Dupage Policy Journal

It will be much easier for the legislature in the future to target different kinds of additional income taxes if voters enact the graduated income tax in November, according to the Illinois Chamber.

Now that both arms of the state legislature have passed the Joint Resolution Constitutional Amendment No. 1, also known as the graduated income tax, voters are slated to decide by referendum whether the state should adopt it.

It will likely have a tremendous negative impact on small business job growth, according to Todd Maisch, president and CEO of the Illinois Chamber.

“It will also expedite the moving vans of people leaving the state of Illinois,” Maisch told the DuPage Policy Journal.

The graduated income tax, also known as the progressive tax, will replace the state’s current flat income tax if it passes muster with voters in six months.

“The constitutional amendment is going to open the door to all sorts of different kinds of tax increases,” said Maisch in an interview. “The constitution, as it is now, mandates that only one tax based on income can be levied. This amendment eliminates that protection, which means the legislature now has the ability to target different kinds of income for additional taxes.”

Illinois Gov. J.B. Pritzker introduced the graduated tax rate as a means to ease the burden on middle-class families because it would earn the state $3.4 billion in added revenue, as previously reported in the DuPage Policy Journal.

But opponents say it does nothing to stop rising pension gaps, health coverage prices or taxation on properties. 

“The comptroller’s website says that the backlog of unpaid bills is more than $7 billion so you can put every single dollar towards the backlog of unpaid bills and not put a single dollar towards education, not put a single dollar towards public safety and not put a single dollar towards any spending priority that you might care about,” said Maisch. “The reality is that the governor's plan for that money is that it will be gone in a second. What this amendment does is allow the state all sorts of new opportunities to go ahead and raise taxes on almost any Illinois residents.”

The Illinois Chamber is among the organizations that signed off on a letter sent to the legislature on May 19, 2020, requesting repeal of Senate Joint Resolution Constitutional Amendment 1. 

However, the legislature did not act on the letter and, as a result, the people will vote on it in the fall.

“The constitutional amendment is just going to be a downward spiral and it's something we've definitely got to avoid,” Maisch said. “We're getting the word out to everybody. This isn't simply free money from somebody across the street. This is going to impact everybody's household incomes and in a very negative way.”

The letter stated specifically, “The introductory rates associated with the amendment would hike taxes on an estimated 100,000 pass-through businesses in Illinois. Small businesses are the economic engine of the state – responsible for roughly 60% of new job creation. Now is the wrong time to raise taxes on job creators and businesses and inject additional uncertainty into the state economy.”