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Proposed Illinois Graduated Income Tax Amendment

The Peoria Area Chamber of Commerce has taken a position Against the proposed Graduated Income Tax Amendment on the Nov. 3, 2020 Ballot.

Valued Chamber & Community Members,

The Peoria Area Chamber of Commerce Board of Directors, on behalf of its members, voted to oppose the proposed Graduated Income Tax amendment on this year’s ballot. While we acknowledge the revenue shortfalls in the Illinois state government and remain committed to supporting the many needs of our community, we simply cannot support this proposed amendment on the grounds that it will hurt our small businesses, large employers, and the broader business community. This additional tax burden will not only impact business owners but employees as well; this amendment will implement an immediate tax, offers no limits on the amount of tax, and allows the government the ability to implement future additional income taxes at any time without accountability provisions in place for the usage of these added revenues. The Peoria Area Chamber proudly joins other Chambers of Commerce in our state, the Illinois Farm Bureau, and many other business groups as a part of the “Vote NO on the Progressive Tax Coalition.”


We take our responsibility to serve our members seriously and have carefully considered this decision. We are confident that standing up for our members against this amendment is the right decision, and we will continue to advocate for policies that will strengthen the business climate in the Peoria region.


For more information on why we believe this amendment is bad for our members, see the Chambers Against Tax website.


We’ve also included a video from the Illinois State Chamber of Commerce, which identifies the key challenges with this proposed amendment, specific to the needs of local Chambers of Commerce.


Thank You,

Joshua Gunn

President and CEO

Peoria Area Chamber of Commerce and CEO Council

What is it?
The Illinois Allow for Graduated Income Tax Amendment is on the ballot in Illinois as a legislatively referred constitutional amendment on November 3, 2020.
The ballot measure would repeal the state’s constitutional requirement that the state’s personal income tax is a flat rate across income. Instead, the ballot measure would allow the state to enact legislation for a graduated income tax. In June 2019, Gov. J.B. Pritzker (D) signed SB 687, which would enact a graduated income tax if voters approve the ballot measure. SB 687 would change the state’s income tax from a flat rate to six graduated rates beginning on January 1, 2021.
Why are we voting on this referendum?
The Illinois Constitution lays out the rules for how an amendment introduced in the Legislature can be adopted. To become part of the constitution, a proposed amendment must be approved by either 60% of those voting on the question or a majority of those voting in the election.
Who stands to benefit?
The money generated from the tax will help pay off the state’s bill backlog which stood at $6.29 billion on Jan. 3 & some middle and low-income taxpayers will see some savings.
History of Income Tax in Illinois
Illinois has collected individual income tax since 1969, when the tax rate was 2.5%.
As of 2019, 43 states levied a tax on personal income. Of these 43 states, 11 states, including Illinois, had a flat income tax rate, meaning there is a constant rate across income before deductions and exemptions. In Illinois, income is taxed at a flat rate of 4.95%. The flat income tax rates ranged from 2.00% in Tennessee to 5.25% in North Carolina. Most (32 of 50) states had a graduated income tax, with different rates applied to different levels of income. Under Illinois SB 687, the proposed tax rates would range from 4.75% to 7.99%. Compared to 2019 tax rates, Illinois would have the sixth-highest top-bracket rate. The state with the highest top-bracket rate—and the largest difference between the bottom and top rates—is California, where the bottom rate is 1.00% and the top rate is 13.30%
The measure would amend Section 3 of Article IX of the Illinois Constitution. The following underlined text would be added and struck-through text would be deleted: (a) A tax on or measured by income shall be at a non-graduated rate. At any one time there may be no more than one such tax imposed by the State for State purposes on individuals and one such tax so imposed on corporations. The General Assembly shall provide by law for the rate or rates of any tax on or measured by income imposed by the State. In any such tax imposed upon corporations the highest rate shall not exceed the highest rate imposed on individuals by more than a ratio of 8 to 5. (b) Laws imposing taxes on or measured by income may adopt by reference provisions of the laws and regulations of the United States, as they then exist or thereafter may be changed, for the purpose of arriving at the amount of income upon which the tax is imposed
Provided Arguments:
  • PRO: House Speaker Michael Madigan (D-22): “Middle-class families bear too much of the burden under the current tax system, and a Fair Tax will enable us to make the wealthy pay their fair share to balance the budget and invest in critical resources like education and health care — all while providing relief for 97% of taxpayers.”
  • PRO: Trisha Crowley, president of the League of Women Voters of Champaign County: “In Illinois, the bottom 20% of wage earners currently pay almost twice as much of their total income for state and local taxes as the top 20%. This is an unjust burden on our poorest residents. As the income gap between rich and poor in the US continues to grow, taxing our highest earners at a rate proportionate to their increasing concentration of income growth could also make a real difference in addressing the state’s well-known fiscal crisis. The proposed amendment will not itself change the current rates, but it will allow for them to be graduated. ”Illinois’ current tax system unfairly benefits millionaires and billionaires and this amendment will set things right for middle-class and working people. Currently, it is unfair that billionaires pay the same tax rate as regular people. Voting “yes” on the amendment means that the State will enact a new tax structure where only those making above $250,000 a year will see their taxes go up. This amendment is simply upgrading Illinois’ old tax system to a graduated system which is how the federal government and the majority of other states do it.”
  • CON: Illinois Chamber of Commerce: The Illinois Chamber of Commerce released a statement opposing the graduated income tax amendment, which included, “Illinois’ current flat rate income tax is inherently more fair than a graduated income tax since everyone pays the same rate and tax increases uniformly impact everyone. A flat rate tax does not promote divisive class warfare rhetoric or purposefully attempt to re-distribute income according to a subjective fairness standard. A flat rate tax requires all taxpayers to vigilantly stand guard against excessive government spending.”
  • CON: Sen. Paul Schimpf (R-58): “Today’s Senate action continues to ignore the reality that Illinois politicians have an insatiable desire to spend more money and expand the size of government. Changing our taxing structure, without providing a means to limit spending or make it more difficult to raise taxes in the future, solves nothing. In fact, this plan will most likely only lead to more tax increases and higher spending in the future.”
More Information:
The specific progressive income tax Gov. J.B. Pritzker has proposed would raise taxes only on people who earn $250,000 or more a year — incomes between $250,000 and $500,000 would be taxed at 7.75%. It would maintain the current tax rate of 4.95% on incomes between $100,000 and $250,000. And it would reduce the rate on incomes of $100,000 or less. Income from $500,000 to $1 million would be taxed 7.85% and income over $1 million would be taxed 7.99%. The corporate tax rate within the package would also be raised to 7.99%.
Voters will not be voting on the specific taxes rates or brackets, but rather, on amending the Illinois Constitution to allow for such a system to be implemented. Currently, the Illinois State Constitution requires that taxes based on income must be levied at non-graduated rates.
Democrats have said the new personal income tax rates would bring in $3.57 billion, and the new corporate tax rate would bring in $350 million.
The current income tax levied on all taxpayers is 4.95%. The flat tax rate, which has fluctuated over the years, has been part of the Illinois constitution since 1970, a year after income tax was first enacted in Illinois. With a constitutional change, the Pritzker administration estimates that 97% of Illinois residents will see at least a modest decrease in their income taxes.
Virtual Town Hall - The Graduated Income Tax
The Small Business Advocacy Council and Illinois Association of Chamber of Commerce Executives believe that an essential function of their organizations is providing viewpoints both in favor of and against the graduated income tax. Together, they have put together a Town Hall which presents both perspectives for your consideration.
Watch the Town Hall on the graduated income tax ballot initiative. They have two great speakers to provide you with different perspectives.
  • Ralph Matire is the Executive Director for the Center for Tax and Budget Accountability. Ralph will present arguments in support of the ballot initiative.
  • Leslie Munger is the Former Illinois Comptroller and Deputy Governor. She is a board member of the Illinois Chamber of Commerce. Leslie will present arguments against the ballot initiative.
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