans,” he claims, “swore their allegiance to the wealthiest interests in the state and threw middle class families under the bus.”. © 2021 Forbes Media LLC. Under the proposed amendment, the tax rate drops to 4.75 percent for the first $10,000 of a taxpayer’s income. The graduated income tax (the Fair Tax) will increase state revenues by asking people in the highest income brackets to pay more while keeping taxes flat – or even reducing the income tax burden – for 97% of the people living in Illinois. Wirepoints has laid out in detail how a constitutional amendment for pension reform can work. Opinions expressed by Forbes Contributors are their own. Follow Amanda Vinicky on Twitter: @AmandaVinicky. A proposed income tax amendment was shot down by voters in Illinois Tuesday. To be sure, there was an element of Billionaire v. Billionaire in the campaigning for and against the amendment (see “Battle Of The Billionaires In Illinois: The Governor, A Hedge Fund Tycoon, $112 Million And The Income Tax Initiative That Voters Rejected”), but there was neither hoodwinking nor deception going on. We won’t store any of your information. Those with joint annual incomes over $1 million, however, would pay a 7.99% tax rate on their entire income, a jump that would see 0.3% of Illinois tax filers paying an additional $138,000 to the state each year, or $2.8 billion collectively. And Missouri’s progressive tax structure is essentially flat, taxing all income above $8,424 at a rate of 5.4 percent. And all Illinois voters are seeing a constitutional amendment on their ballot asking them to approve of the so-called Illinois "fair tax" by repealing the state's constitutional requirement that the state income tax is a flat tax across income levels. One one side: Gov. Our report includes specifics on how Illinois could, through that process, save more than the initial revenue claimed by Fair Tax supporters, without undue hardship on pensioners. Michigan, Indiana, and Kentucky all have a flat income tax like Illinois. The proposal, formally titled the "Allow for Graduated Income Tax Amendment", appeared on the ballot in the November 3, 2020 election in Illinois as a legislatively referred constitutional amendment. Getting information out in support of the graduated tax is a top priority for AARP Illinois. in medieval history and the F.S.A. I will leave this state eventually because of absurd property and State Income tax rates, but until our current socialist leadership embraces the fundamental first law of economics, that there are “no free lunches”, we will unfortunately continue to slowly but surely succumb to the quick stand of debt they’ve created. (AP Photo/Charles Rex Arbogast). A woman walks past a pro Fair Tax yard sign near a polling place on Election Day, Tuesday, Nov. 3, ... [+] 2020, in Chicago. The “Fair Tax” amendment gives total control to the Illinois Legislature to make future changes to the Illinois Tax Code as they see fit. actuarial credential, with 20 years of experience at a major benefits. The fate of Illinois’ constitutionally mandated flat tax lies in the hand of voters, who will decide on Nov. 3, 2020 whether or not to adopt the Proposed Amendment to the 1970 Illinois Constitution — also known as the “fair tax” amendment or the “Illinois Allow for Graduated Income Tax Amendment.” Illinois Voters Reject ‘Fair Tax’ Amendment Amanda Vinicky | November 4, 2020 10:41 am In a blow to Gov. Voters will decide whether to replace the current flat tax with a graduated state income tax. Terry Savage – The Fair Tax amendment: VOTE YES VOTE NO? Without that revenue, lawmakers will have to make tough choices of seeking alternative methods of bringing in more money, or making cuts to fill that billions-deep budgetary hole. WTTW - Chicago PBS. The amendment … SPRINGFIELD, Ill. — Illinois will vote on an amendment to its state constitution on the Nov. 3 ballot. Illinois’ wealthiest residents stood to get hit hardest in their pocketbooks, had the measure been approved. For example, a single mom making $61,000 would pay an additional $521 in taxes. Pritzker the first major defeat of his 22-month tenure. All Rights Reserved, This is a BETA experience. With 98% of the vote counted, the Chicago Tribune this morning reported that “no” votes exceeded “yes” votes by a margin of 55% to 45%. Voters have rejected the Fair Tax proposal to abolish Illinois' flat-rate income tax for one that would take a greater share from wealthier taxpayers. It’s the difference between a state where voters trust politicians, and one where they don’t. How And Why To Create A Compilation Of Your 2020 Trusts Now! Moreover, it is not separate from a ballot for other matters as clearly required by the Illinois Constitution. After that, income up to $100,000 is taxed at 4.9 percent. 11-03. In a blow to Gov. The outcome was stunning: despite months of ads telling voters that a “yes” vote would ensure that the wealthiest 3% of Illinoisans would “pay their fair share” and the rest of the state would see a tax cut, voters rejected the ‘Fair Tax’ amendment to the state’s constitution, which would have stricken from the constitution the requirement that the state’s income tax be levied as a flat percentage of income across all income levels. You may opt-out by. Illinois Fair Tax Amendment. The state’s constitution requires that all income be taxed at a singular, flat rate – it’s currently 4.95%. The proposed amendment grants the State authority to impose higher income tax rates on higher income levels, which is how the federal government and a majority of other states do it. Austin Berg, vice president at the Illinois Policy Institute, made another pitch against the amendment (for instance, here at the Chicago Tribune as well as at various web forums): it would allow the legislature to raise tax rates more easily by dividing up taxpayers, and raising taxes on one tax bracket at a time, ultimately raising everyone’s tax burden but without the political pushback of an all-at-once hike. (Thankfully, this margin also rendered moot the provision that an amendment must receive either 60% of the vote among those voting on the item or 50% “yes” votes among all voters who cast a ballot at all, because explaining this requirement is a headache in itself. Late Tuesday night, chair of the Pritzker-funded Vote Yes for Fairness group Quentin Fulks had signaled the campaign would not yield “until every ballot is counted.”. The governor, spending nearly $ 54 million to combat the change a flat nearly-flat. 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