Illinois politicians still want boosted tax power
The Illinois Constitution stops politicians from imposing progressive taxation, which would give them power to progressively tax everyone more.
More than five years after the failure of the so-called Fair Tax Amendment, Illinois politicians are still trying to eliminate the state constitution’s flat income tax protection and make it easier to raise state income taxes.
Here’s what you need to know about what they are pushing, and how the flat tax guarantee in the Illinois Constitution protects taxpayers.
Eight more states have seen the wisdom of converting their progressive income taxes to a flat tax since Illinoisans voted down Gov. J.B. Pritzker’s “Fair Tax” Amendment in 2020. Still, Illinois lawmakers continue to push for scrapping the flat tax to give themselves greater power to pick who gets taxed and by how much.
In 2024, lawmakers placed an advisory question on the ballot asking voters to voice support for an additional 3% tax on individuals making over $1 million to be dedicated to property tax relief. That question squeaked by the 60% threshold required to approve an actual constitutional amendment proposal by less than a percentage point.
And now some members of the Illinois General Assembly are again taking up the charge, with three constitutional amendments proposed in the state legislature this session allowing such a “millionaire” tax, though none of them fit the ballot question exactly:
- Senate Joint Resolution Constitutional Amendment 4 and House Joint Resolution Constitutional Amendment 16 would completely scrap the flat tax requirement, allowing lawmakers to impose as many taxes and as many rates as they want.
- House Joint Resolution Constitutional Amendment 21 would add a 3% tax on income over $1 million for the taxable year, requiring half of that revenue to go to property tax relief and the other half to be distributed to school districts on a per-pupil basis.
How the constitution protects taxpayers
Currently, Article IX, Section 3 of the Illinois Constitution requires any income tax to be:
- “at a non-graduated rate,” and
- “no more than one such tax imposed” on individuals and one on corporations.
Both provisions are necessary to preserve the flat tax protection. If lawmakers could impose more than one income tax on individuals or corporations, they could artificially engineer a progressive tax by placing multiple taxes at technically flat rates on the same taxpayer.
When the 1970 constitution’s authors included flat tax protections, they explicitly cited the negative economic effects of a progressive income tax. They also noted the increased complexity of administering a progressive tax and the common practice of wealthy taxpayers’ ability to shield their income from taxation, effectively counteracting the potential revenue benefits the state might hope to gain through a progressive tax.
Two of the three proposed amendments would completely scrap the protection of the current flat tax provisions, which deny politicians the ability to tax anybody without angering everybody. These amendments would hurt taxpayers by allowing lawmakers to target taxpayers piecemeal.
Plus, the “millionaires” they claim to be after don’t necessarily live in mansions. Many are small business owners and family farms that file taxes as individuals.
Not only would these proposed amendments make it easier to tax retirement income, a progressive tax would likely be used to target the middle class – where the bulk of the revenue resides. As they continue to spend beyond their means, lawmakers could gradually impose broader tax increases on groups of middle-class taxpayers without facing popular opposition to any single increase.
But even HJRCA 21 – which narrowly targets income over $1 million at a set 3% rate – could have implications that are not immediately obvious. That amendment would completely bypass all limits required by the flat tax provision and open up income for taxation that might otherwise be exempt. The income amount is not inflation-adjusted and would cover a greater percentage of taxpayers over time. Not only that, but any high earners can easily move their money or residences to avoid paying the tax, which could counteract any benefit to state coffers.
These are the same reasons the drafters of the 1970 Illinois Constitution chose to limit lawmakers to a single flat income tax on individuals. Even a narrowly drafted amendment to circumvent that protection will struggle to avoid the problems they predicted.
Plans for progressive taxes all add up to greater power for state lawmakers to impose higher taxes, resulting in fewer new businesses and more Illinoisans heading for the exits.