‘Painful’ cuts coming to Illinois after voters reject graduated income tax
CHICAGO — While Democratic voters cheered Joe Biden’s victory in Illinois Wednesday, those who backed Gov. J.B. Pritzker’s graduated income tax constitutional amendment were anything but elated.
Among those dismayed after Tuesday’s vote were Pritzker himself, who spent more than $56 million pushing the measure. The governor said the plan’s opponents lied to the public and now, as a result, the public will pay the consequences.
The plan was stymied by Republican “millionaires and billionaire” opponents, Pritzker said Wednesday, those who would have paid the highest amount of taxes.
“The opponents of the fair tax lied about what would happen if it passed, and they left all of the working people of Illinois holding the bag,” Pritzker said. “They opposed it for their own selfish interests.”
Among the lies, Pritzker said, was the claim that the plan would include a tax on retirement income, an assertion Pritzker denies.
“I’m going to continue to make sure that we’re paying the pensions that are owed to people and that we don’t tax retirement income,” he said. “I will stand four-square against any tax on retirement.”
The chief opponent of Pritzker’s plan was billionaire GOP donor and Citadel hedge fund founder Ken Griffin, who spend about $54 million on the campaign against it.
With 98% of precincts reporting as of Wednesday, the amendment only garnered 45% of the vote.
Pritzker’s next order of business is to meet with leaders of the General Assembly to mull other options. The governor said out of those meetings will still come a balanced budget, one with funding for things like job creation and education. But they’ll come at a hefty price, one he said would have been offset by the fair tax.
“There will be cuts, and they will be painful,” he said.
Recalling the inability of ex-Gov. Bruce Rauner’s inability to pass a budget for almost three fiscal years, Pritzker said the state’s economic woes haven’t gone away.
“We now sit at a crossroads,” he said. “Our state finances still require fundamental structural change. My predecessor, Gov. Rauner, tried to drag the state underwater with painful and draconian cuts that in the end were blocked by both Republicans and Democrats. His approach devastated higher education, child care, human services, and hollowed out state agencies like those that manage public health and unemployment benefits, all while adding billions of dollars of debt on to our bill backlog.”
One possible alternative to the graduated plan is an increase of the current 4.95-percent flat rate on personal income. And while what an increase could look like is anyone’s guess, the chances of it being well north of 4.95% are solid. Lt. Gov. Juliana Stratton said in September the rate could be hiked by as much as 20% if the fair tax fails.
“Everything is on the table,” Pritzker said.
Under the graduated plan, different levels of income would be taxed at different rates. Pritzker said the plan would have protected lower taxpayers by placing more burdens on higher earners. Forty-one states have graduated tax plans. Those that apply a flat rate are Colorado, Illinois, Indiana, Kentucky, Massachusetts, Michigan, North Carolina, Pennsylvania, and Utah.