Illinois Voters Asked To Decide 'Fair Tax': What You Need To Know

ILLINOIS — Voters will have a lot of choices to make this November, from picking a president and a U.S. senator to dozens of state representatives and local judges. But one of the most important decisions before Illinois voters will be Gov. J.B. Pritzker's "Fair Tax" amendment.

The ballot initiative will ask voters to approve a change to the state constitution that will allow lawmakers to set a graduated income tax rather than the flat tax that currently exits.

Here's the ballot language voters will see:

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. The amendment would remove the portion of the Revenue Article of the Illinois Constitution that is sometimes referred to as the “flat tax,” that requires all taxes on income to be at the same rate. The amendment does not itself change tax rates. It gives the State the ability to impose higher tax rates on those with higher income levels and lower income tax rates on those with middle or lower income levels. You are asked to decide whether the proposed amendment should become a part of the Illinois Constitution.

What does that mean? Let's break it down.

As it stands, the state constitution requires all Illinoisans to pay the same tax rate — currently 4.95 percent — whether they make $20,000 a year or $20 million. The governor's proposed change would keep the same or lower rates for anyone making less than $250,000 a year and raise them on those making more than that.

The amendment won't directly set tax rates, but will give lawmakers the power to do so. A "yes" vote will amend the constitution and allow for a graduated state income tax. A "no" vote would reject the amendment and keep the flat tax.

Here are the proposed tax brackets as approved by the Illinois General Assembly:

• Single and joint filers making less than $10,000: 4.75 percent (0.2 percentage points less)
• Single and joint filers making $10,000-$100,000: 4.9 percent (0.05 percentage points less)
• Single and joint filers making $100,000-$250,000: 4.95 percent (same as the current rate)
• Single filers making $250,000-$350,000 or joint filers making $250,000-$500,000: 7.75 percent (2.8 percentage points higher)
• Single filers making $350,000-$750,000 or joint filers making $500,000-$1 million: 7.85 percent (2.9 percentage points higher)
• Single filers making more than $750,000 or joint filers making more than $1 million: 7.99 percent (3.04 percentage points higher)
• Corporate rate: 7.99 percent (the same as the highest personal rate and 0.99 percentage points higher than the current 7 percent corporate tax rate)

For single taxpayers making less than $750,000 a year or married taxpayers making less than $1 million, the rates are marginal, meaning you only pay the higher rates on what you earn within each tax bracket. So, a single taxpayer making $101,000 a year would pay a 4.75 percent rate on the first $10,000, 4.9 percent on the next $90,000 and 4.95 percent on the remaining $1,000, resulting in a tax cut on all but $1,000 of his or her income.

Likewise, a single taxpayer making $251,000 a year would pay 7.75 percent on only $1,000, still resulting in an overall tax cut, according to the state's tax calculator. For taxpayers in the highest brackets, however, the 7.99 percent tax rate will be assessed on all net income starting with the first dollar, resulting in a significant tax hike.

According to Democratic lawmakers, 97 percent of Illinoisans would end up paying less. You can calculate exactly how much less or more you would end up paying here.

Pritzker, a billionaire, unveiled the plan last year. "It’s wrong that I would pay the same tax rate as someone earning $100,000 or, even worse, pay the same tax rate as someone earning $30,000," he said at the time.

Proponents say the changes to the tax code will help close a hole in the state's budget. If it is not approved, the state will have to cut education, police and other services by up to 15 percent or hike taxes on everyone to around 5.95 percent, according to the governor's office.

That was before the coronavirus pandemic only deepened Illinois' financial woes.

But opponents of the amendment say the tax hikes will hurt businesses at a time many are already suffering, making the state less competitive with neighbors like Indiana, Iowa, Kentucky, and Missouri, which have all cut state income taxes in recent years. And they don't trust the General Assembly not to squander the money or raise rates again once lawmakers have the power to do so, pointing to high-profile corruptions allegations against Illinois House Speaker Mike Madigan and others as proof lawmakers can't be trusted.

“(Voters are) being asked, ‘Hey, trust us,’ but what we’re saying is we have a General Assembly that has just run amok on spending and hasn’t addressed any of the other major problems," opposition group leader Jason Heffley told the Better Government Association, a nonpartisan watchdog.

Other prominent opponents of the amendment include hedge fund manager Kenneth Griffin, listed by Forbes as Illinois' richest person, former Illinois Manufacturers Association President Greg Baise, the Illinois Farm Bureau and Illinois Chamber of Commerce.

The amendment has been endorsed by prominent labor groups such as the Illinois AFL-CIO, SEIU Illinois State Council, Associated Fire Fighters of Illinois and Chicago Teachers Union, as well as the AARP, League of Women Voters of Illinois, Planned Parenthood Illinois Action, Sierra Club Illinois and the Chicago Jobs Council, according to Ballotpedia.

Election Day is Tuesday, Nov. 3. The deadline to register online to vote in Illinois is Sunday, October 18, and the last day to request a ballot by mail is Thursday, October 29. Early voting starts Sept. 24 and runs through Nov. 2. You can also register to vote on Election Day. Check with your local election authority to find out what locations offer same-day registration.

Find more Election Day information here.