Name: Pritzker-funded group concedes defeat on Illinois graduated income tax amendment, throwing future of state finances in doubt
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Pritzker-funded group concedes defeat on Illinois graduated income tax amendment, throwing future of state finances in doubt

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AdvertisementBy Chicago TribuneNov 04, 2020 at 3:51 pmThe group backed by Democratic Gov. J.B. Pritzker to pitch his proposal to enact a graduated state income tax in Illinois acknowledged the constitutional amendment’s defeat Wednesday and warned of a financial morass as a result of the rejection of the proposed constitutional amendment.“We are undoubtedly disappointed with this result but are proud of the millions of Illinoisans who cast their ballots in support of tax fairness in this election,” said Quentin Fulks, chair of the Pritzker-funded Vote Yes for Fairness group.“Now lawmakers must address a multibillion dollar budget gap without the ability to ask the wealthy to pay their fair share. Fair Tax opponents must answer for whatever comes next,” Fulks said, pointing the finger at “Republican legislators and their billionaire allies” who opposed it.In a battle pitting billionaire Pritzker against billionaire hedge fund founder Ken Griffin, more than $124 million was raised by groups for and against a proposed change to the Illinois Constitution that would switch the state from a flat-rate income tax to a graduated-rate system in which taxes would increase as income rises.There were two ways the proposal could have been ratified: It needed either 60% support among those voting directly on the question or more than 50% support of those voting in the election.As for the first pathway, the amendment was falling far short of the 60% bench mark. The question had 45% support among those voting directly on the amendment. Another 55% voted against the question with nearly 98% of the state’s precincts reporting. All totals are unofficial.With the measure having received more than 2.3 million “yes” votes, the pro-amendment forces acknowledged it would not clear the 50% support threshold from among all ballots cast in the election—even though Illinois law allows mail-in ballots to be counted until Nov. 17 if they were postmarked by Election Day.The announcement of the proposal’s defeat was a huge blow to Pritzker, who had promoted the concept even as a candidate for governor in defeating one-term Republican Gov. Bruce Rauner in 2018.Pritzker had made the graduated tax amendment his signature agenda item —but it ran into serious headwinds from a well-funded opposition, voter disdain of any tax-raising issue, and public distrust of Springfield amid renewed scandals involving Democrats who hold one-party control of state government.Pritzker himself has faced sometimes heated public opposition to restrictions he has placed on the state to deal with the pandemic.The Coalition to Stop the Proposed Tax Hike Amendment said the theme of its opposition campaign was "trust.'“And, at the end of the day the voters knew we simply could not entrust the Springfield politicians with another blank check,” group spokeswoman Lissa Druss said in a statement. “This is a great victory for all hard working middle-class families, small business owners, family farmers and employers across the state.”Griffin, whose donations to the anti-amendment group were essential in delivering the opposition message, said in a statement that Illinois citizens “delivered a clear message” to Springfield that “now is the time to enact long overdue reforms to save our state from fiscal ruin.”“Illinois should forever be a place where people want to live, work and raise a family,” he said.With state finances hanging in the balance, the ballot proposition was viewed as a measure of Illinoisans' trust and faith in their current government after decades of corruption and an inability to adequately budget.At issue was whether to change the current flat-rate income tax, now 4.95% on individuals regardless of how much they make, to a tax that increases as income rises.Supporters contended a graduated-rate system is a fair way to shift the tax burden and generate more money to help end Illinois' long-term financial structural imbalance. Opponents contended it’s a job-killing move that offers no guarantees that higher initial tax brackets for the wealthy won’t eventually creep down to the middle class.Though the ballot question was nonpartisan, the fight over it was not. The referendum was backed by the governor and Democrats as well as labor interests including public employee unions. It was opposed by Republicans and traditional GOP money contributors and interest groups.Those pro and con arguments and others played out largely on TV screens, often in back-to-back ads, funded by a record amount of money raised for a ballot proposition in Illinois. The bulk of it came from two billionaires.Pritzker, a wealthy heir of the Hyatt Hotels fortune, made the graduated tax proposal his top agenda issue. Pritzker, worth $3.4 billion , gave $58 million to the pro-amendment Vote Yes for Fairness campaign.On the other side was Griffin, the founder and CEO of the Citadel hedge fund and investment group. Regarded as the state’s wealthiest individual with a worth of $15 billion , Griffin was the lead funder of the Coalition to Stop the Proposed Tax Hike Amendment with $53.75 million.Collectively, those groups and others involved in the amendment fight were effectively even moneywise heading into Election Day, according to an analysis prepared by Kent Redfield, professor emeritus of political science at the University of Illinois at Springfield.Anti-amendment groups, which also include the Illinois Farm Bureau and the Illinois Chamber of Commerce, raised $62.4 million. Pro-amendment groups, which also included the union-backed Vote Yes for Fair Tax and AARP Illinois, raised $61.8 million, based on Redfield’s analysis.Previously, the most money spent on a proposed constitutional amendment was $4.3 million for the Illinois Crime Victims' Bill of Rights in 2014. In 2016, $3.8 million was spent on a question to ensure transportation-related taxes and revenues went to transportation purposes, such as highway construction. Both amendments were approved.The advertising strategy of anti-amendment forces played off voter concerns about their faith in Springfield, using speculative arguments in warning about the prospects of middle-income taxpayers paying higher taxes or on their income because of “new” powers granted by the amendment.In reality, the only new power in the amendment was to tax different incomes at different tax rates. For decades, lawmakers have only been able to impose across-the-board income tax rate increases regardless of income. Still, hitting middle and lower incomes with future tax hikes could be more politically onerous for lawmakers than singling out higher wage earners down the road.Nothing in the amendment , and lawmakers have always had the power to impose such a tax in Illinois — one of three states with an income tax that does not put a levy on pensions or qualified retirement benefits.The pro-amendment side pushed a more aspirational approach, calling it the “Fair Tax” and arguing that the wealthy should not pay the same tax rate as lower and middle incomes. But the side also dealt in speculation, with a warning from Lt. Gov. Juliana Stratton that income taxes across the board if the amendment isn’t adopted. AARP Illinois, an amendment supporter, also said a retirement tax might have to be considered as an alternative.Illinois has had an income tax for five decades, starting at a personal rate of 2.5% that lasted through 1982. Since then, the rate has fluctuated, going as high as 5% from 2011 to 2014, then falling to 3.75% between 2015 and June 2017, and then coming up to the current 4.95% rate.Under a law adopted by the Democratic-controlled General Assembly last year, new rates would take effect on Jan. 1 if the amendment is ratified by voters.Individual and joint filers would pay 4.75% on their first $10,000 in income, 4.9% on income over $10,000 to $100,000 and 4.95% on income from $100,001 to $250,000.At that point, the income ranges and tax diverge for individuals and people filing jointly. Individuals would pay 7.75% on income between $250,001 to $350,000 and 7.85% on income from $350,001 to $750,000. Joint filers would pay 7.75% on income between $250,001 to $500,000 and 7.85% on income between $500,001 to $1 million.Individuals making more than $750,001 or married couples earning more than $1 million would see their entire income taxed at 7.99%.The corporate tax rate, currently at 7%, would rise to 7.99%. Corporations also pay a personal property replacement tax of 2.5%, which is basically added onto their income tax liability.Supporters said that under the tax rates that would go into effect if the amendment is adopted, 97% of Illinoisans — those earning $250,000 or less — would pay the same or lower income taxes.The fate of the amendment is particularly acute because of declines in government revenue due to pandemic restrictions. Pritzker has said if the amendment is adopted, it would raise $1.2 billion for the final six months of this budget year and $3.4 billion over the course of a full year.Pritzker has estimated a revenue loss of $6.5 billion this budget year and next, and has helped to keep the spending plan solvent with the ability to borrow up to $5 billion from the Federal Reserve. But there is uncertainty over how to pay it back as Washington remains stalemated over giving money to state and local governments. Advertisement

AdvertisementBy Chicago TribuneNov 04, 2020 at 3:51 pmThe group backed by Democratic Gov. J.B. Pritzker to pitch his proposal to enact a graduated state income tax in Illinois acknowledged the constitutional amendment’s defeat Wednesday and warned of a financial morass as a result of the rejection of the proposed constitutional amendment.“We are undoubtedly disappointed with this result but are proud of the millions of Illinoisans who cast their ballots in support of tax fairness in this election,” said Quentin Fulks, chair of the Pritzker-funded Vote Yes for Fairness group.“Now lawmakers...

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The Chicago Tribune is a daily newspaper based in Chicago, Illinois, United States, owned by Tribune Publishing. Founded in 1847, and formerly self-styled as the "World's Greatest Newspaper" (a slogan for which WGN radio and television are named), it remains the most-read daily newspaper of the Chicago metropolitan area and the Great Lakes region. It had the 6th highest circulation for American newspapers in 2017.

Pritzker-funded group concedes defeat on Illinois graduated income tax amendment, throwing future of state finances in doubt

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