The measure supported by Gov. J.B. Pritzker, and dubbed the “Fair Tax” by those in favor of the measure, would tax different levels of income at different tax rates.

The state currently taxes 4.95% of all taxable income for every taxpayer, according to reporting by Jerry Nowicki of Capitol News Illinois. The measure is expected to bring in more than $1 billion in additional state revenue this fiscal year and more than $3 billion annually when it is implemented for a full fiscal year.

In the proposed structure, tax rates would remain the same or decrease for those earning $250,000 or less, and would increase for those earning above that amount. Those earning more than $750,000 and joint filers with incomes exceeding $1 million would see the largest tax increases at 7.99%. For all other earners, each varying tax rate would apply to only one specific margin of income.

The measure also includes an increase in the property tax credit from 5% to 6%, and up to a $100 per-child tax credit for couples earning less than $100,000 and single persons earning less than $80,000. The corporate tax rate would go from 7% to 7.99%, not including an existing corporate property replacement tax of 1.5% to 2.5% that is not changed by the bill.

How can it pass?

The Illinois House of Representatives and Senate both passed legislation to place the measure on the ballot. Now, it is up to the voters to decide whether to pass the amendment during the election this November.

The change in tax structure will take effect if three-fifths (or 60%) of people voting on the amendment approve it, or if a simple majority (50% plus one) of all voters, including those who skip the question on their ballots, approve it.

The amendment itself won’t change the rates — it will only allow them to be graduated based on taxable income level. Lawmakers have already passed a separate bill to set the graduated income tax’s rates that, if the ballot measure is approved, would take effect on Jan. 1, 2021. Pritzker has vowed to sign the matter into law if it passes.

Political debate, funding

The proposal has been a point of contention in state political spheres and has resulted in millions spent from proponents and opponents of the proposed measure. Illinois’ wealthiest man and a frequent Republican political donor, Ken Griffin, pledged $20 million to a group dedicated to defeating the amendment.

Griffin, who is the founder of the hedge fund Citadel, has previously donated tens of millions of dollars to the campaign of Republican former Gov. Bruce Rauner. He’s also given millions to House and Senate Republican leadership in the state and has donated to several individual lawmakers. Forbes estimates his net worth at $15 billion. As of Sept. 30, Griffin has donated $46.7 million to the Coalition to Stop the Proposed Tax Hike Amendment ballot initiative committee. Aside from Griffin’s donation, the committee has received $1.6 million in donations as of Oct. 6.

Gov. J.B. Pritzker has already dropped more than $50 million of his own personal fortune — estimated at $3.4 billion — in support of the legislative proposal and the Vote Yes for Fairness ballot initiative committee. Pritzker has been a supporter of the measure for years, using it as one of the central pieces of his platform for governor. The governor originally pitched the tax plan as an effort to address the state’s $133.5 billion unfunded pension liability and a way to fund critical state services and infrastructure.

Lara Sisselman, communications director for the Vote Yes For Fairness committee, said her group believes Illinois’ flat-tax system is “fundamentally unfair and broken.” The ballot initiative committee is tied to Think Big Illinois, a political group that “advocates for progressive policy in Illinois.”

Sisselman said Illinois’ current flat-tax model allows millionaires and billionaires to pay the same tax rate as the middle class, working-class families and the pandemic’s essential workers — including nurses, grocery store clerks and janitors. In addition, she said the proposed amendment would give 97% of Illinoisans a tax cut, and in several Southern Illinois counties, the number exceeds 99%.

“There’s a lot of misinformation and, frankly, outright lies about the fair tax out there, and we just encourage all Illinoisans to figure out what it actually means for them,” she said. Voters can use the governor’s “Fair Tax Calculator” to see what the impact of the amendment would be on their income.

John Jackson, a visiting professor at the Paul Simon Public Policy Institute at Southern Illinois University Carbondale, said there have been analyses done that show that there are a “remarkably small number” of individuals that make a taxable net income of $250,000 a year and above. He said the majority of those who would be impacted reside in northern and northeastern Illinois.

But, Republican opponents of the measure allege the amendment would contribute to irresponsible spending by Democrats, who hold a super-majority in the state’s legislative bodies. House Republican Leader Jim Durkin of Western Springs called it "another step toward handing a blank check over to the Democrats and their reckless spending habits.”

Lissa Druss, spokesperson for the Griffin-backed Coalition to Stop the Proposed Tax Hike Amendment, shared similar sentiments. Druss said through a written statement Monday that proponents of the measure are asking voters to trust Springfield politicians, despite raising taxes twice in the last decade.

The same politicians, she claims, are asking voters to trust them with “new unyielding power” to raise taxes and create new tax brackets at their leisure. “The bottom line is we can’t trust the politicians in Springfield with a blank check,” she said.

Opponents have also cited a recent study commissioned by the fiscally conservative-leaning Illinois Chamber of Commerce lobbying group. The study, conducted by the Berkeley Research Group, says that tax relief would be minimal — less than a single family meal at a fast food restaurant for many filers — would result in job losses that would disproportionately affect women and minorities, and corporate taxes will be passed on to consumers.

Voters weigh in

Illinois voters support graduated income tax by a 2-to-1 margin, according to an April 2020 poll conducted by SIU’s Paul Simon Public Policy Institute. The poll aggregated the opinions of 1,000 voters from Feb. 10-17 where 65% of respondents said they favored the constitutional change.

A majority of poll respondents supported the proposal in all three of Illinois' major regions, according to the poll. It found 55% of downstate Illinoisans supported the amendment. Out of those interviewed, 83% of Democrats said they supported the graduated income tax, but only 41% of Republicans said they supported it. Among Independents, 59% responded in support of the measure.

Before this year’s contentious campaigns regarding the amendment, Jackson said, the Simon Institute had asked voters similar questions about a graduated tax structure and roughly two-thirds of those interviewed have been in favor of the measure. “It’s been very consistent way before all of this got going with the governor’s backing,” he said.

Elizabeth Malone, of Carbondale, said she would be supporting the graduated income tax amendment because the measure helps advance the state toward equitable solutions to income inequality in Illinois. “It just allows us to raise taxes on those that are doing really well and lower the taxes of the people who are struggling to get by,” she said. “I don’t see how that’s not a good thing.”

Malone said voters have to remember that proportionately, those within middle and lower incomes — especially those under $250,000 — spend a larger portion of their total taxable income on other fees such as property taxes and registration fees.

Many of the “frontline workers” who have remained working during the COVID-19 pandemic, Malone said, fall within that category, and she notes those jobs are not easily able to be changed to a remote option. In addition, she said Southern Illinois would largely benefit from the amendment as the region receives more in state aid than it pays into state coffers.

A 2018 analysis by the Simon Institute found downstate counties, for the most part, receive more than what is sent to Springfield in terms of state funding. The support typically is seen in the form of state aid for services such as public school districts, downstate prisons, mental health facilities, Medicaid and community colleges and universities.

“Downstate gets more money than they send to Springfield. Chicago doesn’t get quite as much, but who really pays the most is the suburbs,” former Republican Gov. Jim Edgar told the Belleville News-Democrat in 2018 regarding the study. “They don’t get as much money back and they pay more money. ... (They’re) wealthier both in income and property value.”

Jackson spoke on tangents related to the proposed amendment, one of them being the intersection of the COVID-19 pandemic and state finances.

While Pritzker said the legislature “passed a real balanced budget” in June 2019, state officials are looking to offset monetary losses exacerbated by the COVID-19 pandemic, in part due to a decline in various state taxes related to business shutdowns to slow the spread of the virus that has killed over 200,000 people throughout the United States.

“The question becomes how does the state pay its bills?,” Jackson said. “Do we go back to the chaos in FY16 and 17 when the state basically refused to pass the budget?”

Jackson said a looming budgetary crisis would heavily affect areas of the state that receive more money from the state than they contribute, including Southern Illinois. The brunt of those challenges will be faced by local municipalities and counties. The result, Jackson said: “very serious cuts.”

But, Jackson said, when researchers have presented a list of service cuts to those who don’t support state taxes, they typically don’t want any of those services cut. “They may want them cut somewhere else, but not the services that are local and not the services that we depend on.”

Springfield mistrust

The income disparities between a wealthier Chicagoland and a distrust of politicians in Springfield are why Andrew Erbes, of Murphysboro, said he is opposed to the graduated tax amendment. “I just don’t trust Springfield,” he said. “I’ve been in and around Springfield for a long time and I think we need to curtail some of what they can do (and) not give them more leeway.”

Researchers found other Southern Illinoisans held a similar disconnect toward lawmakers, especially those who reside in the northern parts of the state. A 2018 study by the Paul Simon Public Policy Institute found 73% of downstate residents interviewed did not believe state politicians have given much attention to their thoughts when it comes to making decisions.

Looking at Southern Illinois’ largely conservative base, the division is more deeply felt in relation with Illinois’ Democratic supermajority in state legislative bodies. The region overwhelmingly voted for President Donald Trump in 2016, aside from Jackson and St. Clair counties. In addition, when looking at the 2012 presidential election cycle to the 2016 presidential election cycle, voting in the region shifted more toward the right.

The split in ideology was a driving factor of the state’s 2015-2017 budget impasse and a part of the conflict over the General Assembly’s vote to override former Gov. Rauner’s veto of the budget that finally passed in July of 2017.

The Simon Institute researchers write that this “rural resentment” is now characterized as one of the driving forces today in American politics. “As we anticipated, the Downstate voters are the most alienated or disenchanted with their lot from state government as compared to their peers in the other two regions of the state,” they write in the study’s findings. “They are the group most convinced that they are not receiving their fair share.”

Retirement income

Erbes also said he doesn’t support the amendment because of the possibility of his parents’ state pensions being taxed. “People that disagree with me on this say the legislature can do that anyway, yes, but they’re putting it to the people as a question now — they’re not putting it to the legislature,” he said. But, that is not the case, according to proponents of the amendment.

The amendment does not itself allow for taxation of retirement income. The state legislature could, however, tax retirement income now or at a future date — whether the amendment passes or fails in November. But, if the legislature were to tax retirement income and the ballot measure passes, it would have to be in a graduated structure, where higher incomes are taxed at higher rates than middle or lower incomes.

Sisselman, with the Vote Yes for Fairness committee, said opponents of the measure often toss around rhetoric stating retirement incomes will be taxed if the graduated income tax measure passes. But, she said, the rumor opponents are spreading is “frankly, a complete lie.” She said she is not aware of any legislator that is in favor of taxing retirement income.

Three organizations representing over 250,000 seniors in Illinois held a news conference Wednesday in support of the proposed amendment and called on the opposition to take down “insidious” attack advertisements.

“As someone who has dedicated myself to supporting the aging population in Illinois for the last 30 years — including fighting for retirement security — I’m deeply concerned about the misinformation being spread,” said Charles D. Johnson, AARP Illinois volunteer and former director of the Illinois Department on Aging. “No matter who has said it or how they have said it, the simple truth is that switching to a graduated income tax does not allow the state to tax retirement income.”

Don Todd, President of Illinois Alliance for Retired Americans, said their group stands with the others in support of the graduated income tax amendment, adding “there is nothing more important to our members than working for and voting to pass the fair tax.”

“Passing a fair tax rate in Illinois is long overdue,” he said. “For too long, we have watched services for seniors be cut or eliminated in Illinois. We have watched the wealthiest (and) richest individuals in Illinois avoid paying their fair share in taxes. It is time for us to change this imbalance in taxation.”

Todd said that if the measure does not pass, opposition groups, like the Illinois Policy Institute, will target retirements as a means to close potential deficits. “This has to pass to keep our retirement safe,” he said, adding that wealthy Illinoisans have resorted to spending their wealth on television and social media ads that spread lies about the graduated tax.

“It is time to stop lying, it is time to take ads like these down. It is time that our wealthiest citizens stop their scare tactics and start to pay their fair share,” he said.

Opponents of the measure have taken to the courts in attempts to remedy what they say are misleading statements to conceal the threat of taxes on retirement income, the Chicago Sun-Times reported Monday.

The Illinois Policy Institute contends in a lawsuit filed in Cook County Circuit Court that the explanation of the amendment on the ballot for voter approval is misleading and needs court-ordered clarification. The Illinois General Assembly approved the language of the proposed amendment that explains the pros and cons of adding a graduated rate to the income tax system last May. 

"Like the ballot explanation, the arguments in favor include several misleading statements including, among others, a misleading statement that, upon information and belief, will induce retirees into voting to impose on themselves a tax on retirement income," the lawsuit, filed by the group along with three retirees, contends.

Vote Yes for Fairness chairman Quentin Fulks said the lawsuit is an attempt by an organization bankrolled by the wealthiest people in the state to ensure the burden remains on middle- and working-class families while millionaires and billionaires avoid paying their fair share.

"When the facts aren't on your side, you're forced to rely on blatant stunts and outright lies and that's exactly what we're seeing from the Illinois Policy Institute today," Fulks said in a statement, adding that his organization will continue to be focused on educating voters on how the graduated tax would help them and their families.

Illinois ‘outmigration’

Opponents of the measure cite a “mass outmigration” of people in Illinois and claim higher taxes will “push even more people out of the state.”

Griffin, who is the main financial supporter for the Stop the Proposed Tax Hike Amendment group, told the Chicago Tribune in a written statement that Illinois has “lost more residents than any other state in the nation” due to “the economic hardship created by Springfield’s spending addiction.”

But, Illinois is ranked 21 — near the middle of the pack — on its rate of domestic out-migration in 2017, the most recent year for which those estimates are available by the U.S. Census Bureau American Community Survey.

Since 2008, the most common reason cited for people moving from Illinois has been for a new job or job transfer — accounting for nearly one in three moves, the Chicago Tribune reported in 2019. They also write Illinois’ declining population can largely be attributed to some migration losses, but largely can be attributed to an aging population, declining birth rates and stagnated international migration. For those moving within the state, surveys show most did so for housing-related reasons.

Small business

Groups who oppose the amendment have advertised that politicians would “immediately implement their plan to increase taxes on small businesses, farmers and large employers.” But, the Illinois Department of Revenue projects only 3% of Illinois taxpayers overall earn enough to see a tax increase under the plan.

An analysis by the Chicago Sun-Times and the Better Government Association found the opposition’s claim to only be “half true” because it leaves out important details or takes things out of context. The analysis notes it is challenging to pinpoint exactly how many “small businesses” would be impacted due to multiple state and federal organizations’ variations in data.

If the measure is approved, corporations will see an increase in their flat-rate income tax under the proposed plan, including some small businesses, according to the analysis. “But, only a wealthy subset of small businesses, which generally pass their profits to shareholders, would be affected — and data suggests that portion would be small,” according to the analysis.

Most businesses, especially small ones, do not pay corporate taxes, and instead operate as “pass-through entities,” which means their profits go directly to the people who own them and are taxed as individual income. Raises to businesses will “be no more than their counterparts in other professions,” according to the BGA.

Supporters have also said the measure would be a safe-guard to the farming industry, which under the proposed amendment, would be taxed based on their net income for that year — protecting them on years there may be a bad crop.

The Chicago Sun-Times and the Better Government Association also found other amendment opposition claims to be false. Pritzker and House Speaker Mike Madigan do not want to change the constitution to allow a permanent jobs tax on middle class families. New York did not see a revenue shortfall after the state “implemented a program” to tax the wealthy at higher rates "because of the outward migration of their top earners."

Looking ahead

From a political scientist’s standpoint, Jackson said this ballot item is interesting to see the roles of the campaigns, the role of the media and the role of paid media advertising.

As advertisements related to the proposed graduated tax measure dominate airwaves in recent weeks, only time will tell if the amendment’s opposition will garner enough backing to knock down voter support. “The amounts of money being spent basically may cancel one another out, but they may not because the spirited campaign that has been mounted in opposition,” Jackson said.

— The Associated Press contributed to this report

This story was updated to clarify the connection between Vote Yes for Fairness and Think Big Illinois.