But billionaire hedge fund operator Ken Griffin went almost dollar-for-dollar with the governor, spending nearly $54 million to combat the change. There are two ways for the change to make it into the state’s constitution: The question either needs to win support from 60% of those who voted on the question, or a majority (over 50%) of everyone who cast a ballot (meaning those who cast a ballot in the 2020 election but who skip the constitutional amendment question). And refusal to reform pensions, treating the future pension accruals as sacrosanct even as other state needs are crowded out by the spending that requires, is not lost on voters, either. (AP Photo/Charles Rex Arbogast). the comment of Illinois State Treasurer Michael Frerichs in June, listed one abandoned promise after the next, Battle Of The Billionaires In Illinois: The Governor, A Hedge Fund Tycoon, $112 Million And The Income Tax Initiative That Voters Rejected. Voters will decide whether to replace the current flat tax with a graduated state income tax. I will leave this state eventually because of absurd property and State Income tax rates, but until our current socialist leadership embraces the fundamental first law of economics, that there are “no free lunches”, we will unfortunately continue to slowly but surely succumb to the quick stand of debt they’ve created. With 98% of precincts reporting Wednesday morning, the question was trailing 55% to 45% in favor – a hurdle too high to clear, even as outstanding ballots continue to be counted. As always, you’re invited to comment at JaneTheActuary.com! (Thankfully, this margin also rendered moot the provision that an amendment must receive either 60% of the vote among those voting on the item or 50% “yes” votes among all voters who cast a ballot at all, because explaining this requirement is a headache in itself. In every other region of the state, the Amendment falls short from a low of 43.8% in Northern Illinois, 35.9% in Southern Illinois, 45.4% in Central Illinois, and 53.4% in the Collar Counties. The Illinois Fair Tax was a proposed amendment to the Illinois state constitution that would have changed the state income tax system from a flat tax to a graduated income tax. For example, a single mom making $61,000 would pay an additional $521 in taxes. Our report includes specifics on how Illinois could, through that process, save more than the initial revenue claimed by Fair Tax supporters, without undue hardship on pensioners. Follow. • The amendment does not hurt small businesses. The Fair Tax Amendment would have introduced a progressive income tax in the state, gradually increasing tax rates for those who make $250,000 and above. By Editor | November 4, 2020 | 1 . The Fair Tax versus The Tax Hike. The proposed amendment grants the State authority to impose higher income tax rates on higher income levels, which is how the federal government and a majority of other states do it. Opponents such as the Illinois Policy Institute warned voters that passing this amendment could lead to the removal of the exemption of retirement income (pensions, 401(k)s, etc. “Now lawmakers must address a multi-billion dollar budget gap without the ability to ask the wealthy to pay their fair share. Illinois is by far the most fiscally mismanaged state in the union. Concurrent with the proposed constitutional amendment, the Illinois legislature passed legislation setting a new set of graduated income tax rates t… The “Fair Tax” amendment gives total control to the Illinois Legislature to make future changes to the Illinois Tax Code as they see fit. Meanwhile, at least 97% of Illinois … A woman walks past a pro Fair Tax yard sign near a polling place on Election Day, Tuesday, Nov. 3, ... [+] 2020, in Chicago. Armed with an M.A. Video: Arguments for and against a graduated income tax rate. But that figure pales in comparison to the long-term consequences the decision by voters will have on the state’s finances, as well as their own pocketbooks. “This amendment would make Illinois’ tax system fair” The amendment does nothing to lower Illinois’ second-highest in the nation property taxes and … “Illinois is in a massive budget crisis due to years of a tax system that has protected millionaires and billionaires at the expense of our working families, a crisis that was only made worse by the Coronavirus pandemic,” he said. No. J.B. Pritzker and to his hopes of injecting billions of dollars more revenue into the state budget, Illinois voters rejected a constitutional amendment to overhaul how the state taxes income – a result that portends budget cuts, an overall income tax hike, or a combination of both. After that, income up to $100,000 is taxed at 4.9 percent. Currently, Illinois has a flat tax, which means that all income is taxed at the same rate, currently 5% for people and I think 7% for businesses. We won’t store any of your information. Without that revenue, lawmakers will have to make tough choices of seeking alternative methods of bringing in more money, or making cuts to fill that billions-deep budgetary hole. The Fair Tax Amendment is on the ballot for Illinois voters to decide in November. The Chicago Tribune reminded its readers repeatedly of the state’s failed promises and indifference to reform — everything from the failure to reform pensions, to failures to reform property taxes, rejection of redistricting reform, rejection of consolidation of local governments. Illinois ‘fair tax’ amendment defeated by voters . A proposed income tax amendment was shot down by voters in Illinois Tuesday. Under that, millionaires’ income would be taxed at rate of 7.99%, while individuals with incomes of $250,000 or below would see marginal tax rates at or below the current rate of 4.95%. Michigan, Indiana, and Kentucky all have a flat income tax like Illinois. Illinoisans voting on the “Fair Tax” constitutional amendment who have not already studied it probably will be duped into the wrong choice because the ballot is deceitful and incomplete. “Illinois voters sent a message that with an $8 billion deficit and two massive tax hikes in the last 10 years, we cannot trust Springfield politicians with another tax hike,” said Lissa Druss, spokeswoman for the Griffin-backed Coalition to Stop the Proposed Tax Hike Amendment. Pritzker’s easy blaming of Republicans and millionaires and billionaires, rather than recognizing that Illinoisans made the only rational choice in a state with such a legacy of mismanagement and without any willingness for reform, certainly indicates that the state has a long way to go. The amendment … ), What were the arguments that prevailed against such a powerful headwind as the promises of “free money”? 11-03. J.B. Pritzker and to his hopes of injecting billions of dollars more revenue into the state budget, Illinois voters rejected a constitutional amendment to overhaul how the state taxes income – a result that portends budget cuts, an overall income tax hike, or a combination of both. Sign up for our morning newsletter to get all of our stories delivered to your mailbox each weekday. One one side: Gov. Pritzker spent $56 million of his personal money to promote moving to what he’d dubbed a “fair tax” as it would allow the state to charge higher rates on those in higher income brackets and lower rates for lower-income filers. In a blow to Gov. But a 2019 law was in place, and would have taken effect in January should the constitutional amendment have been approved. Does it even have a path to fill the budget hole it was hoping to fill with the next tax rates? What the Fair Tax Amendment would allow would be a modest increase in income taxes for those with incomes over $250,000. The question before voters in the general election is whether the state should toss the constitutional requirement that “a tax on or measured by income shall be at a non-graduated rate” in favor of a structure that would allow for those in different tax brackets to be taxed at different rates. actuarial credential, with 20 years of experience at a major benefits consulting firm, and having blogged as "Jane the Actuary" since 2013, I enjoy reading and writing about retirement issues, including retirement income adequacy, reform proposals and international comparisons. Fair Tax opponents must answer for whatever comes next.”. ), armed with the comment of Illinois State Treasurer Michael Frerichs in June that a graduated income tax would make it politically easier to begin to tax retirees. Of the 42 states that have an income tax, 32 and Washington, D.C., have a graduated rate structure, while Illinois is one of nine that impose a flat tax. Use the calculator below to see how the Fair Tax would impact your family. The outcome was stunning: despite months of ads telling voters that a “yes” vote would ensure that the wealthiest 3% of Illinoisans would “pay their fair … Pritzker said the switch to a “fair tax” could help reduce the Prairie State’s $3.2 billion budget gap. All Rights Reserved, This is a BETA experience. The outcome of Tuesday's Nov. 3, vote handed Illinois Gov. The amendment on the November 2020 ballot in Illinois proposes a change from a flat tax to a graduated tax. When Illinois voters head to the polls on Nov. 3, 2020, they will vote on an amendment to the Illinois Constitution which would allow state lawmakers to impose a graduated income tax. “We should not allow politicians to keep raising taxes until they get their spending under control.”. The constitutional amendment itself merely removed a constitutional mandate that all personal income be taxed at a flat rate. Moreover, it is not separate from a ballot for other matters as clearly required by the Illinois Constitution. A ballot form is reproduced below that contains the Fair Tax language. SPRINGFIELD, Ill. (WTVO) — Voters decided against altering Illinois’ constitution to install graduated income tax rates, a defeat to one of Gov. J.B. Pritzker’s most campaigned-for issues. WTTW - Chicago PBS. The proposal, formally titled the "Allow for Graduated Income Tax Amendment", appeared on the ballot in the November 3, 2020 election in Illinois as a legislatively referred constitutional amendment. Under the proposed amendment, the tax rate drops to 4.75 percent for the first $10,000 of a taxpayer’s income. Yes, I'm a nerd, and an actuary to boot. “Ninety-seven percent of Illinois residents, including our essential workers, will get a tax cut. Instead, I suspect that the ultimate reason for voters’ rejection of an amendment that promised a free lunch, is that years and years of fiscal mismanagement, without any genuine reform, meant the tax’s supporters had no credibility with the voters. As I’ve also mentioned here before, Michael Madigan, the state House speaker for 35 of the last 37 years, has had his fingers on every state budget, and every failed pension fix, for decades. Illinois’ wealthiest residents stood to get hit hardest in their pocketbooks, had the measure been approved. Should voters approve the change, the constitution would give state legislators a wider door to set tax rates, such that the General Assembly could “provide by law for the rate or rates of any tax on or measured by income.”. But by the next morning, Fulks was out with an updated statement. And, what’s more, at the same time, “purple” state Arizona has approved a new tax rate that would have more-or-less matched what Illinois proposed. “So unless it passes overwhelmingly or unless it doesn’t have enough support that it’s worth waiting for – if it’s in that sort of 50 to 60 range, we’re almost certainly going to have to wait probably two to three weeks no matter what.”. Illinois is nearly surrounded by flat tax states. Advocates Want Park District to Add Plovers’ Nesting Site to Neighboring Protected Nature Area. How And Why To Create A Compilation Of Your 2020 Trusts Now! SPRINGFIELD, Ill. — Illinois will vote on an amendment to its state constitution on the Nov. 3 ballot. actuarial credential, with 20 years of experience at a major benefits. Joint filers with income above that would face higher marginal tax rates, kicking in at 7.75% on income above $250,001. #mc_embed_signup{background:#fff; clear:left;width:100%;font-weight:normal;}, The Great Chicago Fire: A Chicago Stories Special, Dividing Party, Republicans Poised to Challenge Biden Win, Many More in GOP Rejecting Trump’s Bid To Undo His Defeat, Trump Pressures Georgia Elections Chief: ‘Find 11,780 Votes’, Cruz Leads 11 GOP Senators Challenging Biden Win Over Trump, Chicago’s Tumultuous Year: Looking Back on 2020, Electoral College Makes It Official: Biden Won, Trump Lost, City Council Supermajority Urges Lightfoot to Rethink School Reopening Plan, The ‘Wildebeest of the Great Lakes’ Is Just One of the Region’s Unsung Aquatic Wonders, Beach or Habitat? Millionaires and billionaires will finally pay their fair share.”, On the other side: some of Illinois’ other wealthiest residents, including hedge fund manager Ken Griffin, as well as the state’s chamber of commerce, farm bureau and other businesses interests who say lifting the flat tax requirement is akin to giving politicians a “blank check.”, “The politicians have raised taxes twice in the last decade and we still have an $8 billion deficit,” reads a brochure sent to voters by The Coalition to Stop the Proposed Tax Hike Amendment. In a set of tweets this afternoon, Pritzker claimed that the only remaining options are to “immediately make billions of dollars in cuts” or “impose a higher flat tax, which falls disproportionately on working and middle-class families.” He then blamed “the millionaires and billionaires” for opposing it and accused them of “deceiving the public about its purpose.”, “Republicans,” he claims, “swore their allegiance to the wealthiest interests in the state and threw middle class families under the bus.”. The fate of Illinois’ constitutionally mandated flat tax lies in the hand of voters, who will decide on Nov. 3, 2020 whether or not to adopt the Proposed Amendment to the 1970 Illinois Constitution — also known as the “fair tax” amendment or the “Illinois Allow for Graduated Income Tax Amendment.” And, of course, regular readers will recall that just last week, I learned that Pritzker’s promise to boost the state’s pension funding by asset transfers, likewise quietly failed. Governor Pritzker is making good on his promise to protect working families and make our system more fair. Wirepoints has laid out in detail how a constitutional amendment for pension reform can work. If amendment passes, per legislation passed that goes into effect upon passage, 97% of Illinois taxpayers would see a tax cut. With 98% of the vote counted, the Chicago Tribune this morning reported that “no” votes exceeded “yes” votes by a margin of 55% to 45%. You may opt-out by. Opinions expressed by Forbes Contributors are their own. Illinois Fair Tax Amendment. in medieval history and the F.S.A. Currently, 46.23% of votes reported support the amendment. “Because we won’t know how many people voted in the election but didn’t vote on that ballot question, we’re almost certainly going to have to wait a couple weeks to find out the math on that situation,” said Scott Kennedy of Illinois Election Data. In order for the amendment to be ratified, 60% of people voting on the measure must approve it, or a simple majority — 50% plus one — including voters who skipped the questions on the ballot. Pritzker the first major defeat of his 22-month tenure. The outcome was stunning: despite months of ads telling voters that a “yes” vote would ensure that the wealthiest 3% of Illinoisans would “pay their fair share” and the rest of the state would see a tax cut, voters rejected the ‘Fair Tax’ amendment to the state’s constitution, which would have stricken from the constitution the requirement that the state’s income tax be levied as a flat percentage of income across all income levels. Ralph Martire, Keynote Speaker. What is Illinois’ path forward? Austin Berg, vice president at the Illinois Policy Institute, made another pitch against the amendment (for instance, here at the Chicago Tribune as well as at various web forums): it would allow the legislature to raise tax rates more easily by dividing up taxpayers, and raising taxes on one tax bracket at a time, ultimately raising everyone’s tax burden but without the political pushback of an all-at-once hike. Pritzker the first major defeat of his 22-month tenure. Follow Amanda Vinicky on Twitter: @AmandaVinicky. (Of course, Gov. The majority of Illinois’ neighbors have a flat or nearly-flat tax structure. © 2021 Forbes Media LLC. In a blow to Gov. Illinois Voters Reject ‘Fair Tax’ Amendment. It’s the difference between a state where voters trust politicians, and one where they don’t. Those with joint annual incomes over $1 million, however, would pay a 7.99% tax rate on their entire income, a jump that would see 0.3% of Illinois tax filers paying an additional $138,000 to the state each year, or $2.8 billion collectively. Voters have rejected the Fair Tax proposal to abolish Illinois' flat-rate income tax for one that would take a greater share from wealthier taxpayers. That lag time is in part because Illinois allows two weeks for ballots postmarked on or before Nov. 3 to arrive at local election authorities’ mailboxes. I write about retirement policy from an actuary's perspective. J.B. Pritzker and to his hopes of injecting billions of dollars more revenue into the state budget, Illinois voters rejected a constitutional amendment to overhaul how the state taxes income – a result that portends budget cuts, an overall income tax hike, or a combination of both. 4.9 percent, spending nearly $ 54 million to combat the change to comment JaneTheActuary.com! 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