With Illinois on deck, state tax hikes just lost big at the ballot box
If other states’ recent tax votes are any indication, Pritzker’s proposal could be a tougher sell than he thinks.
Political horse races came to an end this year in 13 statewide elections across the country. News of a Democratic “trifecta” in Virginia and the potential toppling of Republican Kentucky Gov. Matt Bevin dominated headlines.
But in red and blue states with referenda on the ballot, voters also made choices to protect their pocketbooks from higher taxes. With a major tax hike on deck for November 2020, could Illinois be next?
In Texas, a constitutional ban on enacting a state income tax won a whopping 74% of the vote. Recall that last November, Beto O’Rourke received nearly half the vote in the Lone Star State.
When it comes to taxes, Illinois’ constitution has been moving in the opposite direction.
Illinois first adopted a 2.5% individual income tax in 1969 with the backing of Democratic Chicago Mayor Richard J. Daley and Republican Gov. Richard Ogilvie. The following year, in a compromise meant to ensure voters approved the state constitution, delegates to the 1970 Illinois Constitutional Convention rejected amendments allowing for a graduated income tax, and instead passed a constitutional flat tax protection.
The initial 2.5% rate has nearly doubled in the decades since, mainly through two broken promises of “temporary” income tax hikes. Gov. J.B. Pritzker’s progressive income tax ballot measure would reopen the constitution and remove the flat income tax protection. If voters approve the constitutional amendment, Pritzker’s introductory rates would top out at 7.99% for the highest earners.
Texans need not worry about this kind of paycheck politics. Their state income tax is likely dead for decades.
Colorado also had a big tax question on the ballot.
Since 1992, Colorado politicians have had to go hat in hand to voters for approval before passing tax hikes or new debt. This is because of a state law called the Taxpayer Bill of Rights, or TABOR.
I joined Colorado Springs Mayor John Suthers on a panel last week on urban governance. “It’s made us stronger,” he said about TABOR, “and it’s kept government accountable.”
That’s one reason his city of nearly half a million residents is growing rapidly, aided by an influx of Illinoisans.
Coloradoans Tuesday saved one of the key tenets of TABOR. Under the law, state revenue can grow in line with inflation and population growth. But any natural revenue growth beyond that is automatically refunded to taxpayers. Proposition CC would have ended those automatic refunds, which average around $30 to $90 a year for married couples filing jointly. The proposition died, with 55% voting no and 45% voting yes. Notably, Coloradoans rejected switching from a flat income tax to a progressive income tax last year by roughly the same margin.
Washington voters had their voices heard on taxes through an advisory referendum, which is non-binding. When asked if the state should retain a 0.58% payroll tax to fund health care, 64% voted no.
Illinois voters aren’t used to having any direct vote on taxes. They’ll soon get one.
A $3.4 billion progressive income tax hike is Pritzker’s prized policy proposal, and he will spend tens of millions of dollars convincing Illinoisans to vote for it.
Time will tell whether voters oblige him. If other states’ recent tax votes are any indication, Pritzker’s proposal could be a tougher sell than he thinks.