The fight over Gov. J.B. Pritzker’s signature policy initiative, moving Illinois to a graduated-rate income tax, is intensifying with about four months to go before voters decide the issue.
A coalition of Illinois organizations that represent businesses launched an effort Tuesday to beat back the proposal, a move that follows Pritzker’s recent $51.5 million contribution to the ballot initiative committee that’s backing a shift from a flat state income tax to one that would impose higher rates on the highest earners.
In a news conference held via Zoom on Tuesday, Illinois Chamber of Commerce President Todd Maisch wouldn’t say what the coalition is prepared to spend in its campaign against the proposed constitutional change.
“There will be resources, but again the important thing is we don’t need to match the proponents’ spending. We only have to go ahead and be competitive,” he said. “We don’t need to spend dollar-for-dollar because this is frankly an unpopular idea once voters figure out what’s really going on. … If the proponents were certain that they had this in the bag, would they have written a $51 million check? I don’t think so.”
Also Tuesday, Vote Yes for Fairness, a pro-graduated income tax committee that’s helmed by Quentin Fulks, Pritzker’s former deputy campaign manager, launched a series of digital ads that call the state’s current flat-rate tax structure “outdated and fundamentally unfair.”
In one of the ads, the group contends it’s “not fair to force our essential workers to pay the same tax rate as millionaires and billionaires.”
Fulks in a statement Tuesday called the news conference by Maisch and others “the height of hypocrisy, put on by a group masquerading as a grassroots organization whose sole purpose is to protect the millionaires and billionaires who have benefited from Illinois’ unfair tax system for far too long.”
Opponents argue that Illinois taxpayers are already severely overburdened, and that financial fallout from the coronavirus pandemic has compounded the strain.
Fulks countered in his statement that it’s “despicable that they’re trying to capitalize on the coronavirus pandemic to protect the wealthiest Illinoisans, while so many families are struggling to make ends meet.”
Fundraising reported by opponents of the plan has been paltry so far, especially compared with the personal bankroll Pritzker is putting behind his initiative. His $51.5 million contribution followed $5 million he threw in last year.
According to a filing with the State Board of Elections, the group Vote No on the Progressive Tax received a $1,000 contribution during the second quarter. Another opposition group called Vote No on the Blank Check Amendment, led by former Illinois Manufacturers’ Association president and CEO Greg Baise, hasn’t yet reported any contributions.
Reports are due July 15 for the second quarter, which ended June 30, though contributions of $1,000 or more are required to be reported on an ongoing basis.
In order for the constitutional change to take effect, 60% of those who vote on the ballot question in the November election, or a majority of those who vote overall, would need to approve it. If voters approve the change, it would take effect Jan. 1.
The Illinois General Assembly approved new tax rates last year. Rates would stay the same or decrease for earners who make $250,000 annually or less, while rates would increase for higher earners — the highest-earning 3% of taxpayers in the state. Illinois currently has a 4.95% personal flat-rate income tax.
One of the primary arguments opponents make against the constitutional change is that it opens a door for lawmakers to tweak the rate structure to raise the rates on a larger swath of earners, playing to mistrust of state government’s use of taxpayer dollars.
“Make no mistake, this isn’t about creating more equitable terms, it’s about raising taxes to fund Springfield’s out-of-control spending addiction,” Cindy Neal, the Illinois Leadership Council chair for the National Federation of Independent Business, said at Tuesday’s news conference.
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The battle has long been expected to grow contentious as Election Day approaches, but the coronavirus pandemic has increased the fervor. Opponents argue that with the far-reaching financial fallout created by the pandemic, individuals and businesses are already hurting, and it’s not the time for a significant change to the state’s tax structure.
The graduated tax is the cornerstone of Pritzker’s plan to stabilize the state’s precarious finances, and the state’s fiscal picture has grown more unstable amid declining revenues caused by the pandemic.
Pritzker has used the pandemic’s sobering effects on the state’s finances to reinforce his argument for the graduated income tax and the revenue it’s expected to bring, saying at a coronavirus news briefing this spring that “we may need it now more than ever.”
This week, the state Commission on Government Forecasting and Accountability issued a report that said the state’s base general revenues for the budget year that ended June 30 came in $1.135 billion lower than the prior year.
Despite revenues performing “quite well” for the first three quarters of the state’s last fiscal year, “that all changed in the final quarter as economic and subsequent revenue impacts related to COVID-19 abruptly manifested.”
jmunks@chicagotribune.com
