SPRIGNFIELD — A graduated tax rate bill joined the constitutional amendment that would allow for the implementation of such a tax structure in awaiting a vote from the full Illinois House on Friday.
The bill, which adopts the same rates approved by the state Senate, was advanced by the House Revenue and Finance committee on a 9-6 party line vote with two “swing vote” Democrats who serve on the committee having been replaced with substitutes.
Rep. Mike Zalewski, a Riverside Democrat and House sponsor of Senate Bill 687, said he expects the House to take up the full amendment and rate structure package next week.
The committee did not act on a separate bill that would have created a conditional property tax freeze on school districts if the state meets certain funding requirements.
Zalewski said property tax relief would be an ongoing discussion in the summer.
“I think it’s the intent of the caucuses to try to work toward a summer task force to deal with property tax relief,” he said. “Property tax relief cannot really be addressed in the income tax code. It’s a very hard bridge to gap. So we’re going to try to work on a solution where we address property tax relief. It should be part of the conversation but it’s hard to entwine the two.”
Democratic Reps. Sam Yingling, of Grayslake, and Jonathan Carroll, of Northbrook, have both said publicly they would not support a graduated tax plan that does not offer more systemic property tax relief. Both serve on the Revenue and Finance Committee, but were replaced on the committee with substitutes Friday by Democratic House Speaker Mike Madigan.
Even if the plan passes the full House, it would not take effect unless a constitutional amendment — Senate Joint Resolution Constitutional Amendment 1 — allowing a graduated rate structure is approved by the full chamber, then by voters in November 2020.
Carroll previously voted to pass the amendment out of committee, but said his vote did not mean he would support the measure on the floor.
While the amendment would need 71 of the chamber’s 74 Democrats to vote for it, the rate structure only requires 60 yes votes.
Per the rate structure approved by committee Friday, single filers would pay the maximum rate of 7.99 percent on all income once their taxable income tops $750,000. For joint filers, that rate takes effect when income tops $1 million.
For joint filers outside of the top brackets, the rates are 4.75 percent on taxable income from $0 to $10,000; 4.9 percent from $10,001 to $100,000; 4.95 percent from $100,001 to $250,000; 7.75 percent from $250,001 to $500,000; and 7.85 percent from $500,001 to $1 million.
For single filers, tax rates are the same as joint filers up to $250,000; but the 7.75 percent rate applies from $250,001 only to $350,000, while the 7.85 percent rate applies from $350,001 to $750,000.
The bill also includes an increase in the property tax credit from 5 percent to 6 percent, and a $100 per-child tax credit for couples earning less than $100,000 and single persons earning less than $80,000.
The discussion of the matter was similar to those in several other committees that have discussed the matter previously.
Republicans said it will drive taxpayers out of the state and make Illinois too reliant on its wealthiest residents for revenue.
Democrats said Illinois needs the estimated $3.5 billion in revenue the bill would generate to close structural budget deficits and give the state the stability it needs to attract new residents and businesses.
Currently, the state constitution mandates that taxes be levied at a flat rate. The current rate is 4.95 percent.
In response to claims that the state’s constitutionally-mandated flat tax is attractive to businesses, Zalewski said it’s only recently that this claim has been made.
“There hasn’t been a celebration of Illinois’ flat tax over the last 10 years around here …” he said. “I’ve never seen a TV commercial or an online ad that said thank God we have the flat tax, this is a reason people need to come to Illinois.”
Rep. Rob Martwick, who will carry the constitutional amendment in the House, said every day of inaction on a graduated income tax would necessitate higher taxes in the future as the state continues to accumulate debt because of a structural budget deficit he believes the graduated rate structure would erase.
But Rep. Margo McDermed, a Mokena Republican, said reductions in pension spending — which would require a separate constitutional amendment — and cuts to other state spending are needed before a tax increase.
The House is scheduled to reconvene Sunday, May 26, with substantial action expected to begin Monday.