Changing Constitution to end flat tax no gimme
Long awaited during the campaign season, we now know the details of Gov. J. B. Pritzker’s income tax plan.
The plan, which has a goal of raising $3.4 billion per year for the state, faces two large uphill battles. Will it pass? Will it work?
Illinois, by its Constitution, has a flat income tax. In order to change that, the plan must first pass a supermajority of the Legislature (60 percent); and then a supermajority (also 60 percent) of the voters in a statewide referendum. It also could pass if approved by a majority of all voters for all issues in the election. What that means is if a voter decides to pass on the issue by not indicating a choice, it is counted as a “no’’ vote.
Our guess is that some people will be skeptical about discarding their Constitutional protection and turning the tax rates over to the Legislature. They are the folks who got us in this mess to start with. It’s like giving matches to an arsonist.
Under Pritzker’s plan, filers who earn $250,000 or less would get a tax break. This allows for the political claim that 97 percent of voters will get a tax cut. The current 4.95 percent rate drops to 4.9 percent for income between $100,000 to $250,000. There also are credits for property taxes and dependent children.
But the break, even when figured by the administration, amounts to $115 in that bracket — a little more than $2 per week. Most people will not notice. In addition, the change in credits is accompanied by a sliding scale. There are different rates for the same taxpayer: so much for the first $10,000 of income; so much for the next $90,000 of income; so much for the next $150,000 of income.
The likely outcome will mean fewer people doing their own taxes. More will seek out accountants. Good for them. Accountants need work, too. The tiny gain might be outweighed by complexity.
Filers of $250,000 or more will have their rate jump to 7.5 percent. Filers of $500,000 or more will pay 7.85 percent. Filers of $1 million or more will pay 7.95 percent.
Will they stay and pay?
That is the million dollar question.