Graduated income tax amendment goes to voters
SPRINGFIELD – A constitutional amendment that would allow the General Assembly to set higher tax rates on greater amounts of income passed its last legislative hurdle Monday, May 27, and will head to the voters for final approval about 18 months from now.
After more than three hours of debate in which all 44 House Republicans spoke on the floor, the vote cleared its constitutionally mandated three-fifths majority by two votes. All 73 representatives voting in favor were Democrats.
While Democratic Gov. J.B. Pritzker played no formal role in the legislative process to put the amendment on the ballot, at least one Democrat who previously said he would vote against the bill credited the governor for his sudden switch.
“I was a very vocal critic about this, obviously, I came out with some concerns,” Rep. Jonathan Carroll, a Northbrook Democrat, said. “… Gov. Pritzker reached out to me right away, had some conversations with me and heard that my issue is property taxes.
“Along with his help and the help of my colleagues in the House and the Senate, we’re going to form a property tax task force to review how we tax in Illinois for property taxes and make sure that we do it better and we do it right.”
The state does not levy or collect property taxes in Illinois; only local taxing bodies such as school boards, municipal governments and counties have that authority. The largest contributor to most local tax bills are K-12 schools, which for years have faced funding shortfalls and proration from insufficient revenues provided by the state.
Still, Carroll and Rep. Sam Yingling – a Grayslake Democrat who also said at one time he would vote against the graduated tax – said state action is needed to overhaul the property tax system and the graduated tax is part of that process.
“The current system does not work and we all know that,” Yingling said in his floor speech. “The process of property tax restructuring will not be easy. But I submit that that process begins today.”
Republicans, however, were more skeptical of any actual tax relief coming from the bill, and House Minority Leader Jim Durkin, R-Western Springs, accused the governor of “horse trading” in order to get the 73 votes in favor.
“Let’s make no mistake. Today’s vote is the end result of the Illinois Democrats’ historical, ravenous, irresponsible budgeting and spending,” Durkin said. “However it was also clear that today’s vote was a fait accompli. It’s a foregone conclusion.
“I know how this bill went down. I know how this amendment went down. And please, don’t think that there wasn’t any horse trading to get these votes. I know better, you know better, we know better.”
Senate Joint Resolution Constitutional Amendment 1’s passage means the voters, in November 2020, will be given the opportunity to decide whether the state can have the authority to set graduated tax rates. Either 60 percent of those voting on the question or the majority of those voting in the election will have to support the measure for it to become law.
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GRADUATED TAX RATES: The graduated tax constitutional amendment will be on the November 2020 general election ballot, and the rates that could take effect upon its passage are one procedural step away from the governor’s desk.
On Thursday, May 30, the Illinois House voted 67-48 to approve a rate structure that would lower the tax rate on any individual or joint-filing couple making less than $250,000, while raising the rates on those above that threshold.
The passage is another step forward for Democratic Gov. J.B. Pritzker’s marquee agenda item with just one day remaining in the legislative session.
“A fair tax will bring monumental change to this state by protecting working families. 97 percent of taxpayers will pay the same or less, and we will stabilize Illinois’ finances,” Pritzker said in a statement following the vote. “Opponents should be honest that they offer bad options – either cutting schools and public safety to the bone, or raising taxes on everyone by 20 percent. Instead, I stand firmly on the side of working families and fairness.”
The rates have now passed both houses, but a House amendment regarding the distribution of funding to local governments means it will have to go back to the Senate for concurrence. That chamber was scheduled to take up the rates package and two bills establishing a property tax relief fund and task force at a committee meeting Thursday evening.
Upon concurrence in the Senate and the governor’s signature, the bill would take effect on Jan. 1, 2021, only if voters approve the graduated tax constitutional amendment in November 2020. That would require 60 percent of those voting on the question or a majority of those voting in the election to become law.
Per the rate structure approved Thursday, single filers would pay the maximum rate of 7.99 percent on all income once their taxable income tops $750,000. For joint filers, that rate takes effect when income tops $1 million.
For the rest of the brackets, each varying tax rate would apply to only one specific margin of income.
The rates are 4.75 percent on taxable income from $0 to $10,000; 4.9 percent from $10,001 to $100,000; 4.95 percent from $100,001 to $250,000; 7.75 percent from $250,001 to $500,000; and 7.85 percent from $500,001 to $1 million.
For single filers, tax rates are the same as joint filers up to $250,000; but the 7.75 percent rate applies from $250,001 only to $350,000, while the 7.85 percent rate applies from $350,001 to $750,000.
The bill also includes an increase in the property tax credit from 5 percent to 6 percent, 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 percent, not including an existing corporate property replacement tax of 1.5 to 2.5 percent that is not changed by the bill.
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ABORTION BILL: Lawmakers on Tuesday, May 28, narrowly approved a bill overhauling Illinois’ abortion statute after more than two hours of debate that was passionate and, at times, emotional.
The Reproductive Health Act would replace the state’s current law with one backers and detractors agree would be the most liberal reproductive health statute in the nation.
It creates access to contraception, pregnancy benefits, abortion procedures, diagnostic testing and other related health care as a fundamental right, banning government from impairing access to those things for women and men.
The bill now moves to the Senate. Melinda Bush, a Democratic senator from Grayslake and the act’s sponsor in that chamber, said Monday she thinks it will succeed there. A committee hearing is expected soon.
Democratic Gov. J.B. Pritzker has vowed to “make Illinois the most progressive state in the nation for access to reproductive health care.” He said in a statement Tuesday he looks “forward to continuing my work as an ally by signing the Reproductive Health Act into law.”
The legislation’s passage comes as a hard-fought triumph for its sponsor, Chicago Democratic Rep. Kelly Cassidy. She said after months of working to advance this initiative down a path that at times has “not been very easy,” she is “very pleased” at its success.
Cassidy said she is also feeling “relief, just relief that this step is over and that we are poised to affirm our support for reproductive freedom in Illinois and intentionally stand out from all these other states that are attacking women's rights.”
The General Assembly’s lack of action on the measure harmed Illinois women, she added.
“I think people have a false sense of security around these issues, when the reality is that women are in real danger in Illinois as the result of our inaction,” Cassidy said at the beginning of the month.
The final vote was close — there were 64 Democrats voting in favor, 50 legislators from both parties voting no and four Democrats voting present. 60 votes were needed to pass the act successfully.
Advocates were trying to change minds and secure a favorable outcome right up until the vote. Several sources said Pritzker spoke to lawmakers Tuesday morning about why the tenets of the legislation were important to him.
Pritzker “did offer his support,” his spokesperson said.
One member who was wavering was Rep. Stephanie Kifowit, a Democrat from Oswego. She ultimately voted yes.
“It did seem like a bill that did a lot, and we did need to make sure everything was correct. I believe abortion should be safe and legal, but I believe it should also be rare,” Kifowit said. “My concern with the bill was with some of the language changes, and the legislative intent had to be there to make sure that it’s crystal clear what we’re doing.”
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GUN OWNERS: A bill that would strengthen the state’s Firearm Owner’s Identification Act to better recover guns from people who’ve had their card revoked or suspended passed the Illinois House in a 62-52 vote Wednesday, May 29.
Senate Bill 1966 would mandate fingerprinting and background checks for card holders, a measure which led opponents to call the bill’s constitutionality into question.
Others said added fees in the bill are unduly burdensome. Those fees include increasing card application and renewal fees from $10 every 10 years to $20 every five years. The bill also requires fingerprinting, which would add an additional cost of up to $30 to the application process due to a cap placed on the price vendors can charge in the bill
Others said added fees in the bill are unduly burdensome. Those fees include increasing card application and renewal fees from $10 every 10 years to $20 every five years. The bill also requires fingerprinting, which would add an additional cost of up to $30 to the application process due to a cap placed on the price vendors can charge in the bill.
Additional costs associated with the bill include a $10-per-firearm fee for any transfer conducted through a licensed dealer, with exemptions for a transfer to relatives, inheritance or active military and law enforcement during the course of their official duties.
“When we are dealing with nearly 10,000 FOID cards annually being revoked for a number of reasons, we need to be sure we're giving the state police the resources and ability to do their job appropriately,” said Rep. Kathleen Willis, an Addison Democrat and the bill’s House chief sponsor.
Willis took questions for more than three hours in the House chamber about ways the law would fix “deficiencies” in the state’s gun revocation process and prevent circumstances similar to those that led to the Henry Pratt Co. shooting in Aurora.
Willis said some of the current deficiencies boil down to people lying about their identity on FOID applications, a problem she said could be countered by the fingerprint requirement since “fingerprints cannot lie.”
“We have some work to do in Illinois to make sure that firearms are only owned by law-abiding citizens,” Willis said.
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PROPERTY TAXES: A pair of measures aimed at addressing high property taxes in the state passed committee Tuesday, May 28, one day after being touted by Democratic Gov. J.B. Pritzker upon passage of a graduated income tax constitutional amendment.
Those measures will create a property tax relief fund (Senate Bill 39 Amendment 1), and a property tax task force (Senate Bill 1932 Amendment 2).
Republicans in the House Revenue and Finance Committee were skeptical that any real property tax relief would result from the task force sponsored by Rep. Jonathan Carroll, a Northbrook Democrat, which passed committee unanimously.
“I’ve been here five years, and I have absolutely no confidence that anything whatsoever will change other than the folks that like the status quo the way it is will destroy your hopes as they have everyone else’s. Good luck,” Rep. Margo McDermed, a Mokena Republican, said.
Carroll, who was initially opposed to the graduated income tax amendment but credited the governor for his switch to supporting the measure, said he wasn’t looking to the past, but the future.
“I would hope that you’d be a part of the solution and not necessarily continue naysaying on it,” he said.
While the Republicans voted unanimously to pass the task force bill, all of them voted against the creation of the property tax relief fund.
Rep. Rita Mayfield, a Waukegan Democrat, said there would be no new state revenues needed to sustain the fund, and it would be up to future state Legislatures to determine whether appropriations would be provided for the fund.
McDermed, who serves on a capital infrastructure task force, said spare funds are not easy to come by in Illinois’ budget.
“I am not aware, and believe me, our group has scoured under every rock in the state of Illinois for a penny, so where exactly are you going to find this money?” she asked.
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LICENSE SUSPENSIONS: Several lawmakers on Tuesday, May 28, promoted legislation that would make the Illinois secretary of state reinstate driver's licenses to people who have committed a number of violations, including not paying parking fines, that don’t deal with driving.
The legislation would also remove language that makes the secretary of state automatically suspend licenses or revoke vehicle registrations for such violations, which happens nearly 50,000 times a year, according to the advocacy group Chicago Jobs Council.
“We’re saying to all of our cities in the state of Illinois that you can no longer use the secretary of state’s office as your collections agency. You cannot suspend a person’s license for non-payment of non-moving violations,” said Rep. Carol Ammons, a Democrat from Urbana, who is leading the charge in the House to pass the legislation.
Sen. Omar Aquino, a Chicago Democrat who filed the original legislation in the Senate, said the practice of suspending licenses for violations unrelated to driving affects minorities more than anyone else, leading to a cycle of debt and poverty from which it is difficult to escape.
“When people lose their licenses, they lose their ability to get to work,” he said.
Aquino cited numbers from ProPublica that show 44 percent of Illinois license suspensions were in majority black ZIP codes, although only 14 percent of Illinois residents are black.
Prospects for the bill’s passage before Friday’s end-of-session deadline, however, are slim. After passing its original chamber, the bill became stuck in a House gatekeeping committee earlier this month, until lawmakers called the news conference Tuesday.
“I would have loved to have this done by May 31,” Ammons said. “Unfortunately, there are just many, many pieces that we are trying to finish up. But we are poised to finish it this year.”
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E-CIGARETTES: The Illinois Senate is considering a bill that would expand the state’s general ban on smoking in public places to include e-cigarettes and other alternative nicotine products, but the vaping industry is resisting, saying their products do not produce “smoke” and don’t pose the same public health risks.
During a hearing Tuesday, May 28, in the Senate Public Health Committee, supporters of the bill argued that the public health effects from exposure to second-hand fumes from those devices are still unknown, but that the state has an interest in regulating their use.
“Electronic cigarettes are completely unregulated tobacco products that have been sold in the United States for a little over a decade,” said Kathy Drea, vice president of the American Lung Association of the Upper Midwest. “Because there has been no (Food and Drug Administration) review of the products on the market, we do not know what is in each individual product.”
The bill being considered is Senate Bill 1864, which passed out of the committee on March 5, but was sent back to the committee recently for a technical amendment to make the language consistent with the state’s new “Tobacco 21” law, which prohibits selling tobacco products to people under age 21.
Sen. Terry Link (D-Vernon Hills), the bill’s chief sponsor, said that because of the lack of regulation, e-cigarettes and other vaping products have become pervasive among underage people in public schools.
But Craig Kitson, who lobbies for the Smoke-Free Alternatives Coalition of Illinois, argued that vaping products are one way to help people quit smoking tobacco, and he said he believes the bill goes too far.
“The Smoke-Free Act is about protecting others from the dangers of smoke from combustible tobacco. I think we all can agree that it is very necessary to have the Smoke-Free Act here in Illinois,” he said. “To add vaping products into this legislation ignores the basic fact that vapor products do not contain smoke.”
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BEER TAX: Craft beer brewers and advocates gathered Friday, May 24, at the Capitol to oppose a tax increase on beer and cider that Gov. J.B. Pritzker introduced last week to help fund a comprehensive capital infrastructure plan.
Under that proposal, the per-gallon tax on beer and cider would rise to 27.7 cents from the current rate of 23.1 cents, a rate established when lawmakers approved the state’s last capital plan in 2009.
Combined with similar tax increases on wine and liquor, the current proposal would bring $120 million in new revenue to help fund the Democratic governor’s proposed six-year, $41.5 billion capital plan that lawmakers have yet to approve.
Craft brewers, distributors and retail advocates held a press conference Friday, May 24 to argue that beer is already taxed enough, and that adding more taxes will only make it harder for small businesses to expand in the emerging craft beer industry that has taken over the Midwest.
Rob Karr, head of the Illinois Retail Merchants Association, said the state already loses about $8.5 million in tax revenue each year from people who drive into bordering states to buy beer. The governor’s tax proposal, he said, would bump that number up by an estimated $4.6 million.
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